Revenue body deputes officers at sugar mills

KARACHI: The Federal Board of Revenue (FBR) has deputed tax officers at the premises of sugar mills after detecting huge tax evasion of Rs5 billion, official sources said on Tuesday.


“The FBR has deputed tax officials in all sugar mills located in Sindh for monitoring of goods at entry and exit points,” a tax official said on the condition of anonymity.


The revenue body has detected around Rs5 billion as short payment of federal excise duty by sugar mills by taking the advantage of a concessionary statutory regulatory order (SRO).


The sugar mills short paid the amount of the federal excise duty by taking the exempted rate prior to the date of issuance of concessionary SRO, which allowed the federal excise duty rate at 0.5 percent instead of eight percent.


The official said that the staff was deputed at sugar mills to monitor stock movement, besides production, input, last year’s production, raw material purchase and value addition.


The FBR will also depute the tax officials at sugar mills in Punjab and Khyber-Pakhtunkhwa, the official said.


Under Section 40 (B) of the Sales Tax Act, 1990, the revenue body can post an officer of the Inland Revenue to the premises of registered persons or class of persons to monitor the business activity.


The sources said that similar powers vested with the commissioner of Inland Revenue subject to have material evidence that a registered person is involved in evasion of the sales tax or tax fraud.


The latest tax evasion of Rs5 billion, detected by the tax departments, was misuse of the SRO dated February 7, 2013 to reduce the sales tax in FED mode from eight percent to 0.5 percent but it was only applicable on the quantity of local supply of sugar equivalent to the quantity actually exported by the sugar manufacturers, in accordance with the export quota allotted in pursuance of the decision of the ECC in its meeting held in January 2013.


The ECC took the decision on the request of the sugar manufacturers due to availability of surplus stocks in the country but, at the same time, the government had also protected the local consumers by reducing the FED rate.


The sources said that during scrutiny of declaration made by the manufacturers, the tax departments detected that the mills have also declared the quantity of local supplies made prior to the issuance of the SRO date.


Presently, around 82 sugar mills are operational in the country and producing approximately five million tons of sugar annually. In its annual report for the year 2011-12, the All Pakistan Sugar Mills Association, released in September 2012, had urged the government to allow export of 0.5 million tons of sugar as its carryover stocks was 1.1 million tons.

Source: The NEWS