Office of the

Director General Audit,

Inland Revenue and Customs (South), Karachi
AUDIT OBSERVATION NO. 01
SUBJECT: Non realization of sales tax - Rs. 365,510.
PARTICULARS OF TAXPAYER
NAME OF TAXPAYER CARGOLINES (PVT) LTD.

INCOME TAX ZONE ZONE – III, CRTO, KARACHI. ASST / TAX 2017
YEAR
N.T.N 1260583 STATUS

ASSESSED UNDER SECTION D.C.R. ITEM/PAGE No. &

DATE

According to section 3 of Sales Tax Act 1990, there shall be charged, levied and paid sales tax at the rate
of seventeen per cent of the value of taxable supplies made by a registered person.

During scrutiny of Annual income tax return for T.Y.2017 of the above named taxpayer, it has been
observed that the above tax payer showed deletion of Assets. The sale of these items and the utilization of
these sale considerations in the business activity is definitely to be considered in the course of or in
furtherance of the business /taxable activity. There is not legal provision excluding the sale of old plant
and machinery, vehicle or scrap from the purview of taxable supply. No exemption has since been
notified by the Federal Government in relation to the sale, auction or otherwise disposal of goods,
moveable fixed assets including plant/machinery equipment having no value addition to the goods and for
which the input tax was not allowed. The fixed asset as have been referred in the cases are goods or
taxable goods and comes within the ambit of taxable supply and liable to the levy of sales tax.
This inaction resulted into loss of revenue as under:
ITEM DISPOSED OFF AMOUNT
Computer Hardware 473,092
Furniture (including fittings) 147,930
Office equipment 775,020
Motor Vehicle (Not plying for hire) 754,019
Total 2,150,061
Sales Tax @17% 365,510

The matter may please be looked into and corrective action as per law be taken under intimation to Audit.

_____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi
AUDIT OBSERVATION NO.02
SUBJECT: Non realization of sales tax - Rs. 240,818.
PARTICULARS OF TAXPAYER
NAME OF TAXPAYER CHINA YUNCHENG PLATE MAKING CO (PVT) LTD.

INCOME TAX ZONE ZONE – III, CRTO, KARACHI. ASST / TAX 2017
YEAR
N.T.N 1545106 STATUS

ASSESSED UNDER SECTION D.C.R. ITEM/PAGE No. &

DATE

According to section 3 of Sales Tax Act 1990, there shall be charged, levied and paid sales tax at the rate
of seventeen per cent of the value of taxable supplies made by a registered person.

During scrutiny of Annual income tax return for T.Y.2017 of the above named taxpayer, it has been
observed that the above tax payer showed deletion of Assets. The sale of these items and the utilization of
these sale considerations in the business activity is definitely to be considered in the course of or in
furtherance of the business /taxable activity. There is not legal provision excluding the sale of old plant
and machinery, vehicle or scrap from the purview of taxable supply. No exemption has since been
notified by the Federal Government in relation to the sale, auction or otherwise disposal of goods,
moveable fixed assets including plant/machinery equipment having no value addition to the goods and for
which the input tax was not allowed. The fixed asset as have been referred in the cases are goods or
taxable goods and comes within the ambit of taxable supply and liable to the levy of sales tax.
This inaction resulted into loss of revenue as under:

ITEM DISPOSED OFF AMOUNT

Plant/ Machinery 1,416,579
Sales Tax @17% 240,818

The matter may please be looked into and corrective action as per law be taken under intimation to Audit.

_____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi

AUDIT OBSERVATION NO.03

SUBJECT: Non realization of sales tax - Rs. 205,963.
PARTICULARS OF TAXPAYER
NAME OF TAXPAYER AB ENGINEERING (PVT) LTD.

INCOME TAX ZONE ZONE – III, CRTO, KARACHI. ASST / TAX 2017
YEAR
N.T.N 1456144 STATUS

ASSESSED UNDER SECTION D.C.R. ITEM/PAGE No. &

DATE

According to section 3 of Sales Tax Act 1990, there shall be charged, levied and paid sales tax at the rate
of seventeen per cent of the value of taxable supplies made by a registered person.

