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020831
GOVERNMENT
OF PAKISTAN MINISTRY OF FINANCE, ECONOMIC AFFAIRS, STATISTICS & REVENUE CENTRAL BOARD
OF REVENUE
Islamabad, the 31st August, 2002.
NOTIFICATION
(SALES TAX)
S.R.O. 575(I)/2002.-
In exercise of the powers conferred by section 50 of the Sales Tax Act, 1990, read
with 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:-
THE SALES TAX REFUND RULES, 2002
1. Short title, application and commencement. – (1) These rules may
be called the Sales Tax Refund Rules, 2002
(2) These shall apply to –
(a) registered manufacturer-cum-exporters and commercial exporters who zero
rate all or part of their supplies under section 4 of the Act;
(b) 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;
(c) investors claiming refund under the second proviso to sub-section (1) of section
10 of the Act; and
(d) registered persons claiming refund of tax other than input tax under section 66
of the Act.
3. These shall come into force at once.
2. Definitions. – (1) In these Rules, unless the subject or context
otherwise requires,-
(a) “Act” means the Sales Tax Act 1990;
(b) “claimant” means a registered person being a manufacturer-cum-exporter or a
commercial exporter or an investor or any other registered person entitled to claim refund
under the Act, who files a sales tax return claiming refund under these rules;
(c) “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
thereof;
(d) “officer-in-charge” means Deputy Collector of sales tax or any other
officer of sales tax who holds full or partial charge of the Refund Division;
(e) “investor” means a person entitled to claim refund of sales tax on
plant and machinery under second proviso to sub-section (1) of section 10 of the Act;
(f) “same-state-goods” means goods purchased by a commercial exporter
against tax invoice for export as such;
(g) “supportive documents” means documents specified in rule 9 or otherwise
prescribed by the Board through a general order, whether on electronic media or otherwise;
(h) “Processing Officer” means an auditor or a Senior Auditor, Deputy
Superintendent or Superintendent authorized to process and scrutinize a refund claim; and
(i) “value-added goods” means such export products as are meant for direct
consumption without further processing.
(2) All other words and 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.- (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 any other officer as may be nominated by the Collector of
Sales Tax, shall be the head of Refund Division:
Provided that Collector of Sales Tax may distribute work of the Refund Division amongst
more than one Deputy Collectors or senior Assistant Collectors in such manner as he may
deem fit.
4. Filing of refund claim.- (1) Monthly sales tax return filed by a
claimant shall be treated as refund claim once all the supportive documents, in the manner
specified in these rules or otherwise prescribed by the Board, have been received.
(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 in the manner prescribed by the Board 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,
e-mail or by post to furnish the same within such time as may be specified by him.
5. Scrutiny of refund claim.- (1) On receipt of a refund claim, the
processing officer shall assign a file or claim number and 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 specified in these rules or
otherwise prescribed by the Board to prove the genuineness and admissibility of the
refundable amount. The processing officer shall also satisfy himself that the refund
claimed is as per input output ratio, if any, duly approved by the Board or by a person
authorized by the Board in this behalf.
(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 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) In case the claimant is the manufacturer-cum-exporter who is also making local
supplies, in excess of 30% of his total supplies, the processing officer shall also
satisfy himself that value of locally supplied goods fulfils the conditions of value of
supply in terms of the provisions of clause (46) read with clause (19) of section 2 of the
Act.
(4) 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 after approval from the Additional
Collector under intimation to the refund claimant.
(5) An officer not below the rank of Senior Auditor deputed to conduct inquiry or
audit of the refund claim in terms of sub-rule (4) may examine such business records and
commercial documents of the claimant or of any person concerned with the refund claim in
any manner as is necessary to satisfy himself about the genuineness and admissibility of
the claim.
Provided that no pre-audit shall be conducted in respect of Computerized and Gold category
exporters if all the supportive documents have been received and in-house computerized
scrutiny does not indicate any incorrect declaration or submission of fabricated or fake
documents.
6. Sanction and payment of refund claim. (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 sub-section (3) of
section 10 of the Act, sanction the claim and send the original copy of the sanction order
to the treasury officer for issuance of a cheque to the claimant:
Provided that if the claimant is liable to pay any duty or tax, additional duty or
additional tax or penalty or any other amount short paid or admitted to be payable under
any law administered by the Board, payment of the refundable amount shall be made only
after adjustment of that unpaid outstanding amount of duty or tax or, as the case may be,
additional duty or additional tax and penalty or any other amount short paid or
admitted to be payable.
(2) The treasury officer, before issuing cross 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 or worked out after deduction of amount as per proviso to
sub-rule (1):
Provided that refund cheque shall be cross cheque to be deposited in the declared bank
account of the registered person-cum-claimant and shall be issued to the claimant only
through courier service on claimant expense, 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 and feed the particulars of each refund cheque in the
computer besides mentioning the same in the relevant file for record purposes.
