"\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-1256\"\u003e\r\n\u003cmeta name=ProgId content=Word.Document\u003e\r\n\u003cmeta name=Generator content=\"Microsoft Word 10\"\u003e\r\n\u003cmeta name=Originator content=\"Microsoft Word 10\"\u003e\r\n\u003clink rel=File-List href=\"2004J5951_files/filelist.xml\"\u003e\r\n\u003ctitle\u003eUNIFORMITY IN SALES TAX RATES:\u003c/title\u003e\r\n\u003co:SmartTagType namespaceuri=\"urn:schemas-microsoft-com:office:smarttags\"\r\n name=\"date\"/\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 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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\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cspan class=SpellE\u003e\u003cb\u003eHuzaima\u003c/b\u003e\u003c/span\u003e\u003cb\u003e\r\n\u003cspan class=SpellE\u003eBukhari\u003c/span\u003e \u0026amp; Dr. \u003cspan class=SpellE\u003eIkramul\u003c/span\u003e \u003cspan\r\nclass=SpellE\u003eHaq\u003c/span\u003e, Advocates, \u003c/b\u003e\u003cst1:City\u003e\u003cst1:place\u003e\u003cb\u003eLahore\u003c/b\u003e\u003c/st1:place\u003e\u003c/st1:City\u003e\u003cb\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\u003eThere was much hype with the\r\npassing of Finance Act, 2004 that the Government had announced a major\r\nconcession for the people by reducing burden of sales tax through introduction\r\nof uniform rate of 15% and eliminating further tax 3% on supplies made to the\r\nnon\u0026#8209;registered persons. Amendments were made in the Sales Tax Act, 1990\r\n(hereinafter \u0026quot;the Act\u0026quot;) in various sections through the Finance Act,\r\n2004 to these effects. Indeed, many heaved a sigh of relief for being rescued\r\nfrom the torment of checking the credentials of parties they were transacting\r\nwith in order to determine the quantum of rate of tax \u0026#8209;\u0026#8209; different\r\nfor registered and unregistered persons. But do the much\u0026#8209;\u003cspan\r\nclass=SpellE\u003epublicised\u003c/span\u003e amendments reflect the true situation \u003cspan\r\nclass=SpellE\u003evis\u0026#8209;a\u0026#8209;vis\u003c/span\u003e claim of reduction in sales tax\r\nincidence or are we in for another deceptive trap laid down by the crafty\r\nfinancial managers and wicked tax machinery?\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\u003eSection 7A of the Act which was\r\nintroduced vide Finance Act, 2003, read with rules 8 to 14 contained in Chapter\r\nII of the Special Procedure Rules, 2004, brought with it the concept of\r\ncompulsory value addition on specified goods for levy and collection of tax.\r\nAlthough subsection (2) of section 7A, empowers the Federal Government to\r\nspecify minimum value addition required to be declared by certain persons or\r\ncategories of persons. At present commercial importers and retailers have been\r\nsubjected to compulsory value addition of 10% by S.R.O. 592(I)/2004 dated 8th\r\nJuly, 2004 and S.R.O. 673(I)/2004 dated 9th August, 2004 respectively. At the\r\ntime of announcement of budget for 2004\u0026#8209;2005 the rate for compulsory\r\nvalue addition in the case of commercial importers was 14%. It is pertinent to\r\nmention that this compulsory value added tax does not qualify for input unless\r\nit is paid in excess of 10 per cent as explained by the C.B.R. in a recent\r\nruling.\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\u003eIs this not another means of\r\nimposing `further tax\u0027 in addition to 15 % sales tax on value of imports? Isn\u0027t\r\nthe commercial importer being forced to pay a higher rate of tax? \u0027Won\u0027t the\r\nend\u0026#8209;user/consumer be burdened by paying higher price for goods which\r\ncould have been much cheaper had they not been subjected to fictional value\r\naddition? Will this not adversely affect market competition for cheaper\r\nproducts? Will it not encourage the \u0027sale of cheaper smuggled items from across\r\nthe borders rather than boost legal trade?\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\u003eThese questions merit answers\r\nfrom the policy makers and those at the helm of affairs. Their attention is\r\ndrawn to the following two examples. Example A taken from rule 10 for payment\r\nof sales tax on value addition and Example B assuming that the provision of\r\ncompulsory value addition does not apply.