During scrutiny of Annual income tax return for T.Y.2017 of the above named taxpayer, it has been
observed that the above tax payer showed deletion of Assets. The sale of these items and the utilization of
these sale considerations in the business activity is definitely to be considered in the course of or in
furtherance of the business /taxable activity. There is not legal provision excluding the sale of old plant
and machinery, vehicle or scrap from the purview of taxable supply. No exemption has since been
notified by the Federal Government in relation to the sale, auction or otherwise disposal of goods,
moveable fixed assets including plant/machinery equipment having no value addition to the goods and for
which the input tax was not allowed. The fixed asset as have been referred in the cases are goods or
taxable goods and comes within the ambit of taxable supply and liable to the levy of sales tax.
This inaction resulted into loss of revenue as under:

ITEM DISPOSED OFF AMOUNT

Motor Vehicle (not plying for hire) 1,211,547
Sales Tax @17% 205,963

The matter may please be looked into and corrective action as per law be taken under intimation to Audit.

_____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi
AUDIT OBSERVATION # 04

Subject: Non-payment of penalty on late filing of sales tax returns– Rs 0.220 million

Under section 33 (1) of the Sales Tax Act 1990, where a person fails to furnish a return within
due date, such person shall pay a penalty of five thousand rupees provided that in case a person
files a return within ten days of the due date, he shall pay a penalty of one hundred rupees for
each day of default.

Sixteen (16) registered persons falling under the jurisdiction of Commissioner Inland Revenue,
Zone-III CRTO, Karachi had late filed their sales tax returns for the tax year 2017-18
(List annexed). The registered persons neither paid penalty and default surcharge on late filing of
sales tax returns nor it was demanded by the department. This resulted in non-realization of
penalty amounting to Rs 0.220 million alongwith default surcharge.

_____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi
Audit Observation No.05
Subject: Non imposition of penalty due to non-filing of sales tax returns –-Rs 2.555 (M)

According to Section 26(1) of Sales Tax Act, 1990, “Every registered person shall
furnish not later than the due date a true and correct return in the prescribed form to a designated
bank or any other office specified by the Board, indicating the purchases and the supplies made
during a tax period, the tax due and paid and such other information, as may be prescribed.”

During examination of data available on e-portal of Sales Tax profile of registered

person pertaining to the Commissioner, Zone-III, CRTO, Karachi for the year 2017-18,
it has been revealed that (82) registered person failed to file sales tax returns for different
months after due date. This caused short filing of Sales Tax returns of registered person for
which penalty u/s-33(1) of Sales Tax Act, 1990 was required to be imposed against them but the
same was not done by the department. This resulted loss to the government amounting to
Rs 2.555 million as detailed in annexure attached.

The matter may please be looked into and appropriate action as per law be taken
to recover government dues under intimation to Audit.

_____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi
AUDIT OBSERVATION#06

Subject: NON-PAYMENT OF SALES TAX RS. 0.101 MILLION

According to Section 3(1) (a) there shall be charged, levied and paid a tax known as sales tax at
the rate of 17% of the value of taxable supplies made by a registered person in the course or furtherance
of any taxable activity carried on by him.

During examination of data available on e-portal of sales tax profile of

M/s. EXPRESS LOGISTICS (PRIVATE) LIMITED having NTN#1144948-9 in respect of the
Commissioner, Zone-III, CRTO, Karachi for the tax period 2017-18, it was observed that the registered
person failed to file Sales Tax return for the tax period of April, 2018 during audit period
(on 25.04.2019), however, neither department initiate action against the registered person to file sales tax
return nor department produced any authenticate evidence to audit, which justify the sales tax return has
already been filed by the registered person. Non filing of return resulted average non-payment of sales tax
of Rs. 100,550/- as detailed below:

DATE OF FILING OF
TAX PERIOD SALES TAX PAID
RETURN
JULY, 2017 20/09/2017 88,477
AUG, 2017 18/11/2017 92,330
SEP, 2017 18/11/2017 87,138
OCT, 2017 14/12/2017 111,191
NOV, 2017 27/12/2017 102,576
DEC, 2017 19/03/2018 90,330
JAN, 2018 20/02/2018 129,343
FEB, 2018 19/03/2018 91,551
MARCH, 2018 20/04/2018 99,110
APRIL, 2018 Return not filed ------
MAY, 2018 28/06/2018 98,392
JUNE, 2018 05/09/2018 115,612

It is requested that either position may be clarified or government revenue, along with default
surcharge and penalty, may be recovered under intimation to Audit.

