Anomaly body bars three items from sale to unregistered persons: SRO 507 reviewed

KARACHI (August 20 2003) : The anomaly committee, appointed by the government, while reviewing the SRO 507, has decided that now only three items will not be sold to unregistered persons.

These are air-conditioning plants/chilling plants and humidification plants, cranes, and propane storage tank/heat exchanger and gas separator.

The SRO 507 (I)/2003 was issued in the 2003-2004 budget, barring the sale of domestic manufactured merchandise to unregistered persons.

It hit about 100 major engineering and processed items.

The Central Board of Revenue (CBR), instead of rescinding the SRO, had agreed to limit the scope of the SRO, and asked the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) to suggest items, which would not be sold to unregistered persons.

The FPCCI had recommended five items, but the anomaly committee meeting, held recently in Islamabad, did not agree on two items, ie defence stores machinery and equipment for defence forces and parts of locomotives.

The share in the sale of the domestic manufactured merchandise was feared to shrink against import-based similar merchandise, which continues to be sold to any person irrespective of its registration under the Sales Tax Act.

All trade bodies had criticised this discrimination between locally manufactured goods and import-based goods of similar nature.

The anomaly committee of the FPCCI had also unanimously resolved to ask the committee, set up for hearing the anomaly cases to rescind the SRO, as it discriminated against the domestic manufactured items against imports by restricting the sales of local products to only registered persons, while the import-based similar goods enjoy the free market access of sale to unregistered persons as well.

The matter was agitated by the domestic industry and the FPCCI made a case, based on many points, one of which was the discriminatory treatment to the domestic product.

In addition, the FPCCI invited attention of the anomaly committee that the further tax as penalty existed in case of sales to unregistered persons.

The CBR's attention was drawn to the fact that by virtue of amendment further tax collected on account of sales to unregistered persons is also not adjustable any more for carry forward and has become cash liability instead.

Besides, the case presentation was based on the point that there is a very narrow gap between import duty rates of finished products and raw materials imported for processing and manufacturing similar domestic merchandise.

The President, Karachi Chamber of Commerce and Industry, Mian Nasser Hayat Maggo, is not very happy on this development.

Instead of limiting its scope, the SRO 507 should have been rescinded, he emphasised while talking to the Business Recorder on the subject.

He thought that the existence of this SRO for regulating the trade of domestic manufactured goods against imported goods of similar nature might not be in the interest of the domestic industry, which was apprehensive that its continuation could be used as and when the CBR thought to add items not to be sold to unregistered persons.

He said that governments created room for increasing sales of the domestic products, but in this case an attempt had been made to restrict the trade, while “we are talking of the challenges of the World Trde Organisation (WTO) whose concept was based on eventuality of cross border movements of goods and services at minimum tax rates.

The SRO, with its limited scope, had been considered as the option at this stage and might see inclusion of many items in future, which would not be sold to unregistered persons, he apprehended.

Such SROs could not motivate the industrialists to increase their capacity or modernise the existing plants when the trade was also regulated or put to quantitative restrictions by CBR, he said.

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