SALES TAX INSTRUCTIONS

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SALES TAX INSTRUCTIONS/
RULING NO. 25/2003

Government of Pakistan
(Revenue Division)
Central Board of Revenue
(Sales Tax Wing)
C.No.1(17)STR/2000 Islamabad, the 31^st October, 2003.

To, The Collector,
Collectorate of Customs, Sales Tax and
Central Excise, Hyderabad/Quetta/Multan

The Collector,
Collectorate of Sales Tax and Central Excise,
Lahore/Gujranwala/Rawalpindi/Peshawar

The Collector,
Collectorate of Sales Tax, Faisalabad.

The Collector,
Collectorate of Sales Tax , Audit/Enforcement/Headquarter, Karachi

The Collector,
Large Taxpayer Unit, Karachi.


SUBJECT: CLARIFICATION REGARDING ADJUSTMENT OF INPUT TAX PAID ON ADVERTISEMENT
SERVICES BY REGISTERED CLIENTS ON AMENDED INVOICES ISSUED BY PTV.


I am directed to refer to the Board’s Ruling No. 12/2003 issued under C. No. 1(17)STR/2000 dated 19.05.2003 on the subject cited above and to state that a question has been raised whether or not a banking instrument (such as bank draft, cheque, etc) issued in the name of advertising agency covering the invoice amount (including agency commission) for onward payment to PTV by such agency after deduction of agency commission is admissible for the purposes of input tax adjustment in terms of section 73 read with section 7 of the Sales Tax Act, 1990, despite the fact the invoice is issued by PTV (service provider) directly in the name of client (registered person) and that the advertising agency is a non registered person for the purposes of the Sales Tax Act,1990.

02. The matter has been re-examined in the Board. Considering the special nature of transaction as well as the established business practice in advertisement sector, the intermediary role of advertising agency can not be avoided by the client and the banking instrument has to be invariably routed through the advertising agency, the Board, in exercise of the powers conferred under section 55 of the Sales Tax Act, 1990 is pleased to direct that such banking instruments shall be accepted for the purposes of input tax adjustment under section 73 read with section 7 of the Sales Tax Act, 1990 and the provisions of section 73 stand relaxed to that extent in all such cases subject to the observance of following conditions viz:

· Payments for all such advertisements are made by the registered person through the
banking channel, so that payment against a particular invoice through banking channel could
be easily verified.

· All the invoices issued by PTV are in accordance with the specimen invoice appended with
this ruling.

· While claiming input tax adjustment, the provisions of Apportionment Rules notified vide
notification SRO 698(I)/96 dated 22.08.1996 are adhered to, if and as applicable.

· No input tax adjustment for items mentioned in notification SRO 578(I)/98 dated 12.06.1998
is claimed or availed.

· No refund of the sales tax already paid by the registered person on this account shall be
allowed / claimed on the basis of this ruling.

4. This ruling is issued in supercession of the Board’s earlier ruling No. 12/2003 dated 19.05.2003 and shall be deemed to have always been so issued.

( Dr. Muhammad Zubair )
Secretary Sales Tax (STR)
Copy to:

1. M/s. Pakistan Advertising Association, 232, Hotel Metropole, Club Road, Karachi with reference to their letter dated 01.10.2003.the other conditions laid down thereunder and the Board’s above quoted ruling are fulfilled.

2. Mr. Banaras Khan, Director (Marketing), Pakistan Television Corporation, Karachi with reference to the discussion on the subject issue.

( Dr. Muhammad Zubair )
Secretary Sales Tax (STR)


PAKISTAN TELEVISION CORPORATION LIMITED
CENTRAL MARKETING OFFICE
TELEVISION CENTER, STADIUM ROAD, KARACHI-5
Phone No. 923-543/923-1057
Fax No. 923-0941

(PTV. S.T. REG.# 12-00-9802-002-37)

Reckit Benckiser Pakistan
Through Invoice No : H4599/10/02
Adcom (Pvt.) Ltd. Date of Issue : 03/04/2003
Osman Chambers, Contract No. : K-2337/02-03
Abdullah Haroon Road, Dated : / /
Karachi. Agency Code : 110.0027

[PTV-1]

Advertiser: M/s Reckit Benckiser Pakistan Product : Reckit Benckiser (Consumer Proc)

Client GST No. 02-06-3405-001-55

CENTRE POSITION QTY DURATION RATE AMOUNT

(RS) (RS)


NAT’L N/W LIVE PRO 1 225 SEC 668.063.00 668,063.00

Jannat
(During 7:30 PM – 9:00 PM)


__________

GROSS AMOUNT: 668,063.00

ADD 15.00% General Sales Tax 100,209.45 768,272.45

LESS 15.00% Agency Commission (100,209.45) 668,063,00
_________

Net Payable Rs. : 668,063,00
E & O.E


1. Kindly make payment of Invoice by Cheque in favour of Pakistan Television Corp: [Crossed – Account
Payee only].

2. 15% Late Payment Surcharge will be levied if the Invoice is not paid by May 03, 2003.



FOR PAKISTAN TELEVISION CORPORATION LTD.
ACCOUNTS OFFICER.

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