_____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi

Audit Observation No.07

Subject: Inadmissible adjustment of input tax amounting to Rs.0.990 million

According to Section 8(1) (i) of the Sales Tax Act 1990, a registered person shall not be entitled to
reclaim or deduct input tax paid vehicles falling under Chapter 87 of the First Schedule to the Customs
Act, 1969, parts of such vehicles, electrical and gas appliances, furniture furnishings, office equipment
(excluding electronic cash registers) but excluding goods acquired for sale or re-sale..

M/S JAWED METAL INDUSTRIES (PRIVATE) LIMITED having NTN # 0710798-6 registered as
MANUFACTURER/ IMPORTERS/ EXPORTER, falling under the jurisdiction of Commissioner
Zone-III of CRTO, Karachi claimed input tax adjustment on purchase of goods falling under goods “87-b-
Public Transport Vehicles/Motor Vehicles for transport of passengers/ Goods” as per annexure A of the
sales tax return for the tax period of August, 2017, December, 2017 and April, 2018 filed by the
registered person. This rendered inadmissible adjustment of input tax amounting to Rs.0.990 million as
detailed below.

S# Name of Suppliers INVOICE DATE OF Description of Value of Sales Tax

& NTN NO. INVOICE goods supply (Rs) involved
purchased (Rs)
1 PAK SUZUKI 17068820 21.07.2017 3,239,318 550,684
MOTOR CO.
LIMITED 87-b-Public
0712837-1 Transport
2 PAK SUZUKI 17113062 07.11.2017 Vehicles Motor 1,291,453 219,547
MOTOR CO. Vehicles For
LIMITED
Transport Of
0712837-1
Passengers
3 PAK SUZUKI 18030407 09.03.2018 1,291,453 219,547
/Goods
MOTOR CO.
LIMITED
0712837-1
Total 5,822,224 989,778

It is requested that either the omission may be justified or appropriate action for recovery may be initiated
under intimation to Audit.

_____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi
Audit Observation No.08

Subject: Inadmissible adjustment of input tax amounting to Rs.0.501 million

According to Section 8(1) (i) of the Sales Tax Act 1990, a registered person shall not be entitled to
reclaim or deduct input tax paid vehicles falling under Chapter 87 of the First Schedule to the Customs
Act, 1969, parts of such vehicles, electrical and gas appliances, furniture furnishings, office equipment
(excluding electronic cash registers) but excluding goods acquired for sale or re-sale..

M/S JINKWANG JAZ (PRIVATE) LIMITED having NTN # 2233509-9 registered as

MANUFACTURER/ IMPORTERS/ EXPORTER, falling under the jurisdiction of Commissioner
Zone-III of CRTO, Karachi claimed input tax adjustment on purchase of goods falling under goods “87-b-
Public Transport Vehicles/Motor Vehicles for transport of passengers/ Goods” as per annexure A of the
sales tax return for the tax period of December, 2017 and January, 2018 filed by the registered person.
This rendered inadmissible adjustment of input tax amounting to Rs.0.501 million as detailed below.

S# Name of Suppliers INVOICE DATE OF Description of Value of Sales Tax

& NTN NO. INVOICE goods supply (Rs) involved
purchased (Rs)
1 INDUS 1458061 31.12.2017 2,011,966 342,034
MOTOR
COMPANY
LIMITED 87-b-Public
0676546-7 Transport
2 PAK SUZUKI 17130624 26.12.2017 Vehicles Motor 935,041 158,957
MOTOR CO. Vehicles For
LIMITED Transport Of
0712837-1 Passengers
/Goods
Total 2,947,007 500,991

It is requested that either the omission may be justified or appropriate action for recovery may be initiated
under intimation to Audit.

_____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi
Audit Observation No.09

Subject: Inadmissible adjustment of input tax amounting to Rs.0.290 million

According to Section 8(1) (i) of the Sales Tax Act 1990, a registered person shall not be entitled to
reclaim or deduct input tax paid vehicles falling under Chapter 87 of the First Schedule to the Customs
Act, 1969, parts of such vehicles, electrical and gas appliances, furniture furnishings, office equipment
(excluding electronic cash registers) but excluding goods acquired for sale or re-sale..

