Flaws in system delaying payment of sales tax refunds

The Collectorate of Sales Tax has not paid a single penny in head of sales tax refund to the NWFP exporters as the pendency has climbed to Rs 1 billion in last three months, business circles told Business Recorder here on Monday.
The collectorate had stopped the payment of refund to exporters since April, they added. Exporters are attributing the delay in payment of sales tax refund to faulty computerised systems of the Central Board of Revenue (CBR). The automation systems are Star and RPC, which both have failed in time of the payment of refund to exporters.
Chairman, SCCI standing committee on Sales Tax, Zahidullah Shinwari said that Star system was problematic, saying that although it promised with exporters that after the filing of refund claims they would be exempted from the physical verification, 100 percent physical verification was going on due to loophole in the system.
According to system, the exporters are required to submit a summary of refund, but CBR has never honoured pledges made with the business community.
"This in competency is resulting in big losses to the business community," he said, adding that the CBR also raised objections over claims on the sales tax refund charged in electricity bill.
Furthermore, CBR officials did not understand RPC, another computerised system. The lack of knowledge about the system is affecting speedy payment of refund. He said that the collectorate in Lahore had paid refund till June 2006, but due to unknown reasons, the exporters of NWFP had been denied of it. "Out of Rs 180 million sales tax refund claim of Gadoon Textile Mills, the collectorate has paid only Rs 0.3 million.
Shinwari said that it was very astonishing that after getting knowledge of the Star and RPC system, the CBR had started consideration to bring amendments in the system. Furthermore, the conditionality of the submission of goods clearance certificate by the Sales Tax department was also creating hurdles in the payment of sales tax refunds to the exporters. It is a unique requirement, as the sales tax department is reluctant to accept the verification of another department of our own country.
Federal Minister for Commerce, Humayun Akhtar Khan has promised with the Sarhad Chamber of Commerce and Industry (SCCI), that he would raise the matter with the senior CBR officials. Such kind of verification is not required in the export with any other country.
The Collectorate of Customs, Peshawar has also termed the condition irrelevant and unnecessary. It has worth to mention here that an invoice prepared by Afghan importer written in Persian with inscription 'Goods from Pakistan' without mentioning the name of Pakistani firm.
"This policy is totally discrimination and sheer injustice with exporters of NWFP," Shinwari alleged. He said that the deletion of the condition could help promote the exports of the country.