APPLICATION OF SECTION 73 OF THE SALES TAX ACT, 1990 ON IMPORTED GOODS

APPLICATION OF SECTION 73 OF THE SALES TAX ACT, 1990 ON IMPORTED GOODS <!--[if gte mso 10]> APPLICATION OF SECTION 73 OF THE SALES TAX ACT, 1990 ON IMPORTED GOODS By Akhtar Javed, Advocate, Lahore Section 73 of the Act provides that the registered person shall be entitled to adjustment of input tax, or refund, repayment or drawback or zero rating only if he makes the payment for a sum exceeding Rs.50,000 through a crossed cheque drawn on a bank or by a crossed bank draft or pay order or any other banking instrument showing transfer of payment in favour of seller from the business account of the buyer. The proviso to section 73 restricts the registered person that in case of transaction on credit, the payment should be transferred in the prescribed manner within 120 days of the issuance of tax invoice. 2. A question had arisen whether or not the provisions of section 73 putting a condition of payment through banking channel within 120 days in case of credit transactions is also applicable to the goods which are imported by registered persons against letters of credit of more than 120 days. 3. Messrs All Pakistan Textile Mills Association (APTMA) vide its Letter No. PO/CE/28 dated 13-11-2002 referred the matter to C.B.R. seeking a clarification. The matter has been examined in C.B.R. and the Board vide its Letter C.No. 3(36)STP/99 dated 21-11-2002 has been pleased to rule that: "The condition of payment through banking channel within 120 days, as mentioned in section 73 of the Sales Tax Act, 1990, is applicable in the case where supply is made against sales tax invoice. Since the goods which are imported are supplied by a person residing in other country and against letter of credit, the condition of payment through banking channel within 120 days, as mentioned in section 73 of the Sales Tax Act, 1990 is not applicable in such cases."