M/S A ONE TECHNIQUES (PRIVATE) LIMITED having NTN # 3178623-5 registered as

MANUFACTURER/ IMPORTERS/ EXPORTER, falling under the jurisdiction of Commissioner
Zone-III of CRTO, Karachi claimed input tax adjustment on purchase of goods falling under goods “87-b-
Public Transport Vehicles/Motor Vehicles for transport of passengers/ Goods” as per annexure A of the
sales tax return for the tax period of July, 2017 filed by the registered person. This rendered inadmissible
adjustment of input tax amounting to Rs.0.290 million as detailed below.

S# Name of Suppliers INVOICE DATE OF Description of Value of Sales Tax

& NTN NO. INVOICE goods supply (Rs) involved
purchased (Rs)
1 PAK SUZUKI 17068511 20.07.2017 87-b-Public 1,708,547 290,453
MOTOR CO. Transport
LIMITED Vehicles Motor
0712837-1 Vehicles For
Transport Of
Passengers
/Goods

It is requested that either the omission may be justified or appropriate action for recovery may be initiated
under intimation to Audit.

_____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi
AUDIT OBSERVATION#10

Subject: NON-IMPOSITION OF PENALTY AND DEFAULT SURCHARGE – RS 0.313 million

According to section 34 of the Sales Tax Act, 1990, if a registered person does not pay
the tax due or any part thereof, he shall, in addition to the tax due, pay default surcharge at
the rate KIBOR plus three per cent per annum, of the amount of tax due. Further, under
section 33 (5) of the Act ibid, any person who fails to deposit the amount of tax due or any part
shall pay a penalty of ten thousand rupees or five per cent of the amount of the tax involved,
whichever is higher, Provided that, if the amount of tax or any part thereof is paid within ten
days from the due date, the defaulter shall pay a penalty of five hundred rupees for each day of
default.
During examination of data available on e-portal of Sales Tax profile of
M/S Anwar Engineering Works Private Limited having NTN# 1442888-1 in respect of the
Commissioner, Regional Tax Office, Zone-III, CRTO, Karachi for the tax period 2017-18. It has
been observed that registered person late deposited amount of sales tax into government
treasury for the tax periods from July, 2017 to June, 2018. The late deposit of sales tax
attracted levy of default surcharge and penalty which was not imposed by the department. This
resulted into non-imposition of penalty and default surcharge amounting to Rs 0.313
million/- as detailed below:

ACTUAL DATE
TAX PAID
S TAX OF PAYMENT DAYS OF KIBOR +
DUE DATE WITH PENALTY
# PERIOD AS PER CPR# DEFAULT 3%
RETURN
OF RETURN
1 JUL, 2017 15.08.2017 06.09.2017 519,573 22 1,111 25,979

2 AUG, 2017 15.09.2017 11.10.2017 523,000 26 1,322 26,150

3 SEP, 2017 15.10.2017 08.11.2017 454,375 24 1,060 22,719

4 OCT, 2017 15.11.2017 06.12.2017 510,342 21 1,042 25,517

5 NOV, 2017 15.12.2017 09.01.2018 497,021 25 1,208 24,851

6 DEC, 2017 15.01.2018 07.02.2018 415,823 23 930 20,791

7 JAN, 2018 15.02.2018 07.03.2018 571,208 20 1,111 28,560

8 FEB, 2018 15.03.2018 09.04.2018 492,000 25 1,196 24,600

9 MAR, 2018 15.04.2018 02.05.2018 591,715 17 978 29,586

10 APR, 2018 15.05.2018 06.06.2018 539,000 22 1,153 26,950

11 MAY, 2018 15.06.2018 17.07.2018 510,817 32 1,589 25,541

12 JUNE, 2018 15.07.2018 27.08.2018 358,391 43 1,498 17,920

SUB TOTAL 14,198 299,164

GRAND TOTAL 313,362
The matter may please be looked into and appropriate action as per law be taken to
recover government dues along penalty & default surcharge under intimation to Audit.

