Notification dated 01-08-2011

Federal Government vide SRO 727(I)/2011 dated 01.08.2011 has exempted sales tax on import of plant & machinery not manufactured locally and having no compatible local substitute. Procedure for exemption is laid down in the notification. If industrial user imports the said machinery, he will submit post dated cheque equal to the amount of sales tax which will be returned on filing of sales tax return. Commercial importers will submit good-for-payment cheque or bank guarantee or pay order or will pay in cash. The said instruments will be returned and refund will be allowed after providing evidence of next supply to the registered manufacturer or industrial user. In case of supply by commercial importer to un-registered user, they will be liable to sales tax. Subsequent supply of plant & machinery to un-registered users will, therefore, be liable to tax. The notification does not cover locally manufactured machinery which remains liable to sales tax. It appears to be a case of discrimination in case of locally manufactured plant & machinery.