GOVERNMENT
OF
**********
(Sales Tax)
S.R.O. 417(I)/2000.¾ In exercise of the powers conferred by section 50 of the
Sales Tax Act, 1990, the first and second provisos to sub- section (1) and
sub-section (2) of section 10 thereof the Central Board of Revenue is pleased
to make the following rules, namely: -
1. Short
title, application and commencement.¾(1) These
rules may be called Sales Tax Refund Rules, 2000.
(2) These shall apply to ¾
(i) registered manufacturer –cum- exporters and commercial exporters who desire to zero rate all, or part, of their supplies under section 4 of the Sales Tax Act, 1990;
(ii) registered
persons who claim refund of such excess amount of input tax as is not fully
adjusted against the tax payable during a period of one year following the tax
period in which the credit first arose;
(iii) investors
claiming refund under the second proviso to sub-section (1) of section 10 of
the Sale Tax Act, 1990; and
(iv) registered
persons claiming refund of tax under section 66 of the Sales Tax Act, 1990.
(3) These
shall come into force at once.
2. Definitions.¾(1) In
these Rules, unless the subject or context otherwise requires,-
(i)
“Act” means the Sales Tax Act, 1990;
(ii)
“Claimant” means a registered person being a
manufacturer -cum- exporter or a commercial exporter, who files a sales
tax return claiming refund under these rules and includes an investor or any
other registered person entitled to claim refund under the Act;
(iii)
“Commercial Exporter” means a person who having no
manufacturing facility of his own, opts for voluntary registration under
section 18 of the Act for exclusively making zero-rated supplies of same state
goods and claims refund of input tax thereon;
(iv)
“Officer -in- charge” means deputy collector of sales
tax or any officer of sales tax of senior rank who holds full or partial charge
of the Refund Division;
(v)
“Investor” means a person entitled to claim refund of
sales tax on plant and machinery under second proviso to sub –section (1) of
section10 of the Act:
(vi)
“same-state-goods” means goods produced by a
registered manufacturer-cum-exporter for export or purchased by a
commercial exporter against tax invoice for export as such and includes the
goods which have been got manufactured or processed from one or more than one
registered vendor against tax invoice against processing charges or as the case
may be, manufacturing or conversion charges;
(vii)
“supportive documents” means documents prescribed in
rule 9 and includes whether on electronic media or otherwise, any such
information, records, statements or declarations as may be considered necessary
by the officer-in-charge to substantiate the genuineness and admissibility of
the refund claim; and
(viii)
“Processing Officer” means auditor or deputy
superintendent deputed by the officer-in-charge to process and scrutinize a
refund claim.
(2) All
other expressions used but not defined in these rules shall have the same
meanings as are assigned to them in the Act.
3. Establishment of refund division.¾ (1) There shall be established a Refund Division in each Collectorate
of Sales Tax to receive, process and settle the refund claims filed under the
Act.
(2) A
deputy collector or such senior officer as may be nominated by the Collector of
Sales Tax, shall be head of the Refund Division:
Provided that Collector of Sales Tax may distribute
work of the Refund Division amongst more than one deputy collectors in such
manner as he may deem fit.
4. Filing of refund claim.¾ (1)
Monthly sales tax return filed by a claimant shall be treated as refund claim
once all the supportive documents have been received to the satisfaction of the
officer-in-charge and shall be processed accordingly.
(2) The
claimant shall forward to the officer-in-charge a legible photocopy of the
bank-receipted return, referred to in sub-rule (1), duly accompanied by the
requisite supportive documents for processing and settling the refund claim;
Provided that in case of a refund claim where such
supportive documents have not been so received, the officer-in-charge may
require the claimant through telephone, facsimile or in writing to furnish the
same within such time as may be specified by him.
5. Scrutiny of refund claim.¾ (1) On
receipt of a refund claim the processing officer shall carry out necessary
examination and scrutiny in order to ascertain the bona fides or
otherwise of the refund claim under the law. He shall check the accuracy of
declarations and calculations, etc., on the sales tax return involving the
amount of refund claimed and satisfy himself that the amount so claimed as
refund is properly supported by the documents as prescribed under these rules
to prove the genuineness and admissibility of the refundable amount.
(2) After
having satisfied himself about the genuineness and admissibility of the refund
claim, the processing officer shall submit a written comprehensive refund
examination report within seven days of receipt of the supportive documents, to
the concerned senior auditor or superintendent who shall give his conclusive
recommendations thereon and pass it on to the officer-in-charge within three
days of receipt of the case from the processing officer. The officer-in-charge shall satisfy himself
about the genuineness and admissibility of the claim on the basis of the said
report, recommendations and supportive documents.
