Comments on Sales Tax Act [Second Amendment] ,1990

Changes in Sales Tax Act, 1990 through 2nd Amendment.
1. Through the Finance Supplementary (Second Amendment) Act, 2019 a new entry, bearing No. 150 was added in Table-1 of Sixth Schedule, whereby, plant and machinery under Chapter 84 and 85 (excluding consumer goods and office equipment) as imported by green filed industries, intending to manufacturer taxable goods during their construction and installation period were given exemption from chargeability of Sales Tax at import stage. This exemption is subject to the conditions that the importer is registered under the Sales Tax Act on or after the 1st July 2019, and the industry is not established by splitting up or reconstruction or reconstitution of an undertaking already in existence or by transfer of machinery or plant from another industrial undertaking in Pakistan. Now, through the Ordinance, the term ‘green field industry’ has been defined to have clarity in availing an exemption in the pertinent entry, and further conditions have been added. The green field industry means a new industrial undertaking having the following characteristics:
2. In order to ensure that persons who are required to integrate with the FBR or have been integrated, either do not get themselves integrated or do not make proper compliance and tamper with the systems so installed so as to avoid reporting and recording of production and sales, it has been provided to amend section 33 of the Act to declare such act as an offence and punishable with imprisonment and fine both.
3. Sales tax is levied on the basis of retail price on the items specified in the Third Schedule to the Act. Such retail price is required be printed with retail price. In order to ensure compliance in this respect, and to safeguard revenue associated therewith, it is penalty has been provided and also confiscation of contravening goods by amending section 33 of the Act.
4. In order to safeguard industry in Pakistan and to prevent misuse of exemption, a new section 40D in the Act has been added and amendment in this regard has also been made in section 33 relating to penalties and offences, so as to provide for powers to prescribe documentation in relation to such goods and to examine and check vehicles coming from tax-exempt areas such as AJ&K, Gilgit-Baltistan and Tribal Areas.
5. Section 73 has been amended to provide that a registered manufacturer shall make all taxable supplies to a registered person excluding supplies not exceeding a value of rupees hundred million in a financial year and rupees 10 million in a month.
6. Sales tax on the imported cotton has been enhanced from 5 % to 10 % to remove disparity.
7. PCT heading of bricks had been inadvertently mentioned as “6901.1000”, whereas the correct PCT heading is “6901.0000”. Tenth Schedule has been amended to correct the PCT heading.
8. Manufacturers using plant and machinery for in house installation have now been excluded from the purview of the 12th, further refund of 3% value addition tax may not be barred if paid on goods used in making of zero-rated supplies.
9. Sales tax on the mobile phones upto the value of 30 US dollars has been reduced from Rs 130 to Rs 100 and phones having value upto 100 US Dollars from Rs 1320 to Rs 200
10. Definition of tier-1 retailer has been amended in section 2(43A), whereby the Federal Board of Revenue is empowered to add any other category of retailers to tier-1. In view of the higher tariff rates of electricity the conditions to qualify for a Tier 1 retailer have been amended so as to increase the threshold of electricity consumption from Rs 600,000 to Rs 1200,000
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