FBR decides to conduct audit of 4 sugar mills

The Federal Board of Revenue (FBR) has decided to conduct audit of four sugar mills to check/verify their records for the last five years and recover the evaded amount of sales tax in line with the recommendations of the Sugar Inquiry Commission.
FBR officials told Business Recorder here on Saturday that It has also been decided that the benami transactions identified by the Sugar Commission would be investigated by respective Benami Zones before filing a reference with the relevant adjudication authorities.
Under the policy measures, the FBR also decided to place track and trace system for three more sectors - sugar, cement and fertilizer - from 2020-21 to monitor the actual production, sales and clearance of these items from the factories.
Sources said the tax authorities are planning to start audit cases of sugar mills identified by Sugar Inquiry Commission in its report of last five years to create demand and then recover taxes of billions of rupees.
According to the FBR official, the Sugar Inquiry Commission utilized FBR's data to conduct its investigation against sugar mills but now under the law the FBR could open up audit of four major mills after Eid holidays. The FBR had kept minimum price at Rs 60 per kg for the purpose of deduction of sales tax.
The Sugar Inquiry Commission has held sugar millers responsible for evading billions of rupees tax evasion and recommended to refer the matter to FBR for recovery of due taxes.
The Sugar Inquiry Commission has also found "massive" discrepancy in data of sugar exported to Afghanistan.
The Sugar Inquiry Commission recommended that, "The matter needs to be referred to FBR with the instructions to recover the sales tax evaded by the sugar mills during last one year on additional amount of ex-mill price exceeding FBR threshold of Rs 60 per kg. Further, FBR should take steps to immediately start collecting sales tax on actual prevailing ex-mill rates instead of benchmark rates of Rs 60 per kg".
It added that the increase in tax impact is Rs 3.6 per kg due to the increase in rate of GST to 17%, after 14 July 2019. The real increase in the retail price occurred between December 2018 to June 2019 when It went up by about Rs. 16 per kg. Similarly, the major increase in ex-mill price occurred between December 2018 to June 2019 when it increased by almost Rs. 12 per kg which is from Rs 51.64 to Rs 63.59 per kg. This period saw no increase in sales or other taxes and the price of sugarcane, the major input, was also stable. The increase in retail price between July 2019 to January 2020 is from Rs. 71 per kg to Rs 74.64 per kg the data, therefore, it does not show any major effect on retail price.