(3) Where
the officer-in-charge is of opinion that any further inquiry or audit is
required to establish the genuineness and admissibility of the claim or
otherwise he may make or cause to be made such inquiry or audit:
Provided that such inquiry or audit shall be got
conducted through an officer not below the rank of senior auditor or
superintendent through the concerned officer-in-charge of the Audit Division:
Provided further that an officer
assigned to conduct inquiry or audit of the refund claim may examine such
business records and commercial documents of the claimant or of any person
concerned with the refund claim in any manner as he may deem necessary to
satisfy himself about the genuineness and admissibility of the claim.
6. Sanction and payment of refund claim.¾ (1) If on the
basis of supportive documents, refund examination report, recommendations,
inquiry or audit report as the case may be, the officer-in-charge is fully
satisfied about the genuineness and admissibility of the claim, he shall,
subject to the provisions of rule 7 sanction the claim and send the original
copy of the sanction order to the treasury officer for issuance of cheque to
the claimant:
Provided that if the claimant is liable to pay any
duty or tax, additional duty or additional tax or penalty under any law
administered by the Board, payment of the refundable amount shall be made only
after adjustment of unpaid outstanding amount of duty or tax or as the case may
be, additional duty or additional tax and penalty.
(2) The
treasury officer, before issuing cheque to the claimant, shall personally
ensure that cheque of only such amount is issued to the claimant as is
specified and sanctioned in the sanction order:
Provided that refund cheque shall be issued to the
claimant only through courier service, or through urgent mail service, with due
acknowledgement:
Provided further that the treasury officer shall
maintain all the records and registers, etc; prescribed under the treasury or
financial laws for the purpose of keeping account of payment of Federal revenue
refunds.
(3) The
duplicate copy of the sanction order shall be retained in the Refund Division
in relevant file.
7. Extent
of payment of refund claim.¾ (1) Refund to a commercial exporter shall be sanctioned and
paid only to the extent of input tax involved in the goods actually exported
and within one month of the submission of supportive documents.
(2) In case of manufacturer-cum-exporter,
refund on zero-rated supplies shall be sanctioned and paid within one month of
furnishing of the supportive documents, and refund, if any, on domestic
supplies shall be sanctioned and paid in the following manner namely.-
(i) Fifty per
cent of such claim shall be sanctioned and paid within one month of filing of
supportive documents:
(ii)
The remaining fifty per cent shall be sanctioned and
paid after
(a) verification of deposit of tax paid on goods in respect of which refund of input tax has been claimed; and
(b) audit of the records and accounts and verification of stocks of the claimant.
Provided that in case action
under clause (ii)/above is not completed within ninety days of the receipt of
supportive documents, the remaining fifty per cent refund shall be paid if
otherwise admissible on the basis of supportive documents and action under the
said clause shall be completed thereafter:
Provided further that manufacturer-cum-exporters who
zero-rate their supplies and also make domestic supplies duly reflected in
their monthly return, may, ipso facto, deduct the amount of tax payable
on their domestic supplies from the amount of refund due on their zero-rated
supplies and claim refund only for the balance amount, if any;
Provided also that refund to the manufacturer-cum-exporters
who zero-rate or intend to zero-rate hundred per cent of their supplies shall
be sanctioned and paid in such manner that they will get within thirty days of
filing of the supportive documents all the refund on goods already exported at
the time of claiming refunds and fifty per cent on goods yet to be exported and
balance after all the remaining goods have been actually exported and after
verification of deposit of input tax and audit of records and accounts and
verification of stocks as aforesaid.
(3) In
order to calculate the refund components of zero-rating and local supplies, the
following formula shall be applied in case of manufacturer-cum-exporters,
namely:-
(i) Zero-rated
component: ExR
D+E
(ii) Local
supplies component: DxR
D+E
E denotes value of exports;
D denotes value of domestic supplies; and
R denotes the amount of refund claimed;
ILLUSTRATION:
Suppose
E = Rs. 600/-
D
= Rs. 400/-
R
= Rs. 100/-
then zero rated component is = ExR
= 600 x 100 = Rs. 60/-
D+E 400 + 600
and
local supplies component is = DxR
= 400 x 100 = Rs. 40/-
D+E 600 + 400
(4) The time
limit given in this rule shall not apply to cases subjected to further inquiry
or audit under sub-rule (3) of rule 5:
Provided that the officer-in-charge shall inform the
claimant about the subjection of his refund claim to inquiry or audit as the
case may be.
(5) The refund claims of registered
manufacturers, importers, wholesalers or retailers shall be sanctioned and paid
in the manner prescribed in clause (i) and clause (ii) of sub-rule (2) read
with the first proviso to sub-section (1) of section 10 of the Act.
