Notify Plant and Machinery, Excluding such Imported Plants and Machinery as are Manufactured Locally

GOVERNMENT OF PAKISTAN REVENUE DIVISION CENTRAL BOARD OF REVENUE ***** Islamabad, the 30th August, 1999 Rescinded vide SRO 487(I)/2004 dated 12.06.2004 NOTIFICATION SALES TAX S.R.O. 987 (I)/99.- In exercise of the powers conferred by sub-section (1) of section 13 of the Sales Tax Act, 1990, read with serial No. 44 in the Sixth Schedule to the said Act, the Federal Government is pleased to notify plant and machinery having the following specifications, excluding such imported plants and machinery as are manufactured locally and also excluding generators, generating sets below 250 KVA, wires and cables and maintenance spares, for the purposes of exemption from sales tax, namely:- (a) Plant and machinery, operated by power of any description, as are imported or purchased locally by a registered person to be used for the manufacture of taxable goods by that registered person; (b) apparatus and appliances, including metering and testing apparatus and appliances specifically adapted for use in conjunction with the machinery specified in clause (a) above; (c) mechanical and electrical control and transmission gear, adapted for use in conjunction with machinery specified in clause (a); and (d) component parts of machinery as specified in clauses (a), (b) and (c) identifiable for use in, or with such machinery but excluding the maintenance spares for current use. 2. The aforesaid plant and machinery shall be exempt from sales tax subject to the following limitations, conditions and procedures, namely:- (1) The importer or purchaser of the locally manufactured machinery, as the case may be, holds a valid sales tax registration issued in his favour showing his registration category as "manufacturer"; (2) the registered person declares his sales tax registration number, NTN number, common tax payers identification number and import registration Number on the bill of entry filed at the time of import; (3) the importer or purchaser of locally-manufactured machinery shall declare the description of taxable goods and its respective PCT heading numbers that he is manufacturing or intends to manufacture with such plant and machinery and shall also declare the intended site for the installation of said machinery; (4) the importer or purchaser of the locally manufactured machinery shall submit an indemnity bond set out in Annex-I or II, as the case may be, to the extent of sales tax exemption under this notification binding himself to pay the sales tax so exempted and additional sales tax in case of his failure to fulfill the condition specified in this notification, to the Collector of Customs or Collector of Sales Tax, as the case may be. This indemnity bond shall not be discharged till the submission of installation-cum-production certificate issued by an officer not below the rank of Assistant Collector of Sales Tax of the respective jurisdiction in the form set out in Annex-III or IV, as the case may be; (5) the machinery imported or purchased locally shall not be removed from the premises declared under clause (8) at the time of import or purchase before the expiry of seven years of the date of bill of entry or date of sales tax invoice or before the expiry of five years from the date of commencement of commercial production of taxable goods, whichever is earlier, if he intends to shift the machinery to a place other than the place declared under clause (4) he shall obtain prior permission from the Collector of Sales Tax having jurisdiction; (6) if the importer or purchaser of locally manufactured machinery intends to sell the said machinery before expiry of the stipulated period, to an unregistered person, he shall pay the total amount of sales tax exempted and shall obtain permission for the same before giving its delivery to the buyer. In case he intends to sell it to a registered person, the purchaser/receiver of such machinery shall submit an indemnity bond for the remaining period after seeking prior permission from the Collector of Sales Tax having jurisdiction over the seller and also after giving due intimation to the Collector of Sales Tax having jurisdiction over the registered buyer. In such a case of sale to registered person, the liability to pay tax shall be deemed, in terms of sub-section (3A) of section 3 of the Sales Tax Act, 1990, to be of the person (registered buyer) receiving the goods; (7) the importer or purchaser of locally manufactured machinery shall start commercial production of the taxable goods within two years of the date of Bill of Entry or sales tax invoice, as the case may be; and (8) the breach of any condition specified in this notification or non submission of installation- cum-production certificate within the stipulated time, shall attract legal action under relevant provisions of the Sales Tax Act, 1990. Besides the sales tax exempted under this notification and additional sales tax shall be recovered under section 202 of the Customs Act, 1969, read with or under section 48 of the Sales Tax Act, 1990, as the case may be, in addition to any other penal action under the Customs Act, 1969 and the Sales Tax Act, 1990. ANNEX-I [See Para 2(4)] INDEMNITY BOND THIS DEED OF INDEMNITY is made on the _________date of _________ BETWEEN Messrs ______________having sales tax registration No.