Member Customs rules guidelines for sales tax assessment of cell phones
KARACHI: Member Customs Nisar Mohammad Khan has advised all the formations to assess the mobile phones according to the category in which majority of the features fall.
There are three categories of mobile phones including Category-A i.e. low priced mobile phones or satellite phones with cameras of 2.0 MP or less, screen size 2.6 inches or less and key pad. Sales tax of Rs300 is applicable per set.
Category-B sets are medium priced mobile phones or satellite phones with one or two cameras between 2.1 to 10 MP, screen size between 2.6 inches to 5.0 inches and micro-processor less than 2.0GhZ. Sales tax of Rs500 is applicable per set.
Category-C sets are Smart cellular phones or satellite phones with one or two cameras 10 MP and above, Touch screen size 5.0 inches and above, 4GB or higher basic memory, operating system of iOS, Android, Windows 8 or Blackberry RIM and micro-processor 2.0GhZ or higher, dual core or quad core. Sales tax of Rs1,000 is applicable per set.
Member Customs deciding an application filed by M/s Advance Telecom ruled that sales tax would be assessed on mobile phones as per the provisions of Ninth Schedule to the Sales Tax Act, 1990 and the category in which majority of the features fall will be upheld.
Nisar Mohammad Khan in his order notes the categorization-features are not mutually exclusive. The Ninth Schedule of the Sales Tax Act, 1990 is silent about categorization of the mobile phones where single feature is in a higher category while remaining features lie in lower category.
Moreover, it does not speak in cases were features of mobile phones lie in more than one category. As such lack of a clarification in the Ninth Schedule has left a room for interpretation by the field Collectorates for the categorization of mobile phones based upon their specifications.
MCC Preventive Karachi applies the categories of Ninth Schedule as per collective features mentioned therein and in case of any overlap in features between any two categories, the category where most of the features reside.
Therefore, the category is applied which qualifies predominantly in features by MCC Preventive Karachi. To the contrary the practice in Lahore is that if some features of an imported set relate to category-A, while one or more features are specified in category-B, such set is assessed in category-B with higher rate of Sales Tax.
Collector Preventive Tariq Huda has appreciated Additional Collector Tahir Qureshi, Deputy Collector Jahanzaib Abbasi, Appraising Officers Tariq Aziz, Junaid Malik and others for dealing the issue in a just and prudent manner. It may be mentioned here that only MCC Preventive Karachi was assessing the mobile phones in the appropriate manner, which Member Customs has set as the benchmark.