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030418
Sales Tax Ruling/
Instruction No. 08/2003
GOVERNMENT OF PAKISTAN
REVENUE DIVISION
CENTRAL BOARD OF REVENUE
(SALES TAX WING)
C. No. 3(36)STP/99 (Pt.I)
Islamabad, the 18th April, 2003
SUBJECT:- PROOF OF PAYMENT UNDER SECTION 73 OF THE SALES TAX ACT, 1990 FOR BANK
DRAFTS/PAY ORDERS OBTAINED FROM A BANK WHERE THE BUYER DOES NOT HAVE AN ACCOUNT.
The Central Board of Revenue had received representations from various Associations of registered persons for ruling as to whether or not payment through a crossed bank draft or pay order in favour of supplier from a bank where the buyer does not have an account, fulfills the requirement as stipulated in section 73 of the Sales Tax Act, 1990, in cases wherein the buyer has the proof that the cash had been withdrawn from the bank account of the buyer and shown as credit in the cash book and later on cash amount was taken to the other bank in the same city for the preparation of crossed bank draft/pay order for payment to the seller.
2. The issue raised has been deliberated upon in consultation with the Law, Justice & Human Rights Division. It has been found that as a normal business practice, a buyer obtains a crossed bank draft or crossed pay order in favour of the supplier from a bank in the same city where the buyer does not have an account. The Central Board of Revenue, therefore, rules that payment made through a crossed bank draft or a crossed pay order by a buyer to the seller from a bank in the same city where the buyer does not have an account, will fulfill the condition stipulated in section 73 of the Sales Tax Act, 1990, provided that the buyer has the documentary evidence to prove that:
i) the amount of crossed bank draft or crossed pay order has been withdrawn from his bank account
and credited in the cash book.
ii) the amount has been shown debited in the cash book and a crossed bank draft or crossed pay order has been got issued from a bank in the same city where a buyer does not have an account for payment in favour of the registered supplier, and ;
iii) the crossed bank draft or crossed pay order was sent to the registered supplier by mail / courier or got delivered through a special messenger.
(Dr. Kamal Azhar Minhas)
Secretary (Sales Tax)
Tel: 9205311, Fax:9215418
E.mail:stp@cbr.gov.pk
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