ABC Limited is issuing (Mushak-6.3) to its customer. They are applying 7.5% VAT on selling Laptops to one of its corporate customers, although computer and computer accessories are VAT exempted. Since the definition of “Procurement Provider” has been changed, they are claiming VAT applications on selling computers and computer accessories.

The fact of Conflict – 1: As per S.R.O. 141-Act/2021/138-Mushak, where computer and computer accessories have been declared exempted in Table-5, Heading no 84.71.

The fact of Conflict – 2: However, Global Brand is providing S.R.O. 240-Act/2021/163-Mushak as a reference to their right to apply VAT on selling computer and computer accessories.

If we go through the definition of Procurement provider, it means any person or organisation who provides both goods and services (except exempted supplies) by quotation or tender or work order or otherwise approved by any ministry, to a government department or offices, semi-government or subsidiary, any state-owned organisation, local authority, council or any similar body, NGO Affairs Bureau or any private organisation approved by Department of Social Services, to any bank, insurance company or similar financial institution, any secondary or higher-level educational institution and any limited supply to any limited company. The SRO also states that purchases for products exempted by SRO (i.e: computer and computer equipment), will also be treated as procurement provider. _VAT withholding in terms of procurement providers. Subsection 4(ka), S.R.O. 240-Act/2021/163-Mushak.

Again, In the case of supply of goods or services exempted by S.R.O 141 by the Procurement providers, the recipient of the supply will have to deduct tax at source as procurement provider service. _VAT withholding in terms of procurement providers. Subsection 4(kha), S.R.O. 240-Act/2021/163-Mushak.

The above reference clarifies that ABC being a trader, will be treated as procurement providers (Other than those registered as manufacturers). Hence, computer and computer accessories will be treated as Non-exempted supply for VAT.