\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\u003ch3\u003eExample A\u003c/h3\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\u003ctable class=MsoTableGrid border=1 cellspacing=0 cellpadding=0\r\n style=\u0027border-collapse:collapse;border:none;mso-border-alt:solid windowtext .5pt;\r\n mso-yfti-tbllook:480;mso-padding-alt:0in 5.4pt 0in 5.4pt;mso-border-insideh:\r\n .5pt solid windowtext;mso-border-insidev:.5pt solid windowtext\u0027\u003e\r\n \u003ctr style=\u0027mso-yfti-irow:0;mso-yfti-lastrow:yes\u0027\u003e\r\n  \u003ctd width=590 valign=top style=\u0027width:6.15in;border:solid windowtext 1.0pt;\r\n  mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt\u0027\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(a)\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e        \u003c/span\u003eValue of imported goods\u003cspan style=\u0027mso-tab-count:1\u0027\u003e           \u003c/span\u003e=\r\n  \u003cspan class=SpellE\u003eRs\u003c/span\u003e. 100\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e            \u003c/span\u003edetermined under section 25 or\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e            \u003c/span\u003e25B of the Customs Act, 1969\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(b)\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e        \u003c/span\u003eCustoms Duty (@ 20 %)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e          \u003c/span\u003e=\r\n  \u003cspan class=SpellE\u003eRs\u003c/span\u003e : 20\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e            \u003c/span\u003eAssessed import value (a + b)\u003cspan style=\u0027mso-tab-count:\r\n  5\u0027\u003e                                                   \u003c/span\u003e= Rs.120\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(d)\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e        \u003c/span\u003eSales tax @ 15 % payable on = \u003cspan class=SpellE\u003eRs\u003c/span\u003e\r\n  18\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e            \u003c/span\u003ebill of entry\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(e)\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e        \u003c/span\u003eValue of supplies, with value = \u003cspan class=SpellE\u003eRs\u003c/span\u003e.\r\n  132 \u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003eaddition of\r\n  10% [c + (c x 10%)] [120 + 12]\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(f)\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e         \u003c/span\u003eValue addition on. which S.T. = \u003cspan class=SpellE\u003eRs\u003c/span\u003e.\r\n  12\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e            \u003c/span\u003eis payable (e \u0026#8209; c) [132 \u0026#8209; 120]\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(g)\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e        \u003c/span\u003eS.T. on value addition (f x \u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e        \u003c/span\u003e= Rs.01.80\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e            \u003c/span\u003e15%) [12 x 15%]\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e            \u003c/span\u003eTotal cost of goods inclusive of\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e \u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e           \u003c/span\u003eindirect taxes only\u003cspan style=\u0027mso-tab-count:2\u0027\u003e                     \u003c/span\u003e=\r\n  Rs.133.80\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify;text-indent:\r\n  -.5in\u0027\u003e \u003cspan style=\u0027mso-tab-count:1\u0027\u003e           \u003c/span\u003eindirect taxes and 6%\r\n  \u003cspan style=\u0027mso-tab-count:2\u0027\u003e               \u003c/span\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003ewithholding\r\n  tax under \u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003esection 148 of\r\n  the \u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003eIncome Tax\r\n  Ordinance,\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003e2001 [133.80 +\r\n  8]\u003cspan style=\u0027mso-tab-count:2\u0027\u003e                   \u003c/span\u003e= Rs.141.80\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003c/td\u003e\r\n \u003c/tr\u003e\r\n\u003c/table\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003e\u003cspan\r\nstyle=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003e\u003c/p\u003e\r\n\r\n\u003ch3\u003e\u003cb\u003eExample B\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/h3\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003ctable