All Pakistan CNG Association (APCNGA) on Tuesday warned the government of shutting all stations down if the government did not resolve their grievances before November 30. Chairman APCNGA, (Sindh Chapter) Shabbir Sulaiman Gee addressing a press conference at a local hotel, here said that the Federal Board of Revenue (FBR) through Sui Southern Gas Company (SSGC) had served a notice to CNG stations for a recovery of Rs 4 billion additional sales tax for the period April 2014 to date, adding that the company had been given 10 days for the recovery of the said amount from CNG stations' owners.
He said the FBR had amended the Section 3(8) of the Sales Tax Act 1990 through an ordinance resulting an impact of 34 percent charged in the gas bills, as against earlier 17 percent on gas charges under Section 3(8) of the Sales Tax Act 1990. This additional tax would add a financial burden on the already paying taxpayers and would result in the closure of the CNG industry in Sindh, he said.
"We will try to negotiate with the FBR over the issue this week if it fails to resolve our problem, we will be left with no choice but to completely shut all stations on (Monday) November 30," Shabbir warned. While elaborating, he said prior to 2008, the CNG industry was under the normal tax regime, section 3(1) of the sales tax act 1990 on which the 17 percent of the GST was charged in gas bills. This was the common practice in all trades and businesses including industries and manufacturing processes. But after 2008, the FBR imposed 26 percent GST under Section 3(8) of the Sales Tax Act 1990 which was struck down by the Supreme Court of Pakistan on 10-12-2013 declaring the 26 percent GST on CNG Stations as unconstitutional and therefore reverted back to the normal tax regime.
Upon the directions of the SC, the gas bills were properly generated on 17 percent GST up to three months after which the government introduced the amended section 3(8) of the Sales Tax Act 1990 through an ordinance on March 28, 2014, he explained.
The new ordinance changed the basic principles of the Sales Tax Act 1990 through a 'wrong' formulation that is not based on factual grounds and a unique mechanism was imposed on the CNG stations having an impact of 34 percent. The CNG stakeholders were never consulted before the execution of the said ordinance, he regretted. The finance ministry under the pressure of the IMF is trying to increase the tax burden on the industry that is already prompt tax payers
The CNG industry is already under crisis because of distorted price break up issued by the Ogra that is not provisioning the actual operating costs and is rather based on notional and hypothetical figures, he said. He claimed that the operating costs of the CNG stations had remained unchanged for almost more than 3 years whereas during this period there had been a substantial increase in the electric tariff, man power costs and many other operational costs that had been completely ignored by Ogra. With the current prices of Rs 67.50 per kg notified by Ogra that has been reduced by Rs 4 per kg w e f September 1, 2015, it has become extremely difficult for the CNG stations to survive and the exorbitant increase in the taxes from time to time.
"We condemn the conspiracy to sabotage the CNG industry and appeals to the government to immediately constitute a committee based on the tax experts and the stakeholders from APCNGA to resolve this matter with mutual consent after hearing the grievances of the CNG industry.
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