It is heartening to learn from a Business Recorder report that the Central Board of Revenue has eventually decided to rescind 15 percent general sales tax (GST) that had been earlier levied on the 'Vehicle Tracker System' (VTS) introduced by a firm. It has also pointed out that following a clarification which is likely to be soon issued, huge investment in this important field will be spurred. A dispute over GST had arisen as the affected firm had contended that the levy had been wrongly slapped by the Directorate-General of Intelligence and Investigation, Customs and Excise.
Challenging it, the management of VTS approached the Board for clarification through a firm of chartered accountants. Its contention was that the services provided by VTS were not telecommunication services and, consequently, not liable to sales tax as such. It will be noted that earlier the D-G Intelligence and Investigation, Karachi, had targeted a collection of Rs 14 million as GST by declaring the VTS as telecommunication services.
CBR Member Shahid Ahmed took serious notice of the wrong interpretation of law by the Intelligence Directorate, clarifying that the services provided by VTS were entirely different from other telecommunication services. It was pointed out that VTS is the latest sophisticated satellite technology, which is used for tracking stolen automobiles, and is not liable to sales tax, unlike other telecommunication services.
Now that it has been established that the Intelligence Directorate had made a false case against the VTS by declaring the services as 'telecommunication services' for levying central excise duty, it will appear that the GST had been hastily imposed without going into the pros and cons of the matter.
Needless to point out, being a new source of investment in Pakistan, where introduction of the system happens to the crying need of the hour for combating the crime having a visible link with terrorism, the flawed levy on VTS could have serious implications for the country.
In all fairness due note should have been taken of all the aspects of the prevailing situation, before rushing with the decision to claim credit for increasing government revenue.
This should leave little to doubt the advisability of encouraging VTS to meet the kind of challenges the country is presently faced with. As now explained, it uses an implanted device of 'Global Positioning System' technology to signal a vehicle's location via SMS messages over a mobile phone network. It helps the operators of the tracker system follow the movement of a very large number of vehicles on computer screens at the control centre, and provide information on a given car for the police to guide patrol cars to the scene, while the computer can immobilise the car and lock its seat belts, doors and bonnet at the same time.
Moreover, there is also provision for a 'panic button' to set off an alarm in the control centre, to help thwart car-jacking and kidnapping attempts. All in all, the Revenue Board's decision, though belated, will be widely hailed, thereby beckoning it to be its officials to exercise due care and caution before taking such decisions in future.
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