8. Action
on inadmissible refunds.¾ (1) In case any refund claim or part thereof is found not
genuine and not admissible under the law, a notice shall be served on the
claimant requiring him to show cause in writing, within fourteen days, as to
why the claim or as the case may be, part thereof should not be rejected and as
to why the claimant should not be proceeded against under the relevant
provisions of law.
Provided that in cases
where the amount of refund liable to rejection does not exceed five million
rupees, the officer-in-charge shall bring to the knowledge of additional
Collector having jurisdiction in writing on the relevant file the reasons for
issuing the notice.
Provided further that
the cases involving amounts of refund liable to rejection exceeding five
million rupee shall be brought to the knowledge of the Collector before
issuance of notice.
(2). After affording a reasonable opportunity
of hearing to the claimant, the officer-in-charge shall issue the show cause
notice to such claimant and pass an adjudication order specifying reasons
therein:
Provided
that in case the claimant does not respond to the show cause notice or does not
appear himself, or through his authorized representative, to defend his
position on three dates of hearing, the officer-in-charge may decide the case
ex parte on the basis of facts and evidence available on record.
9. Supportive
documents.¾ (1) A manufacturer-cum-exporter or a commercial
exporter shall submit the following documents in support of his refund claims,
namely: -
(i)
Input tax invoices and /or as the case may be, bills
of entry,
(ii)
Zero-rated invoices in case of export,
(iii)
Output tax invoices in case of domestic supplies;
(iv)
tax invoices of intermediary processes as and if
applicable.
(v)
bill of exports (quadruplicate copy) indicating Mate
Receipt number and date or as the case may be, Airway bill number or railway
receipt number and date or postal receipt number and date.
(vi)
bill of lading, and airway bill or as the case may be,
railway receipt and postal receipt indicating transportation of goods out of
Pakistan; and
(vii)
inventory statement indicating in terms of value and
unit of quantity, stocks of inputs and outputs carried over from the previous
tax period, additions in such stocks, stocks consumed or supplied during such
period and stocks in balance.
(2)
An investor shall furnish the following documents,
namely:-
(i)
Bills of entry or tax invoices indicating import or
purchase of plant and machinery, its components and spare-parts;
(ii)
plot allotment order or ownership documents of the
premises where such plant and machinery has been installed;
(iii)
rent deeds in case the plant and machinery has been
installed in the rented premises;
(iv)
feasibility report of the industrial project and its
budget forecast; and
(v)
loan documents of the bank or non-banking financial
institution as and if applicable.
(3) In case of refund claimed under section
66, the following documents shall be submitted, namely:-
(i) bill of entry or input tax invoices and tax invoices of intermediary processes (if applicable) as the case may be;
(ii) output tax invoices in case goods have been supplied domestically;
(iii) zero-rated invoices in case goods have been exported;
(iv) export documents mentioned in sub-rule (1); and
(v) inventory statement, if required by the officer-in-charge.
(4) The claimant shall submit the original
supportive documents in original along with one set of photo copies and the
original supportive documents shall be returned to the claimant after tallying
with the photocopies by the officer-in-charge or any officer authorized by the
Collector in this behalf, who will endorse his proper verification on each
photocopy:
Provided
that the original quadruplicate copy of the bill of export shall be returned to
the claimant after recording the following endorsement under the full
signatures and official stamp of the said officer, namely:-
“Zero-rating
has been claimed on this bill of export”.
(5) The officer-in-charge may, for reasons
to be recorded in writing and after taking permission from the Collector, call
for any other document or information not specified in sub-rules (1), (2), (3)
and (4) in support of the refund claim or for the purpose of satisfying himself
about the genuineness and admissibility of the claim.
10. Refund
claim of an investor.¾ (1) An investor, in addition to the documents specified in
sub-rule (2) of rule 9, shall submit an undertaking on a non-judicial stamped
paper that he shall commence production and supply of taxable goods within a
period of two years of the receipt of refund.
(2) If the investor fails to commence
production and supply of taxable goods within the period specified in sub-rule
(1) or within such further period as may be allowed by the Collector, the
amount of sales tax refunded to him shall be recovered from him along with
additional tax and penalty as provided in the Act.
11. Refund
under section 66.¾ A registered person who claims refund under section 66, in
addition to the documents specified in sub-rule (3) of rule 9, shall file an
application of refund indicating --
(i) his name,
his address and registration number;
(ii) date of
application;
(i)
amount of sales tax refund claimed; and
(ii)
reasons for seeking refund.
12. Profiling
of exporter for the purpose of refund.¾ (1) Each Collectorate shall develop profile of
exporters categorizing them into “Gold”, “Silver” or ‘Others’ on the basis of
the criteria specified in this rule.
Explanation:
-“For the purpose of this
rule, exporter means manufacturer-cum-exporter and commercial exporter”.
