A few leading industrial importers of sugar in Karachi and Lahore have been involved in massive evasion of sales tax, causing huge loss to the exchequer, sources said. Sources told Business Recorder on Wednesday that the Directorate General of Post Clearance Audit (PCA) has unearthed evasion of sales tax by most documented companies falling within the jurisdiction of Large Taxpayer Unit (LTU), Karachi and Lahore.
The Federal Board of Revenue has received a comprehensive report of the DG PCA in this regard. The most interesting aspect of the case is that three leading companies including a beverage manufacturer and a Lahore-based multinational company engaged in manufacturing of food items such as milk, etc are involved in sales tax evasion.
All these consignments were cleared under the green channel facility of the PACCs, despite declarations of lower value of sugar for assessment of sales tax. This evasion remained unchecked until the PCA directorate conducted a detailed scrutiny of tax records of these companies. "If such high profile companies have been involved in sales tax evasion, what would be the situation in case of medium and small companies?" sources asked.
Details revealed that the Directorate General of PCA, while conducting post clearance audit of imports of sugar has detected huge evasion of sales tax on account of non-payment of leviable sales tax by various industrial importers. It has been detected that the said importers got 43 consignments cleared through Pakistan Customs Computerised System on lesser values in violation of the assessable fixed value of US $440 per metric tons (PMT) notified vide SRO.563(1)/06 of June 5, 2006 for sales tax purposes, thereby evading sales tax amounting to Rs 74.6 million.
The DG PCA has initiated legal proceedings against these companies. Recently, the directorate of PCA had detected wrong exemption of customs duty on the import of sugar by pharmaceutical companies. The companies were involved in clearance of imported "pharmaceutical grade sugar" without payment of duty under SRO.567(I)/2006.
The importers cleared the consignments on payment of zero percent duty against the applicable 5 percent duty under the terms and conditions of the relevant notification. The companies have wrongly claimed exemption of customs duty under S No 2A of Table-I of SRO 567(I)/2006 on the import of pharmaceutical grade sugar. Exemption of custom duty under the provisions of SRO 567(I)/2006 is available only to white crystalline sugar, which is liable to 16% sales tax. Pharmaceutical grade sugar is specifically chargeable to 5% custom duty in terms of S No B(12) of Table III of SRO 567(I)/2006 as the same is entitled to sales tax exemption under SRO 551(I)/ 2008.