(3) The duplicate copy of the sanction order shall be retained in the Refund Division in
the relevant file.
7. Extent of payment of refund claim.¾ (1) Refund to a commercial
exporter shall be sanctioned and paid within one month of the submission of supportive
documents to the extent of input tax shown in Sales Tax invoices issued by
registered local manufacturers or suppliers of the goods actually exported.
2. In case of manufacturer-cum-exporter, refund shall be sanctioned in the following
manner, namely:-
(a) refund on zero rated supplies in the tax period shall be sanctioned and paid
within a maximum period of fifteen days of furnishing of the supportive documents; and
(b) refund of input tax incurred on stocks in balance, to be used in connection with
zero-rated supplies, shall be sanctioned and paid to the extent of amount of input tax
involved on zero-rated supplies made during the last four months in all cases, eight
months in respect of value-added products including textile and leather made-ups and one
year in respect of stocks of cotton and hides and skins, and shall be paid in the
following manner, namely:-
(i) 50% of such claim shall be sanctioned and paid within a maximum period of fifteen
days of deposit of the supportive documents:
Provided that admissible refund to “Computerized”, “Gold” and
“Silver” category claimants under clause (a) and sub-clause (ii) of clause (b)
of sub-rule (2) shall be sanctioned and paid within five working days, seven working days
and ten working days respectively after the receipt of supportive documents complete in
all respects; and
(ii) the remaining fifty percent 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) after scrutiny of relevant records or accounts and verification of stocks of the
claimant if not already done in terms of sub-rule (4) of rule 5:
Provided that in case action under clause (ii) is not completed within forty days of the
receipt of supportive documents, because of no fault of claimant or supplier of goods on
which refund is claimed the remaining fifty per cent refund shall be paid if otherwise
admissible on the basis of supportive documents:
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 and fall under category ‘Others’,
shall be sanctioned and paid in such manner that they will get refund within fifteen days
of filing of the supportive documents on goods already exported at the time of claiming
refund 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) The time-limit given in this rule shall not apply to cases subjected to further
inquiry or audit under sub-rules (3) to (5) 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.
(4) The refund claims of registered manufacturers, importers, wholesalers or
retailers shall be sanctioned and paid in the manner prescribed in clauses (i) and
(ii) of sub-rule (2) and the first proviso to sub-section (1) and sub-section (4) of
section 10 of the Act.
8. Action on inadmissible refunds. (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 rupees, the approval of the Collector shall be obtained 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. (1) A manufacturer-cum-exporter shall submit
refund claim in computer diskette in the format prescribed along with following documents,
namely: -
(a) Input tax invoices or as the case may be, bills of entry;
(b) tax invoices of intermediary processes, if applicable;
(c) output tax invoices in case of domestic supplies;
(d) zero-rated invoices in case of export;
(e) bills of export (quadruplicate copy) indicating Mate Receipt number with date
or airway bill or railway receipt or postal receipt besides the examination report
recorded by customs officers.
(f) bill of lading and airway bill or as the case may be, railway receipt or postal
receipt indicating transportation of goods out of Pakistan; and
(g) a statement showing value and input tax on stocks in balance and the position of
stocks of major 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, if any.
(2) A commercial exporter shall submit bank credit advice duly issued by the concerned
bank in addition to documents specified in clauses (a),(b), (c), (d), (e), (f) and (g)
of sub-rule (1).
(3) An investor shall furnish the following documents, namely:-
(a) Bills of entry or tax invoices indicating import or purchase of plant
and machinery;
(b) plot allotment order or ownership documents of the premises where such plant and
machinery has been installed; or
(c) rent deed in case the plant and machinery has been installed in the rented
premises;
(d) electricity and gas consumer numbers as applicable;
(e) list of items to be produced alongwith production capacity of each machine; and
(f) installation certificate issued by the designated officer of Sales Tax Collectorate.
(4). In case of refund claimed under section 66 of the Act, the following documents
shall be submitted, namely:-
(a) bill of entry or input tax invoices and tax invoices of intermediary
processes (if applicable) as the case may be;
(b) output tax invoices in case goods have been supplied domestically;
(c) zero-rated invoices in case goods have been exported;
(d) export documents mentioned in sub-rule (1); and
(e) inventory statement, if required by the officer-in-charge.
(5) The claimant shall submit the 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 shall endorse his proper verification on each photocopy:
Provided that the original quadruplicate copy of the bill of export and bills of entry
along with sales tax invoices 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 claimed”.
