Hope Limited (UL) is registered under the Sales Tax Act, 1990. The company is engaged in the manufacture and sale of a range of fibre glass products. Following information has been extracted from UL’s records for the month of May 2021. Rupees Purchases: Local: Raw material from registered suppliers 25,000,000 Raw material from un-registered suppliers 10,000,000 Import of raw material 4,000,000 Supplies: Local: Taxable supplies to registered persons 20,500,000 Taxable supplies to un-registered persons 9,000,000 Exempt goods 6,000,000 Export to Portugal 12,500,000 Additional information: (i) Raw materials purchased from a registered supplier in April 2021 were destroyed by fire. However, UL received full insurance claim of Rs. 1,000,000 against such loss. Input tax paid on such raw material was however adjusted by UL in its April 2021 return. (ii) On scrutiny of the company’s previous sales tax returns, the internal auditor has pointed out that input tax on raw materials of Rs. 200,000 purchased in October 2020 from a local registered supplier has not been claimed / adjusted by UL. (iii) UL under misapprehension collected additional sales tax of Rs. 64,000 from one of its customers. 70% of the goods on which additional sales tax was collected are still lying with the customer as unsold stock. (iv) Taxable supplies to registered persons include the following: Goods worth Rs. 500,000 supplied to AB Limited which is registered as an exporter with the Large Taxpayer Unit. Supplies of Rs. 2,000,000 to a domestic airline for regular maintenance of an aircraft weighing 8,500 kilograms. (v) Raw materials purchased from local registered suppliers include an invoice of Rs. 100,000 which was issued in the name of a director of UL. All the above amounts are exclusive of sales tax, wherever applicable. Sales tax is payable at the rate of 17%. The value of imported raw material is inclusive of custom duty and federal excise duty. However, other goods are not subject to duty under the Federal Excise Act, 2005. Required: In the light of the provisions of Sales Tax Act, 1990 and Rules made thereunder, calculate the sales tax payable by or refundable to UL for the tax period May 2021. (8 Marks)

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ANS WER Sales tax payable by UL for the tax period May 2021 Local purchases Raw materials from ... View the full answer