Sales tax recovery drive against sugar mills launched

ISLAMABAD (May 09 2005): Central Board of Revenue (CBR) Chairman M Abdullah Yusuf has directed the sales tax department to immediately launch a country-wide drive against sugar mills for recovery of outstanding sales tax arrears.

Addressing the Fourth Quarterly Conference of Collectors of Sales Tax and Central Excise on Sunday, the Chairman took a serious note on reports submitted by ST Collectors regarding short filing of tax by millers. “It is not acceptable,” he said, and added: “They have no right to keep the money, which they have collected on behalf of the government.” He directed the collectors to recover all outstanding amount from the sugar sector and deposit the same in national kitty.

The collectors pointed out that shortage of sugarcane resulted in less production, which ultimately decreased sales tax collection during fiscal year 2004-05 against the corresponding period of last year. However, it was decided to take measures for the recovery of sales tax from the short-filers of sugar industry to enhance sales tax collection.

Officials present in the conference told this scribe that the Chairman had asked the collectors of sales tax to start recovery of outstanding dues from industrial units for meeting the enhanced target of Rs 590 billion.

Performance vis-à-vis targets of the Collectorates was also reviewed and strategy was evolved to achieve the overall targets in the remaining two months of the current year.

Yusuf expressed hope that targets and goals would be achieved. He urged the collectors to put greater efforts “as the next two months are very crucial”.

He directed the tax officials to come up with suggestions to expand the tax net and identify services, including professionals to be taxed in the coming budget. The directive has been given to collect revenue from services sector, particularly those services where revenue can be conveniently collected. Officials said that the CBR would compile a list of service providers to be brought under the tax net from 2005-06.

CBR Chairman said that sales tax collection is not commensurate with the country's industrial sector potential, and stressed the need of taking all possible steps, including plugging of loopholes of tax evasion to enhance revenue collection and enlarging the tax base.

Emphasising the need to focus attention on future course of action, Yusuf asked the collectors to evolve a strategy targeting potential sources of revenue. “We have to adopt proactive approach and need to make the whole exercise industry-specific”, he said.

The Chairman said that the tax base could be expanded provided a serious effort is made by field officers to collect credible information about the production potentials of the industrial sector, particularly the major industries.

To facilitate the entire textile sector, Yusuf said that the recent notification of CBR to levy sales tax at the rate of zero-percent on certain raw materials of textile industry has been appreciated by the stakeholders. In the next phase, the CBR is considering to levy zero sales tax for all raw materials at the local stage as well as export-oriented items.

He said that the collectors should submit their viewpoint on the proposal to apply zero-percent sales tax on all raw materials used by textile industry. The CBR will take decision after incorporating the viewpoints of regional collectors.

On the issue of sales tax refund, the Chairman called upon the Collectors to clear the pendency as early as possible. “We have to be transparent and open and should address all the genuine complaints”, he remarked. He stressed the need of avoiding unnecessary litigation with the taxpayers.

The conference was informed that LTU, Karachi, has introduced e-filing of Sales Tax Return with collaboration of National Bank of Pakistan. In this connection, LTU, Karachi has already conducted 16 Workshops for educating taxpayers, and helpline has been opened at LTU, Karachi and National Bank of Pakistan, PNSC Branch, Karachi, to facilitate the taxpayers in e-filing.

He also issued instructions to all regional collectors to encourage the aggrieved taxpayers to use Alternative Dispute Resolution (ADR) mechanism for speedy settlement of disputes. “This is the only way to reduce litigation through 'out of court' settlement,” he added.

Member (Sales Tax) Shahid Ahmed, Member (IMS) Aamir Zafar Chaudhry, Member (Audit) Amjad Pervez and Member Fiscal Research and Statistics (FRS) also attended the conference.

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