Raw Materials used in making a taxable supply

[imrank]

Hi,


One of my friends is registered for Sales Tax and has a Zips Manufascturing business. He imports zips, dyes/colours and then sells on to manufacturers who use these zips to manufacture jeans. He advises me that he doesn't charge any GST on the Zips as the zips are exempted from sales tax charge. If we also go to the schedule of "exempted" items under the Sales Tax Law, I do remember reading that any raw material sold to a manufacturer who will use the raw material to manufacture and charge sales tax will be exempt from sales tax (Zips and Jeans in our example).

Please share your thoughts.


Thanks,

Imran