"\u003chtml xmlns:o=\"urn:schemas-microsoft-com:office:office\"\r\nxmlns:w=\"urn:schemas-microsoft-com:office:word\"\r\nxmlns:st1=\"urn:schemas-microsoft-com:office:smarttags\"\r\nxmlns=\"http://www.w3.org/TR/REC-html40\"\u003e\r\n\r\n\u003chead\u003e\r\n\u003cmeta http-equiv=Content-Type content=\"text/html; charset=windows-1252\"\u003e\r\n\u003cmeta name=ProgId content=Word.Document\u003e\r\n\u003cmeta name=Generator content=\"Microsoft Word 11\"\u003e\r\n\u003cmeta name=Originator content=\"Microsoft Word 11\"\u003e\r\n\u003clink rel=File-List href=\"2003J2001_files/filelist.xml\"\u003e\r\n\u003ctitle\u003eSALES TAX ON DELIVERY CHARGES INCURRED ON SUPPLY OF GOODS\u003c/title\u003e\r\n\u003co:SmartTagType namespaceuri=\"urn:schemas-microsoft-com:office:smarttags\"\r\n name=\"City\"/\u003e\r\n\u003co:SmartTagType namespaceuri=\"urn:schemas-microsoft-com:office:smarttags\"\r\n name=\"place\"/\u003e\r\n\u003c!--[if gte mso 9]\u003e\u003cxml\u003e\r\n \u003co:DocumentProperties\u003e\r\n 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table.MsoNormalTable\r\n\t{mso-style-name:\"Table Normal\";\r\n\tmso-tstyle-rowband-size:0;\r\n\tmso-tstyle-colband-size:0;\r\n\tmso-style-noshow:yes;\r\n\tmso-style-parent:\"\";\r\n\tmso-padding-alt:0in 5.4pt 0in 5.4pt;\r\n\tmso-para-margin:0in;\r\n\tmso-para-margin-bottom:.0001pt;\r\n\tmso-pagination:widow-orphan;\r\n\tfont-size:10.0pt;\r\n\tfont-family:\"Times New Roman\";\r\n\tmso-ansi-language:#0400;\r\n\tmso-fareast-language:#0400;\r\n\tmso-bidi-language:#0400;}\r\n\u003c/style\u003e\r\n\r\n \r\n\r\n\u003cbody lang=EN-US style=\u0027tab-interval:.5in\u0027\u003e\r\n\r\n\u003cdiv class=Section1\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003eSALES TAX ON\r\nDELIVERY CHARGES INCURRED ON SUPPLY OF GOODS\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003eBy\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003eAkhtar Javed,\r\nAdvocate, \u003cst1:place w:st=\"on\"\u003e\u003cst1:City w:st=\"on\"\u003eLahore\u003c/st1:City\u003e\u003c/st1:place\u003e\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe term value of supply has been\r\ndefined in section 2(46) of the Sales Tax Act, 1990 (the Act) as\u003cspan\r\nstyle=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003e\u0026quot;\u003cu\u003evalue\r\nof supply\u003c/u\u003e\u0026quot; means \u0026quot;in respect of a taxable supply, the consideration\r\nin money, including all Federal and Provincial duties and taxes, if any, which\r\nthe supplier receives from the recipient for that supply but excluding the\r\namount of tax:\u0026quot;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e2. C.B.R. in its letter dated\r\n2-4-1999 has ruled that the tax has to be assessed on total amount charged and\r\nreceived for a supply as the consideration in money is for\u0027 taxable supply and\r\nnot for the bare taxable goods, therefore, all charges, received against the\r\n\u0027supply of goods constitute part of value of supply. It was further ruled that\r\nin case supplies are delivered at buyers\u0027 premises, the total consideration in\r\nmoney charged including delivery charges will be included in the value of\r\nsupply for the assessment of tax.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e3. Messrs Sitara Chemical\r\nIndustries Ltd., Faisalabad are the manufacturer of Hydro Chloric Acid (HCl)\r\nand other chemicals and supply the same to different parties on ex-factory\r\nbasis. The chemicals manufactured by the company are transported only in\r\nspecially built vehicles for which the company has, as of necessity, advanced\r\nloans to the transporters for purchase of such vehicles which are recovered\r\nfrom them in instalments from the remittances received from the buyers of the\r\nchemicals who make payment against chemicals and transportation charges to Messrs\r\nSitara Chemicals. As the company has advanced loans to the transporters for\r\npurchase of those vehicles, the delivery charges received from the buyers of\r\nthe chemicals are adjusted against those loans. The company had not been\r\nincluding element of freight charges in the value of supply on the plea that\r\nthe freight is paid by the buyers to transporters in consideration of the\r\nservices provided by them.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e4. The Sales Tax Collectorate \u003cst1:place\r\nw:st=\"on\"\u003e\u003cst1:City w:st=\"on\"\u003eFaisalabad\u003c/st1:City\u003e\u003c/st1:place\u003e made out a case\r\nagainst Messrs Sitara Chemicals for not including the element of freight\r\ncharges in the value of supply. The Additional Collector (Adjudication) \u003cst1:place\r\nw:st=\"on\"\u003e\u003cst1:City w:st=\"on\"\u003eFaisalabad\u003c/st1:City\u003e\u003c/st1:place\u003e upheld the\r\ncharges levelled in the show-cause notice. The company filed an appeal in the\r\nAppellate Tribunal, Lahore Bench-II.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e5. After hearing and perusing the\r\nrecord, the Appellate Tribunal observed that:\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003e\u0026quot;As regards\r\ndemand of sales tax on freight charges, we do not find much force in the\r\nappellant argument that freight charges were separately charged by the\r\ntransporters who carried the chemicals in specially built vehicles and even in\r\ncase freight charges were paid by\u0027 the buyers to the appellant\u0027s, the same were\r\nadjusted against loan instalments due from the transporters. The factual and\r\nadmitted position is that the fleet of specialized vehicles is owned by the\r\nappellant-company as the vehicles are registered in their name and as per\r\nagreements placed on record, the transporters cannot use the vehicles for any\r\nother propose, any other organization or individual except for transport of\r\nchemicals supplied by the appellant. Under these circumstances, the\r\nappellant-company cannot dissociate itself from the transport/delivery of their\r\nproduct at the buyer\u0027s place. The supply shall, thus be deemed to have been\r\nmade on delivery basis and the element of freight charged from the buyers shall\r\nform part of the value of goods. The value of supply as defined in section\r\n2(46) of the Sales Tax Act, 1990 means the consideration in money including all\r\nFederal and Provincial duties and taxes, if any, which the supplier receives\r\nfrom the recipient for that supply excluding the amount of tax. In this case,\r\nthe appellant has admittedly received freight charges from the buyers and\r\ntherefore they become a part of the value of supply chargeable to sales tax.\r\nDemand of sales tax amounting to Rs.10,45,965 alongwith additional tax under\r\nsection 34 of the Sales Tax Act, 1990 is therefore upheld.\u0026quot;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e6. Keeping in view the aforesaid\r\njudgment of the Appellate Tribunal, the registered persons are advised to\r\ninclude the element of freight charges in the value of supply and sales tax has\r\nto be charged and paid\u0027 on total consideration in money charged including\r\ndelivery charges if these are received alongwith the consideration of goods and\r\nthe goods are delivered at the door-step of the buyer.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003c/div\u003e\r\n\r\n\u003c/body\u003e\r\n\r\n\u003c/html\u003e\r\n"