class=MsoTableGrid border=1 cellspacing=0 cellpadding=0\r\n style=\u0027border-collapse:collapse;border:none;mso-border-alt:solid windowtext .5pt;\r\n mso-yfti-tbllook:480;mso-padding-alt:0in 5.4pt 0in 5.4pt;mso-border-insideh:\r\n .5pt solid windowtext;mso-border-insidev:.5pt solid windowtext\u0027\u003e\r\n \u003ctr style=\u0027mso-yfti-irow:0;mso-yfti-lastrow:yes\u0027\u003e\r\n  \u003ctd width=590 valign=top style=\u0027width:6.15in;border:solid windowtext 1.0pt;\r\n  mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt\u0027\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(a)\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e        \u003c/span\u003eValue of imported goods= \u003cspan class=SpellE\u003eRs\u003c/span\u003e. 100\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e            \u003c/span\u003edetermined under section 25 or\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e            \u003c/span\u003e25B of the Customs Act, 1969\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(b)\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e        \u003c/span\u003eCustoms Duty (@ 20%)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e           \u003c/span\u003e=\r\n  \u003cspan class=SpellE\u003eRs\u003c/span\u003e. 20\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003eAssessed\r\n  import value (a + b)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e   \u003c/span\u003e= Rs.120\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(c)\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e        \u003c/span\u003eAssessed import value (\u003cspan class=SpellE\u003ea+b\u003c/span\u003e)\u003cspan\r\n  style=\u0027mso-tab-count:1\u0027\u003e     \u003c/span\u003e=Rs.120\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(d)\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e        \u003c/span\u003eSales tax @ 15 % payable on. =Rs.18\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e            \u003c/span\u003ebill of entry\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n  1\u0027\u003e            \u003c/span\u003eTotal cost of goods inclusive of:\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003eindirect taxes\r\n  only\u003cspan style=\u0027mso-tab-count:3\u0027\u003e                                 \u003c/span\u003e=Rs.128\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003eindirect taxes\r\n  and 6%\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003ewithholding\r\n  tax under\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003esection 148 of\r\n  the\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003eIncome Tax\r\n  Ordinance,\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003e2001 [128 +\r\n  7.68]\u003cspan style=\u0027mso-tab-count:3\u0027\u003e                               \u003c/span\u003e=Rs.135.68\u003c/p\u003e\r\n  \u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n  \u003c/td\u003e\r\n \u003c/tr\u003e\r\n\u003c/table\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 incidence of .all the taxes\r\nin Example A on import of an item having landed cost of Rs.100 is 41.8%. This\r\nincludes Rs.20 (customs duty), Rs.18 (15% sales tax), Rs.1.80 (15% sales tax on\r\ncompulsory value addition) and Rs.8 (6% presumptive income\u0026#8209;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\u003eLast but not least, this\r\nprovision brought in its wake an amazing exemption tag, viz. that those who\r\ncomplied with it were exempt from audit and those who dared to defy it were to\r\nbe subjected to audit. In other words, the Government had openly admitted that\r\nsince it had made audit so loathsome and horrendous for the taxpayers they\r\nshould give preference to paying higher rate of tax rather than undergo the\r\ntorture of audit. To put it more crudely, one can say that the State was\r\nencouraging people to, freely manipulate/restructure transactions and then\r\nignore their actions by asking them. \u003cspan class=GramE\u003eto\u003c/span\u003e pay some \u003cspan\r\nclass=SpellE\u003eBhatta\u003c/span\u003e [extortion tax]. Now the State has gone a step ahead\r\nand has done away with this option. \u003cspan class=GramE\u003eThrough the promulgation\r\nof \u003cspan class=SpellE\u003eS.R.Os\u003c/span\u003e.