________ (hereinafter called "the importers" which means and includes their successors, administrators, executors and assignees) of the one part, AND the President of Pakistan through the Collector of Customs_________ (hereinafter called the "Collector of Customs" of the other part. WHEREAS the Federal Government, by its decision contained in Notification No. S.R.O._____ dated the ______ and subject to the conditions specified in the said Notification, has been pleased to direct that such machinery, as are not manufactured locally, shall be exempt from the whole of sales tax leviable thereon, in accordance with the said notification. NOW, THEREFORE, in consideration of the release of the machinery without recovery of leviable tax, the importers bind themselves to pay on demand to the Government of Pakistan the sum of Rs._____ being the sales tax leviable and additional sales tax on the machinery, if the importers fail -- (i) to produce an installation-cum-production certificate from Assistant Collector of Sales Tax of respective jurisdiction within two years from the date of the importation of the machinery, to the effect that the machinery has been installed and has started commercial production of the taxable goods as declared in the Bill of Entry at the time of import of machinery; and (ii) to produce such other evidence as the Collector of Customs may require to satisfy himself that the plant or machinery has been installed in accordance with the conditions of the said Notification and has started commercial production of taxable goods. The importers further agree and bind themselves that the amount covered by this Bond shall be recovered as arrears of customs duty under section 202 of the Customs Act, 1969 (IV of 1969). This Bond shall be cancelled and returned when the aforesaid certificate has been produced and the Collector of Customs is satisfied that the importers have fulfilled all the conditions of this Bond in the said Notification. Signed by importers on this _________________day of _________________________200 ____. ----------------------------------------------------- Managing Director (Name and permanent address) Collector of Customs or his authorized officer (On behalf of President) Witness _______________________________________ (Signature, name, designation and full address) Witness _______________________________________ (Signature, name, designation and full address) Note.- The bond shall be written on appropriate non-judicial stamp paper and shall be witnessed by a Government servant in BPS-16 or above, an Oath Commissioner, a Notary Public or an officer of a Scheduled Bank. ANNEX-II ( See para 2(4)] INDEMNITY BOND THIS DEED OF INDEMNITY is made on the ___________day of ________ BETWEEN Messrs ___________having sales tax registration No.______ (hereinafter called "the purchaser" which means and includes their successors, administrators, executors and assignees) of the one part. AND the President of Pakistan through the Collector of Sales Tax _______ (hereinafter called the "Collector of Sales Tax"), of the other part. WHEREAS the Federal Government, by its decision contained in Notification No. S.R.O.________ dated the _________ and subject to the conditions specified in the said Notification, has been pleased to direct that such machinery shall be exempt from the whole of sales tax leviable thereon, in accordance with the said notification. NOW, THEREFORE, in consideration of the supply of the machinery without recovery of leviable sales tax, the purchaser bind themselves to pay on demand to the Government of Pakistan the sum of Rs._______ being the sales tax leviable on the machinery alongwith additional sales tax, if the purchaser fails - (i) to produce an installation-cum-production certificate from Assistant Collector of Sales Tax of respective jurisdiction within two years from the date of purchase of the machinery, to the effect that the machinery has been installed and has started commercial production of the taxable goods as declared at the time of purchase of machinery; and (ii) to produce such other evidence as the Collector of Sales Tax may require to satisfy himself that the plant or machinery has been installed in accordance with the conditions of the said Notification and has started commercial production of taxable goods. The purchaser further agree and bind themselves that the amount covered by this Bond shall be recovered as arrears of sales tax under section 48 of the Sales Tax Act, 1990. This Bond shall be cancelled and returned when the aforesaid certificate has been produced and the Collector of Sales Tax is satisfied that the purchaser have fulfilled all the conditions of this Bond in the said Notification. Signed by purchaser on this ________________day of ______________________200_____. ----------------------------------- Managing Director (Name and permanent address) Collector of Sales Tax or his authorized officer (On behalf of President) Witness _____________________________________ (Signature, name, designation and full address) Witness _____________________________________ (Signature, name, designation and full address) Note.- The bond shall be written on appropriate non-judicial stamp paper and shall be witnessed by a Government servant in BPS-16 or above, an Oath Commissioner, a Notary Public or an officer of a Scheduled Bank. ANNEX-III [See Para 2(4)] INSTALLATION-CUM-PRODUCTION CERTIFICATE File No._____________________ Dated: _________________ Certificate No._________________________________ (Progressive S. No. started from 1st January every year) I _______________________(name of Assistant Collector of Sales Tax), am satisfied that the machinery imported by Messrs ___________ having sales tax registration No._______ under the provision of Notification No. S.R.O._________ dated__________ vide bill of Entry No._________ dated________ has been installed at the unit situated at ___________and has started commercial production of taxable goods. Assistant Collector of Sales Tax ANNEX-IV [See Para 2(4)] INSTALLATION-CUM-PRODUCTION CERTIFICATE File No.______________________ Dated:___________ Certificate No.__________________________________ (Progressive S. No. started from 1st January every year) I____________________________________ (name of Assistant Collector of Sales Tax) am satisfied that the machinery purchased locally by Messrs _________________having sales tax registration No.________________ under the provision of Notification No. S.R.O.___________ dated__________ vide sales tax invoice No._________________ dated________________________ issued by M/s _____________________ having sales tax registration No._________________ have been installed at the unit situated at ___________________ and has started commercial production of taxable goods. Assistant Collector of Sales Tax -------------------------------------------------------------------------------------------------------------------------------------------------------- [C.No.1/14-STB/99] S. M. Kazimi Additional Secretary Amended vide SRO. 839(I)/2000 dated 21.11.2000 Amended vide SRO. 503(I)/2003 dated 07.06.2003