_____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi
Audit Observation No.11

Subject:- NON-IMPOSITION OF PENALTY AND DEFAULT SURCHARGE –

RS 0.201 million

According to section 34 of the Sales Tax Act, 1990, if a registered person does not pay the tax
due or any part thereof, he shall, in addition to the tax due, pay default surcharge at the rate KIBOR plus
three per cent per annum, of the amount of tax due. Further, under section 33 (5) of the Act ibid, any
person who fails to deposit the amount of tax due or any part shall pay a penalty of ten thousand rupees or
five per cent of the amount of the tax involved, whichever is higher, Provided that, if the amount of tax or
any part thereof is paid within ten days from the due date, the defaulter shall pay a penalty of five hundred
rupees for each day of default.

During examination of data available on e-portal of Sales Tax profile of

following registered persons in respect of the Commissioner Inland Revenue, Zone-III,
Corporate Regional Tax Office, Karachi for the tax period 2017-18. It was observed that registered
persons late deposited amount of sales tax into government treasury for the tax periods from
July, 2017 to June, 2018. The late deposit of sales tax attracted levy of default surcharge and penalty
which was not imposed by the department. This resulted into non-imposition of penalty and default
surcharge amounting to Rs 0.201 million/- as detailed below:

ACTUAL DATE
TAX PAID
DUE OF PAYMENT AS DAYS OF KIBOR +
S# TAX PERIOD WITH PENALTY
DATE PER CPR# OF DEFAULT 3%
RETURN
RETURN
M/s SHAHEEN AUTOMOTIVE PRIVATE LIMITED NTN # 0675085-7
01 NOV, 2017 15.12.2017 30.12.2017 330,671 15 482 16,534
DEC, 2017 15.01.2018 01.02.2018 464,071 17 767 23,204

Sub Total 1,249 39,737

M/s PLASTECH AUTOSAFE NTN # 1021179-9

02
JUNE, 2018 15.07.2018 27.07.2018 3,130,997 12 3,653 156,550

Sub Total 3,653 156,550

4,902 196,287
GRAND TOTAL 201,189

The matter may please be justified and appropriate action as per law be taken to recover
government dues along penalty & default surcharge under intimation to Audit.

_____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi
AUDIT OBSERVATION # 12
Subject: Short payment of extra tax Rs. 0.411 million

According to Chapter XIII of the Sales Tax Special Procedure Rules 2007, Rule 58 T laid down that extra
amount of sales tax at the rate of 2% of value of supplies shall be levied and collected on the supplies of all specified
goods by manufacturers and importers in addition to the tax payable under sub-sections (1) and (2) of section 3 of
the Act, as the case may be.
(2) Extra amount of sales tax so charged and collected by the above listed registered person shall be declared in the
monthly return against relevant supplies and shall be deposited without any adjustment against the same.
(3) The supplier of specified goods shall mention the extra amount of sales tax charged under this Chapter separately
on the sales tax invoice to be issued by them.
(4) The said registered persons shall charge the said extra sales tax even if they have paid any tax relating to value
addition at import stage.
(5) As per rule 58S ibid the goods i.e Auto parts and accessories specified at S.No.04 of the Table and are liable to
extra tax.
On perusal of soft data pertaining to M/s Qaim Automotive Manufacturing (Pvt.) Ltd. NTN 0711761-2
registered as manufacturer falling under the jurisdiction of Zone-III CRTO, Karachi, it has been observed that
during 2017-18 the taxpayer had manufactured auto parts and accessories supplied for valuing Rs.133.161 million
to bulk unregistered persons but extra tax Rs 0.411 million was charged short. This resulted in short-payment of
extra sales tax @2% Rs.0.411 million as detailed below.
S.No Month Value of 2% Extra tax to Amount Amount of short
supplies be paid paid payment
1 July,2017 15,119,176 302,384 276,183
26,201
2 August, 2017 18,609,931 372,199 339,780
32,419
3 September, 2017 12,170,875 243,418 208,416
35,002
4 October, 2017 10,435,059 208,701 174,026
34,675
5 November, 2017 7,323,715 146,474 116,312
30,162
6 December, 2017 10,102,750 202,055 169,854
32,201
7 January,2018 7,596,207 151,924 119,725
32,199
8 February, 2018 12,083,552 241,671 206,898
34,773
9 March, 2018 13,908,794 278,176 238,180
39,996
10 April, 2018 13,224,526 264,491 220,743
43,748
11 May, 2018 6,007,780 120,156 88,465
31,691
12 June, 2018 6,578,445 131,569 93,427
38,142
Total 133,160,810 2,663,218 2,252,009 411,209

