The ghee and cooking oil industry is seeking direct intervention of Tariq Bajwa, Chairman Federal Board of Revenue (FBR) to withdraw notices issued by the Directorate of Intelligence (IR) Karachi for recovery of sales tax on local purchases made by the manufacturers and submission of relevant documents to the investigating agency.
Sources told Business Recorder here on Saturday that the industry has explained the legal position regarding the case to the FBR Chairman that is the notices issued to manufacturers of Ghee/Cooking Oil and allied products by Directorate of Intelligence (IR), Karachi. The industrial units are procuring three distinct types of edible oil vis-à-vis levy of duty/taxes, as a raw material to be later consumed in manufacture of finished products. These are enumerated as under.
The edible oil included imported edible oil, extraction plants from imported oil seeds and edible oil extracted by Solvent Extraction Plants from locally (indigenously produced oil seeds.) The rate and stage of levying duty taxes varies in all the three above procedures used for attaining raw material. Moreover, the Sales Tax and FED Acts are respectively applicable with a provision of refund in case of edible oil extracted from local oil seed. The industry while scrutinising the notices so served to manufacturers has also observed certain discrepancies. Firstly, the notice has referred to S.R.O 24(I)/2006 dated 7th January, 2006 without mentioning the queries already answered in FEGO 1 of 2006 dated 19th January, 2006. Secondly, the notice also mentions the S.R.O 507(I)/2013 dated 12th June, 2013, however the period of examination mentioned in the notices is for the years 2008-2009, 2009-2010 and 2010-2011. Thirdly, the figures of purchases, value addition, sales value and tax seems to be assumed by directorate as for only edible oil setting aside the entire procurement of other inputs but not limited to packing material, chemicals, utilities etc. Whereas the SROs quoted in the notice pertains to edible oil only.
The industry feels it appropriate to suggest that concerned LTU and RTOs have already scrutinised returns filed by industrial under-taking and has not observed any of shortfall mentioned in the notice. The audit/notice issued by I & I (IR) is not sustainable in the eyes of law especially after the suspension of S.R.O 351(I)/2014 dated 7th May, 2014. The S.R.O was suspended very correctly by the government on the apprehensions forwarded by the chambers including the industry.
As per notices issued by the Directorate of Intelligence (IR), Karachi to the manufacturers of ghee and cooking oil sector, according to Six schedule of Sales Tax Act 1990 exemption from Sales Tax is available for manufacturers of edible Oils and vegetable oil including cooking oil on which Federal Excise duty is charged, levied and collected by a registered manufacturer or importer as if it were a tax payable under section 3 of the Act.
According to, SRO 24(1)/2006 dated 7th'''' January, 2006 Central Board Of Revenue (now FBR) is pleased to levy fixed amount of Federal Excise duty @ of 1Rs per Kg at the import stage, in lieu of Federal Excise duly payable at production or manufacturing stage and you are availing the above SRO by paying FED at import stage.
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