Sales Tax Circular No.1/1991, Dated 27th February, 1991

SUBJECT: LEVY OF SALES TAX ON TUBULAR PLASTIC PACKING FILM- CLARIFICATION REGARDING. A question regarding chargeability of sales tax on tubular plastic packing film used in the manufacture of polyethylene bags has been raised by the Plastic Manufacturers Association, Lahore. The Association is of the view that since the end product is exempt from sales tax, levy of tax on tubular plastic film, which is a processed raw material of polyethylene bags is not justified. 2. The issue in question is :- (i) whether the manufacture of polyethylene bags from plastic granules to the finished stage is a continuous process; (ii) where such intermediary items used in the manufacture of exempt goods are chargeable to sales tax. 3. Tubular plastic packing film is manufactured from plastic granules and the same is further used in the production of polyethylene bags. Inquiry made in this matter has revealed that tubular packing film is manufactured and is then subjected to other processes to produce bags. Further there arc judicial pronouncement to the effect that if intermediary items are "capable of being weighed,…