Federation Chambers for withdrawal of SRO 507 and suspension of Section 73 of Sales Tax Act

KARACHI (July 09 2003) : Sheikh Maqbool Ahmed, acting president, Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has demanded of the government to withdraw SRO 507 (I)/2003 of June 7, 2003 and suspend the operation of Section 73 of the Sales Tax Act 1990.

He said that FPCCI has written a letter to Finance and Economic Affairs Minister Shaukat Aziz that a number of industries operating under the concessionary regime of SROs have sent representations to FPCCI expressing apprehensions that there will be shrinkage of business due to restriction on the sale to any person who is not registered.

He added that the meeting held in FPCCI to identify the anomalies had given unanimous approval to the demand for withdrawal of the SRO.

He said: “The concessionary imports are primarily made to provide cushion between tariff rates of imports of raw materials and finished goods produced from these concessionary imported raw materials.

The rate of duty on concessionary imports is between 5-10 percent, while on the freely imported finished goods the rate is between 20-25 percent. Further not all the inputs are import based.

Some inputs are at higher rates due to locally manufactured classifications and some of the inputs are also in commercial market, which are imported at the highest cap of 25 percent.

“The margin between concessionary rates and normal import rates of similar goods is very low due to rising costs under other heads and has already put the domestic industry in a disadvantageous position to face the cost competition from import of similar goods.

In fact, the concessionary imports are due to non-rationalisation of tariffs for imports of raw materials, sub-components and components which are not locally manufactured or have to be deleted as per deletion programmes.

The concessionary imports are to help the domestic manufacturing goods in taking a share of the market against imports of similar goods.”

“He pleaded with the finance minister that as the sales tax registration is showing progress and with the passage of time the increase in the sales tax registration will automatically correct the situation and the present measures to direct the sales to only registered persons will reduce the sales of the goods which may not be the considered policy of the government.

“The business community is of the view that in this situation when the similar treatment is not given to the imports of finished goods, the share of domestic market will increase for imports as the imports are not required to be sold to only registered persons.

“The discrimination between policies for domestic manufactured goods and imports of similar products appears to be more favourable to imports of finished goods without any restriction on sale to non-registered persons.

“FPCCI is of the firm opinion that the issuance of the SRO in fact has given an impression that in effect it has rendered the operation of the concessionary SROs ineffective, almost null and void due to stipulation of the SRO 507 amended by SRO 592.”

Regarding suspension of Section 73 of Sales Tax Act, Sheikh Maqbool Ahmed said that the meeting held in the FPCCI with the participation of all the trade bodies has recommended to the government to delete Section 73 of Sales Tax from the Statute Book.

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