It is requested that either the omission may be justified or take necessary action for recovery of
government dues.
____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi
Audit Observation No.13

Subject:- Inadmissible adjustment of input tax -Rs. 1.363 million

According to Section 8(1)(h) of the Sales Tax Act 1990, a registered person shall
not be entitled to reclaim or deduct input tax paid on goods used in, or permanently attached to,
immoveable property, such as building and construction materials, paints, electrical and sanitary
fittings, pipes, wires and cables, but excluding pre-fabricated buildings and such goods acquired
for sale or re-sale or for direct use in the production or manufacture of taxable goods.

M/S CHINA YUNCHENG PLATE MAKING (PRIVATE) LIMITED NTN #

1545106-2, falling under the jurisdiction of Zone-III, CRTO Karachi claimed input tax
adjustment of sales tax amounting to Rs.1.363 million during the financial year 2017-18 on
purchase of building materials like cement. The input tax adjustment claimed by the taxpayers
against these materials was not admissible under the law. This resulted into inadmissible
adjustment of input tax amounting to Rs 1.363 million (statement attached).

It is requested that either the omission may be justified or recover government

dues along-with penalty and default surcharge under intimation to Audit.

____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752
 Office of the
Director General Audit,
Inland Revenue and Customs (South), Karachi
Audit Observation No.14

Subject: Inadmissible adjustment of input tax amounting to Rs.219,460/-

According to Section 8(1) (a) & (f) of the Sales Tax Act 1990, a registered person shall not be
entitled to reclaim or deduct input tax paid on the goods or services used or to be used for any purpose
other than for taxable supplies made or to be made by him and goods or services not related to the
taxable supplies made by the registered persons.

M/s MULTIPLE AUTOPARTS INDUSTRIES PVT LIMITED (NTN 2257670-3) falling under the
jurisdiction of Commissioner Zone-III of CRTO, Karachi claimed input tax adjustment on purchase of
goods i.e. “09-a-Tea, 25-b-cement, 09-b-coffee & 30-a-pharmaceutical products” whereas the
registered person made supply of goods “87-d-Other vehicles/ Carriages/ Trailers, vehicle parts” as per
annexure C of the sales tax returns for the tax period from July 2017 to June, 2018. The description of
goods purchased does not relate to supplies. This rendered inadmissible claim of input tax against
irrelevant supplies amounting to Rs.219,460/- as below.

Sr. # of Description of Value of Supply Sales Tax

S.No. Month Annexure A goods purchased (Rs.) involved (Rs.)
1 July, 2017 84 09-a-Tea 69,741 11,856
2 August, 2017 34 09-a-Tea 69,741 11,856
3 September, 2017 38 09-a-Tea 69,741 11,856
4 November, 2017 55 09-a-Tea 71,794 12,205
5 December, 2017 03 & 35 09-a-Tea 143,588 24,410
6 January, 2018 50 09-a-Tea 107,694 18,308
7 February, 2018 57 09-a-Tea 107,694 18,308
8 March, 2018 29 09-a-Tea 107,694 18,308
9 April, 2018 08 25-b-Cement 201,709 34,291
10 April, 2018 18 09-b-Coffee 107,694 18,308
19 30-a-Pharmaceutical
11 April, 2018 products 116,924 19,877
12 June, 2018 16 09-a-Tea 116,924 19,877
Total 1,290,938 219,460

It is requested that either the omission may be justified or appropriate action for recovery may
be initiated under intimation to Audit.

_____________________________
AUDIT OFFICER (FAT – 09)
External Audit, o/o the DGAIR&C (South)
KARACHI
To,
The Commissioner,
Inland Revenue, Zone-III CRTO, Karachi

Ground Floor, Pakistan Audit & Accounts Complex, Near NIPA chorangi Main University Road, Gulshan-e- Iqbal, Karachi Ph# 021-99244757,99244833 Fax99244752