S. Tax (Specific issues) Flashcards
Supply Parts Under Warranty
Charge ST or not
Free Additional Promotional Items
Charge ST or not
- General Rule: Free supply is taxable
- However This can be taken as Qt Discount, so ST on net value e.g 2+1 ST on Value of 2 [if in confirmity w/normal biz practice]
- if items relate to 3rd schedule (e.g fruit juices) - no concept of ST, ST on retail price
Debit & Credit Note
- When
- Types: Sales Return, Purchase Return:?
- Max Time for Adjustment: ?
- Who to Make
- Particulars
- Where Supplier Reg. Receipient Unreg??
- where such goods are sub. resupplied
- If goods (returned) were returned being unfit e.g. expiry date & destroyed
- When?
- Cancellation
- Return
- CHANGE in nature
- CHANGE in value
- other such events
- Credit Note, Debit Note
- 180D (may be extended for special reasons;comissioner)
- Both Parties to make for a particular supply
- Name & NTN of both;Original ST Inv- No. date,qt,value,amount;reason for issuance;sign&seal;qt being returned;original revised&diff.
- adj. only by supplier through Cr
- ST in normal way
- No I/P; No O/P——Goods to be destroyed u/supervision of ST Deptt.
- Return
- Normal
- Reg-Unreg.
- Unfit supply (This case is not due difference in required specifications: Example of this case may be that returned goods can not be resold/resupplied e.g due to expiry date, etc)
- Subsequest Destroy; e.g fire in warehouse, etc (LHC decision Mayfair Spinning Mills, PTCL2002 CL 115)
- Wastage of RM during Manuf. (1989 circular FBR)
of Goods
- Return
- Issue DR/CR both (reduce from O/P & I/P)
- Reg. to issue DR/CR only
- (This case is not due difference in required specifications) No I/P or O/P by seller i.e. Both IPOP of seller(receipient off course ‘ll reverse I/P):destroy in presence of ST deptt.
- I/P can be claimed
- Wastage
- not saleable - I/P can be claimed
- saleable - By product - chargeable to ST
practically wastage issue is debateable as verifiable or not?
Delivery of Goods to Insurance Company against insurance claim constitutes a taxable supply
Destruction of goods (totally0 an dsubsequent compensation by Insurance Company does not constitute Supply (as per definition of supply)
- Not sale
- not done in the normal course of biz
- Payment (by ins. Co.) is compen. for loss and not payment/consid. for delivery of goods.
VALUE ADDITION ——SEC 7A
NOT PRACTICALLY IMPLEMENTED
Charge tax on value addition only…….specially important where RM/input supply is exempt and FG/output taxable
Currently where Input supply is exempt no tax on purchase but taxed when output/sales
Refund Procedure
CORPORATE ENTITY
Furnishing Audited FS
If
Input not settled through C/F
Refund claim - Time Limit (not claimed in the relevant tax period)
- Furnish
- statement duly certified by auditors+
- Annual audited FS showing i/p>90% of O/P
- Refund on yearly basis in 2nd month following the end of Co’s fin. year
Auditor guily-refer ICAP council for disciplinary action
Refund claim - Time Limit (not claimed in the relevant tax period) - within 1 YEAR
Goods - Registered can not supply to Un-Registered
Consequence: Input of Registered shall be disallowed, even he purchased/procured supply from registered
OR
Prohibited supplies for Registered Person
Sec 8(6) SRO 488 of 2004
Following goods supplied by Reg. person to unregistered (I/P of unreg. shall be disallowed)
- filter rods for cigarettes
- A/C, chilling, humidification PLANTS
- Cranes
- storage tanks, gas separaters, heat exchangers
- artificial filament tow
- polypropylene granules
Does not apply to supply to end user, govt, etc
Input claim related to
STOCK PURCHASED before Registration (Sec 59)
- complete Registration Within
- 30D - local
- 90D - Import
CLAIM on UNSOLD/UNUSED stock
- What is TOLL MANUFACTURING
- CHARGEABILITY OF TAX
- SRO 1125 items
- RM & FG Both exempt (e.g Pharmaceuticals)
- Both RM & FG taxable
- RM exempt, FG Taxable (e.g RM: Red Chilli, FG: Red Chilli Powder is exempt u/Sr16 Tbl1 6th Sch)
- Compare diff b/w Cat. 3 & Cat. 4
- Is vendor manufacturer or service provider in Toll Manuf.
- What is value of supply
- How ‘ll the toll manuf. of 3rd schedule items be treated
- What about Toll Manuf. of zero rated items
- RM supplied to vendor by Principal;FG returned to Pincipal by vendor
- 3% on conversion charges
- NO ST
- ST on conversion charges
- ST on market value of _total supply (_as per definition of value of suppl)
- Vendor is manuf. as per Mauf. defi.
- Conversion charges
- 3rd schedule items Toll manuf. under the ame principle. Vendor ST on conv. charges while manufacturer on retail price.
- Toll Manuf. of zero rated items - in same way as zero rated items
Sale of Taxable Business (Activity)
or
Transfer of ownership
- From Reg. person to Unreg. Person
- From Reg. person to Reg. Person
- On Stock (i.e. possession of taxable supply)- Reg. person shall account for and pay ST (otherwise transferee shall have to pay.
- By Transferee
Excess Tax Collection
Sec 3B
- What is excess
- If incidence passed on to consumer
- IF incidence not passed on
- Not collectable or collected (excess output) mistakenly
- Deposit with Govt. (no claim of refund wrt this amount shall be acceptable)
- Return to payer (however proof of incidence shall be with the collector)
SALES TAX - JOINT & SEVERAL LIABILITY
OF
REGISTERED PERSONS
IN
THE SUPPLY CHAIN
WHERE ST IS UNPAID
CONDITIONS
- BURDEN OF PROOF RESTS WITH FBR
- REG. PURCHASES FROM REG
- IN KNOWLEGE / HAS RESONABLE GROUNDS
- CURRENT/PREVIOUS/SUBSEQUESNT SUPPLY
- ST WILL REMAIN UNPAID
- BOTH (HAVING KNOWLEDGE & SUPPLYING AND RECEIVER) - JOINTLY AND SEVERALY LIABLE FOR UNPAID TAX
- BOARD MAY EXEMPT
