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The Central Board of Revenue (CBR) has assured to resolve all the pending cases of textile sales tax refund before December 31. Defending its stance over the refund of sales tax of the textile industry, before the National Assembly Standing Committee, which met to review textile industry downfall on Monday.
CBR Member (sales tax) Ms Musarrat Jabeen said the board has speeded up its working and might be able to refund the sales tax well before the deadline of December 31.
She said that many reputed auditing companies have been appointed to take up the task, which are to submit their findings within 90 days. The chartered accountant firms were assigned to conduct sales tax audit of exports made in the zero-rated sectors.
Ms Musarrat Jabeen said that 348 major textile units have been approved, out of which the audit has been initiated in 60 units. There are 4,299 cases claiming refund of Rs 10.8 billion. It is worth mentioning that Rs 4.8 billion pertains to blacklisted firms. The CBR has 1,700 major textile units, which have been zero-rated, she added.
The major problem in ascertaining the refund is that the exporters of the zero-rated sectors themselves do not submit the relevant supportive documents in time. Secondly, some firms are trying to utilise the zero-rating facility for local business instead of exports, which needs to be investigated and thus their refund is pending.
Another factor, which caused this delay, was CBR's own computer software, which was not user-friendly and they were facing problems since its inception in 2003. The board has been trying to overcome this problem by changing software for the last few months, but now problem has been resolved once for all. According to her, the software problem is over and the job will be accomplished soon.
The refund has become a more complicated issue with the cases prior to June 5, 2005, when zero-rating was not initiated and those when zero-rating was initiated. The department had to handle two types of cases, causing considerable complication. The CBR member also claimed the aging of refund cases would not be prolonged if the firms had played fairly and squarely and also had supplied the supportive documents like invoices, utility bills against input tax in time.
Shafqat Javed of Aptma during the meeting said that manufacturers have to bear the losses on account of CBR software, which are already in a lot of crisis. Software is supposed to assist and not to add miseries, he added. He also stated that earlier, manual overwriting was practiced to solve any anomalies, which was stopped few months ago, but now revived, he appreciated.
Zubair Motiwala pointed out that firms, which finalise deal with other companies, who were not blacklisted at the time of contract but later on declared defaulter even a day after the contract is signed creates problem for the other company, which causes heavy loss to it. This blacklisting of the firm after specified date is inappropriate as the other party also suffers due to withholding of its large sums of money, which hampers its business adversely, he added.
The committee members also informed the board that the duty drawback rates applicable to the import of raw materials/inputs used in the manufacturing of certain finished products are not calculated accurately.
Minister for Textile Mushataq Ali Cheema said that although there are some procedural impediments in furnishing refunds, they would be resolved with change in some laws of refund, besides assuring for refund payments to the genuine companies after completion of audit.
He also claimed that he is pursuing the textile issues with the government at the highest level, and the government is conscious of the plight of the textile industry and keen to resolve them at the earliest for its revival, he added. The CBR members asked the exporters to file sales tax returns timely to avoid delays, which is in their own interest. Meanwhile, the board is making its best efforts to simplify the computer system to speed up its working.

Copyright Business Recorder, 2006

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