RESERVATIONS OF APTMA MEMBERS ON S.R.O. 966(I)/2002

RESERVATIONS OF APTMA MEMBERS ON S <!--[if gte mso 10]> RESERVATIONS OF APTMA MEMBERS ON S.R.O. 966(I)/2002 By Mr. Akhtar Javed, Advocate, Lahore Through S.R.O. 966(I)/2002 dated 30-12-2002, the Federal Government has framed Special Procedure for Manufacturers-cum-Suppliers of Spun Yarn Rules, 2002 which are operative from 1-1-2003 to 30-4-2003. Through these Rules, the Federal Government has granted exemption of further tax @ 3% on supplies of spun yarn even if these are made to non-registered persons, however, this exemption is subject to certain conditions contained in clause (i) to clause (v) of Rule 3 of the said Rules. The members of APTMA have shown certain reservations on S.R.O. 966(I)/2002 date 30-12-2002. The reservations as have been information. The Rules does not bind the buyers of spun yarn to supply this communicated by APTMA and the explanation on these reservations is given in the following paragraphs: Reservation No.1 Reference Rule No. 3(i) Annexure 'A'.---It is required that Buyer's A/C No. with bank branch is to be stated. How a supplier can verify buyer's A/C No. if Buyer has given a wrong A/C No. and bank branch, how supplier shall be responsible for this, when there is no authority with the seller to verify this. Explanation 1.1 In terms of Rule 3, the exemption of further tax on supply of spun yarn made by spinning unit is granted subject to certain conditions. Clause (i) of Rule 3 pertains to such supplies which are made by spinning units to registered persons and the payments against such supplies are made through banking channels as has been specified therein. It is to point out that the language of section 73 is different from the language given in clause (i) of Rule 3. In my view the modes of payment under section 73 of the Sales Tax Act, 1990 are: (i) a crossed cheque drawn on a bank; or (ii) a crossed bank draft; or (iii) a crossed pay order; or (iv) or any other banking instrument showing transfer of the payment in favour of seller from the business account of the buyer. 1.2 However in clause (i) of Rule 3, C.B.R. has restricted the prescribed modes of payment only to: (i) Crossed Cheque; or (ii) any other banking instrument showing transfer of payment in the bank account of seller from the bank account of the buyer; 1.3 In terms of clause (i) of Rule 3, the spinning unit is required to furnish the information about the supplies to the Collector in the format prescribed under Annexure-A. In column 10 of the Annexure-A, the suppliers of spun yarn have been required to give their buyers' Account No alongwith the name of the Bank Branch. In order to comply with requirement, the suppliers of spun yarn will be required to give the bank account and name of bank branch from where their buyers have issued the instruments. In case payment is made through crossed cheques, the information will be available on the cheques. However in case of other instruments, the suppliers should ask their buyers in writing to give this information whereas suppliers of spun yarn have beep required to give this information by 15th day of the following month; 1.4 To avoid any objection from the department, the members of APTMA may be advised to regularly ask this information in writing from their buyers so, in case, the buyer does not give this information, the department may be apprised of the fact that the supplier had made his attempt to get this information; 1.5 It is also pointed out that the Rules require the spinning unit to furnish this information by 15th day of the following month. However, in case supplies are made on credit, the supplier will not be able to furnish this information by 15th day of the month following the month in which the supplies are made. In such a case, the words "Sale on credit" may he written in column 9 and 10 of Annexure-A; Reservation No.2 Reference Rule No. 3(iv) what do this rule means by "without receipt of sale proceeds through a banking instrument showing transfer of the payment from the A/C of the bank. A/c of the buyer to the bank A/c of the supplier of spun yarn." -- When sale is without receipt then how can supplier give information of banking instrument. -- In case when even receipts are to be shown. Now how can supplier show or prove payment from the bank A/c of the buyer as all the formalities old transactions. Explanation Clause (iv) of Rule 3 requires the supplies of spun yarn to furnish information in respect of supplies made by them from 1-7-2001 to 30-12-2002 wherein they had received payments in any manner other than the modes prescribed in section 73 of the Sales Tax Act, 1990. The learned member of APTMA has perhaps misconstrued the provisions of clause (iv) and has misinterpreted the wordings. He is of the view that the information is to be furnish in respect of sales wherein proceeds against supplies were not received whereas clause (iv) requires the spinning unit to give information in the form prescribed in Annexure-C where the payment against supplies from 1-7-2001 to 30-12-2002 were made and payments were received through any mode other than prescribed ones and such payments were not reflected from the bank account of the buyer to the bank account of the seller. Reservation No.3 In Rule 3(iii) if buyers himself write down his sales tax registration No. on sales tax invoice, who shall be responsible? Explanation Clause (iii) of Rule 3 requires that the spinning unit shall issue sales tax invoice in case the buyer is not a registered person. In such a case the supplier will give all the particulars required in the invoice except the sales tax registration number of the buyer because the buyer is not registered. The apprehensions of the learned member of APTMA is valid. To avoid any complication which may arise subsequently, the APTMA member may be advised to write the words "not registered" in the column where registration number of the buyer is to be written.