+108/2020 ‘Salas Tax Circular Year 2006 Circular No 02- Government of Pakistan (Revenue Division) Central Board of Revenue [Sales Tax & Federal Excise Wing] C. No. 1/33-STB/2004 Islamabad, the 20th March, 2006. SALES TAX CIRCULAR NO, 02/2006 SUBJECT: CHARGEABILITY OF SALES TAX ON GENERAL REPAIR WORKS CONTRACT! Military Engineering Services (MES) has approached the Central Board of Revenue to clarify the status of chargeabilty of sales tax on contracts awarded by MES to various contractors for general repair works in defence organizations. These contracts have been classified as under: a) Term Contract (TC): General repair like masonry, carpentry, plumbing, electrification, water supply maintenance, sui gas maintenance and replacement of un-serviceable items, furniture maintenance. (b) Decoration Contract (DC): White washing, painting distempering 02 The issue has been examined in the light of relevant provisions of the Sales Tax Act, 1990, As regards the question of leviabilty of sales tax on the service charges ofthe services mentioned above, its stated that the services of construction and civil works do not attract the levy of sales tax. Therefore, no sales tax would be leviable on the service charges of the following activites: i) masonry (i) carpentry (ii) plumbing (v) electrification (water supply maintenance (vi) ‘sui gas maintenance (vil) replacement of un-serviceable tems (viii) furniture maintenance (x) white washing/painting/aistempering 04, As regards the question of leviability of sales tax on goods consumed during the execution of the services mentioned in above para, its clarified that no sales tax shall be leviable on the said goods provided: (a) the sales tax has been paid by the contractor at the time of procurement of goods; () no supply of same state goods takes place and the goods supplied are consumed in civil ‘worksirepair e.g. paint consumed in white washing © no value addition is made as far as the goods are concemed: the contract consists of charges for services rendered and value of goods on actual basis. @) the activities/services of the contractors are not taxable: no sales tax is leviable on the goods supplied in the course or furtherance of non-taxable activity as per provisions of section 3 of the ‘Act; and (e) the activity of the contractor as stich does not constitute supply of moveable goods and the items consumed in painting, repair of building etc are becoming part of a building! structure: according to section 3 of the Act read with section 2(12) ibid, sales tax is chargeable only on supply of movable goods. download for gov pk/Does/201011259115051982006crcular.htm we+108/2020 ‘Salas Tax Circular Year 2006 Circular No 02- 05, In the light of above, it is held that such civil work contracts shall be out of the ambit of chargeability of sales tax which fulfil the criteria listed at paras-4(a) to(e).. (Wajid Ali) Secretary (ST&FE-Budget) download for gov pk/Does/201011259115051982006crcular.htm 22