(2) The exporters fulfilling the following
conditions shall be rated as category “Gold”, namely: -
(i) for limited
companies:
(a) certified
Books of Account for the last eighteen months;
(b) either
certified accounts show amount of exports, domestic sales or a separate
statement by the concerned Chartered Accountant firm regarding amounts of
export or domestic sales;
(c) bank or
bank’s certificate for the last three years' export performance;
(d) six months
accounts having been audited by Sales Tax department during last twelve months
indicating at least ninety per cent claim acceptance level in terms of value;
and
(e) payment by
crossed cheque encashable in any of the bank branches issuing the certificate
in clause (c).
(ii) other than
limited companies --
(a) export
registration of three years or more;
(b) bank
certificate-confirming availability of loan credit limit equal to four times
the value of an individual claim to be sanctioned;
(c) bank
certificate for last three years' export performance;
(d) six months
accounts having been audited by Sales Tax department during the last twelve
months indicating at least ninety per cent claim acceptance level in terms of
value; and
(e) refund cheque
shall be issued as encashable through the bank branch issuing the certificate
in clause (c)
(3) The exporters fulfilling the following conditions shall be classified as category "Silver", namely: -
(a)
new enterprises and new exporters having export
registration of less than three years but with at least one year's valid
registration;
(b)
bank certificate for export performance since the date
of export registration;
(c)
verification by the Collectorate (through fax, E-mail,
post, courier or in person) of bank certificate mentioned in clause (b) within
the period of fifteen days;
(d)
six months accounts having been audited by Sales Tax
department during the last twelve months indicating at least ninety per cent
claim acceptance level by value; and
(e)
bank certificate for loan limit indicating credit
limit being not less than four times the amount of claim, which shall be
verified, by the Collectorate, from the respective bank branch within the said
period of fifteen days.
(4) The following class of exporters shall be treated as category "Other", namely: -
(a)
Persons not falling under categories "Gold"
and "Silver";
(b)
persons disqualified in category "Gold" or
category "Silver" shall be down-graded to category "Other"
directly if their claim acceptance levels under audit are less than ninety per
cent or forged or untrue documents are submitted;
(c)
once an exporter is down-graded, he shall not be
up-graded for at least eighteen months and will only be considered by the
Collector for upgrading, if he is satisfied that during the eighteen months
down-grading period, the exporter has met the requirements of respective
category for continuous period of eighteen months; and
(d)
persons involved in a prosecution case of tax fraud
under the Act or any other tax shall be rated in category "Other"
even if they fulfil rating criteria for "Gold" or "Silver".
(5) The exporters falling under the category "Gold" shall be allowed refund within seventy-two working hours from the date of receipt of supportive documents if the refund is genuine and admissible on the basis of such documents.
(6) Exporters falling under the category "Silver" shall be allowed refund within fifteen days of receipt of supportive documents if the refund is genuine and admissible on the basis of such documents.
(7) The refund claims of exporters falling under category "Other" shall be sanctioned after thorough scrutiny and verification and refund shall be allowed within the time-limit specified in sub-section (2) of section 10 of the Act.
(8) If a person in a lower category improves whether on the basis of audit or on the basis of other prescribed criteria, his category rating shall be upgraded accordingly, on the basis of a review by the Collector on six monthly basis on the recommendations of a Review Committee comprising representatives of the Export Promotion Bureau, Collectorate of Sales Tax, Chamber of Commerce and Industry, and exporter’s respective association, if any, of which the exporter is a member.
(9) The Review Committee shall select a Secretary whose name, address and fax number, if any, shall be notified for the information of all exporters.
(10) The Review
Committee shall meet every month to review--
(a)
the cases rated or categorized six months earlier;
(b)
reference from any organization for down-grading of
rating or category of any exporter; and
(c)
reference from any exporter for up-gradation of his
category".
13. Miscellaneous.¾ (1) All such refund claims that have not been
subjected to pre-sanction inquiry or audit shall invariably be audited
subsequent to payment by the Audit Division.
(2) In cases where it has been found during
post-payment audit that refund has been paid in excess of the claimant’s
entitlement, excess paid amount shall be recovered along with additional tax
and penalty as provided under the Act.
(3) The refund claims of a registered person
found indulged in tax fraud shall not be finalized before thorough pre-audit.
(4) The
refund claims shall be processed and finalized on ‘first come first served'
basis.
14. Saving.¾ The genuine and admissible refund claims sanctioned
and paid in pursuance of Board's instructions contained is its letter C.No.
3(39)STP/96, dated 21.10.1998 shall be deemed to have been validly sanctioned
and paid under these rules.
15. Repeal.- The Sales
Tax Refund Rules, 1998,are hereby repealed.
________________________________________________________________________
[C.No.3(10)STP/2000]
(ABDUL RAZZAQ)
Secretary (STP)