Tax managers term ghee mill owners demand impracticable

ISLAMABAD (July 16 2003) : Terming ghee mill owners demand of 15 percent value addition in input price impracticable, the tax managers have strongly contested that such value addition would mean Rs 2 to Rs 2.50 per kg, which would result in unmanageable sales tax refund payment.

A senior sales tax official, while talking to Business Recorder here on Tuesday expressed apprehension that why this benefit of Rs 2 to Rs 2.50 per kg should be given to the ghee manufacturers instead of consumers.

He categorically said that the ghee and cooking oil units should have to pay sales tax on the basis of actual price charged from the consumers instead of solely insisting on payment of refunds without paying genuine tax.

The Central Board of Revenue (CBR) and Pakistan Vanaspati Manufacturers Association (PVMA) had earlier decided to mutually sort out the issue of value addition on input cost to determine sales tax.

But 15 percent value addition was impossible as it amounted to Rs 2 to Rs 2.50 refund per kg, he said.

The sales tax record available with the department shows an entirely different picture with huge variation in the input/output taxes.

The ghee industry is using all its energies to get maximum sales tax refund, but the real issue is whether they are honestly paying sales tax on actual price being charged from the consumer.

The CBR also agreed with the demand of the PVMA to constitute a committee to figure out the actual value addition.

However, the ghee mills record reflects variation in the consumption of raw materials and electricity as compared to the output to evade the authorities.

The quantum of tax evasion is evident from the fact that only in four cases each, the CBR has calculated liabilities amounting to Rs 100-120 million.

The CBR has given an offer to the ghee mill owners to sit together with the tax authorities and mutually resolve the issue.

When asked whether the impact of the increase in levy would be 40 percent as claimed by the PVMA, the tax official replied in negation, saying that this was exaggerated figure.

To a question on expected strike call by the ghee industry, he said that the CBR has no intention to hinder industrial growth.

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