\u003c/span\u003e 592(I)/2004 8th July 2004 and\r\n657(I)/2004 dated August 4, 2004 all commercial importers have no choice but to\r\npay additional sales tax on 10 % compulsory value addition. The same thing was\r\nlater on done with the retailers through S.R.O. 673(I)/2004 dated \u003cst1:date\r\nYear=\"2004\" Day=\"9\" Month=\"8\"\u003e9th August, 2004\u003c/st1:date\u003e imposing condition of\r\nminimum value addition of 10%.\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\u003eIn return, the Government has\r\ngiven immunity from audit to all those commercial importers who pay sales tax\r\non the basis of compulsory value\u0026#8209;addition. The condition of detailed\r\naudit of commercial importers under the newly amended rules has been withdrawn\r\nthrough S.R.O. 657(I)/2004 issued, on \u003cst1:date Year=\"2004\" Day=\"4\" Month=\"8\"\u003eAugust\r\n 4, 2004\u003c/st1:date\u003e. The commercial importers were confused over the term\r\n`detailed audit\u0027 as specified in tile procedure for collection of sales tax.\r\nThey opined that the sales tax auditors have the authority to conduct audit\r\neven in cases where the commercial importers pay sales tax on minimum value  addition\r\nof 10 per cent. Under the previous rule (Exemption from\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\u003eAudit), a commercial importer who\r\npaid sales tax on value\u0026#8209;addition basis as prescribed under these rules\r\nfor a year was not subjected to any audit for that year, and detailed audit was\r\nconducted in the case of a commercial importer who paid sales tax in a manner\r\nother than prescribed in the rules. Now, the C.B.R. has redrafted the rule,\r\nwhich says that payment of sales tax on value\u0026#8209;addition basis shall be\r\nmandatory and the commercial importer shall be exempt from the requirements of audit\u0027.\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\u003eAccording to C.B.R. officials,\r\nthe immunity from sales tax audit does not mean that the auditors may not\r\nconduct audit in cases where there is definite information, of evasion or fraud\r\netc. under Act. There would be detailed audit in cases of information, while\r\nimmunity from audit would continue provided the commercial importers pay sales\r\ntax on 10 per cent value addition. Following is the text of the notification\r\nissued on \u003cst1:date Month=\"8\" Day=\"4\" Year=\"2004\"\u003eAugust 4, 2004\u003c/st1:date\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;In\r\nexercise of the powers conferred by section 71 of the Sales Tax Act, 1990, read\r\nwith clause (9) of section 2, sections 3, 3AA and 4, subsection (2) of section\r\n6, section 7A, clause (b) of subsection (1) of section 8, clause (a) of\r\nsubsection (2) of section 13, sections 26AA and 34A, and the first and second provisos\r\nto section 45 thereof, the Federal Government is pleased to direct that the\r\nfollowing further amendment shall be made in the Sales Tax Special Procedure\r\nRules, 2004, namely:\u0026#8209;\u0026#8209;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-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\u003eIn the aforesaid Rules, for rule\r\n14, the following has been substituted namely\u003cspan class=GramE\u003e:\u0026#8209;\u003c/span\u003e\u0026#8209;\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;14 \u003cu\u003eExemption\r\nfrom audit.\u003c/u\u003e\u0026#8209;\u0026#8209;\u0026#8209;Payment of sales tax on value  addition\r\nbasis as prescribed under these rules shall be mandatory and the commercial\r\nimporter shall be exempt from the requirements of audit.\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\u003eThis brings us back to the tall\r\nclaims of the Government of having made 15 % uniform rate of tax. Indeed it\r\ndoes remain 15%, once on import value and then again on compulsory value\r\naddition both in the case\u0026#8209;of importers and retailers. It is clear from\r\nthe above example that a higher rate is concealed in the garb of the so\u0026#8209;called\r\nuniform rate. On an imported article of public consumption the effective rate\r\nof tax before any further supply is 41.80 % [nowhere in the world such a high\r\nrate of tax is prevalent on imported goods which is to be borne by the poor\r\ncitizens of Pakistan who are neither aware of this colossal tax burden nor\r\npossess means to defy it. By taking upon the role of an extortionist, the State\r\nis forcing itself on the unsuspecting citizens for achieving irrational revenue\r\ntargets and receiving kudos from the foreign donors.\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\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"