(6) 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), (4) and (5) 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 shall, in
addition to the documents specified in sub-rule (3) of rule 9, submit an undertaking on a
non-judicial stamped paper that he will commence production and supply of taxable goods
within twelve months and has not so far claimed refund or adjustment of tax
paid on purchase or import of plant and machinery.
(2) If the investor fails to commence production and supply of taxable goods within the
period specified in sub-rule (1) or within such extended 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.—A registered person who claims
refund of tax other than input tax under section 66 of the Act, in addition to the
documents specified in sub-rule (3) of rule 9, shall file an application of refund
indicating –
(a) his name, his address and registration number;
(b) date of application;
(c) amount of sales tax refund claimed; and
(d) reasons for seeking refund.
The refund shall be sanctioned after audit that no adjustment of input tax has been
allowed and goods have duly been accounted for as per provisions of section 22 of the Act.
12. Profiling of exporters for the purpose of refund. (1) Each
Collectorate shall develop profile of exporters categorizing them as
“Computerized,” “Gold”, “Silver” or ‘Others’ on
the basis of the criteria specified in this rule.
Explanation: For the purpose of this rule, the expression “exporter” means
manufacturer-cum-exporter and commercial exporter.
(2) The exporters fulfilling the following conditions shall be classified as
“Computerized Category” for the purpose of payment of refunds, namely:-
(a) Maintains the accounts and the records in the computer program duly approved by the
Central Board of Revenue or by the Collector having jurisdiction;
(b) supplies the information in detail regarding all the purchases and supplies
either through the internet or computer disc, as may be required by the Board or the
Collector of Sales Tax having jurisdiction;
(c) submits the annual accounts showing imports, local purchases, sales and exports
and the taxes paid as well as payable, duly audited and certified by the Chartered
Accountant Firm notified by the Board;
(d) makes all the payments of fifty thousand rupees and above through cross cheques;
(e) manufactures goods in accordance with the input output ratio, if any, notified by the
CBR or any other persons authorized by it; and
(f) has not been found any type of evasion or fraud of any tax including Sales Tax.
(3) The criteria for qualifying for the “Gold” category shall be that the
exporter fulfils the basic conditions at (A) and any one condition at (B) below:
(A) (i) that audit conducted by the sales tax department or by chartered
accountant confirms no evasion of sales tax or filing of wrong refund claim with minimum
90% claim acceptance as per last audit; and
(ii) that no case of commercial fraud is proven against him; and
(B) (i) that the exporter is a company listed on the stock exchange; or
(ii) the exporter has exported goods valued at minimum fifteen million US dollars
per annum on average during last three years as per certificate issued by the banks; or
(iii) the exporter has manufactured and exported value-added goods valued at a
minimum of one million US dollars per annum on average during the last three years as per
certificate issued by the banks, and such value-added exports constitute at least 80% of
his total exports; or
(iv) the exporter has been adjudged as one of the best exporters under the Export
Promotion Bureau’s programme for incentivisation of exporters.
(4) The exporters shall be classified as category "Silver", with the same
conditions as for ‘Gold’ category, except that the minimum limit for export of
all goods will be seven and half million US dollars and, for export of value-added goods,
half million US dollars, per annum, on average for last three years as per certificate
issued by the banks.
(5) The following class of exporters shall be treated as category "Other",
namely: -
(a) persons not falling under categories of “Computerized”, "Gold"
and "Silver";
(b) persons disqualified from either of the categories “Computerized” or
"Gold" or "Silver" and down-graded by Collector Sales Tax, to
category "Other" directly if their claim acceptance levels under audit are less
than ninety per cent or forged or untrue documents are found to have been submitted after
profiling in either of the said categories;
(c) once an exporter is down-graded, he shall not be up-graded for at least eighteen
months and may only be considered by the Collector for upgrading, if he is satisfied that
during the eighteen months of 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 enactment shall be rated in category "Other" even if they fulfill
rating criteria for “Computerized”, "Gold" or
"Silver".
(6) 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.
(7) The Review Committee shall select a Secretary whose name, address and fax number,
if any, shall be notified for the information of all exporters.
(8) 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 category of any exporter; and
(c) reference from any exporter for up-gradation of his category.
13. Miscellaneous. (1) All such refund claims that have not been
subjected to pre-sanction inquiry or audit shall invariably be audited on quarterly basis
subsequent to payment.
(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 besides any other penal action that may be taken
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. The admissible refund claims received with supportive documents up to the
date of promulgation of these rules shall be sanctioned and paid in accordance with the
provisions of the Sales Tax Refund Rules, 2000.
15. Repeal.- The Sales Tax Refund Rules, 2000 are hereby repealed.
[C.No.3(12)ST-L&P/2002]
(MANZOOR HUSSAIN MEMON)
Secretary (ST-L&P)
