Major businesses including petroleum, textile chemical and other zero-rated sectors are facing serious liquidity problems as the Federal Board of Revenue is reluctant to issue SOP for processing their billions of rupees sales tax refunds, manually, Business Recorder learnt on Thursday.
According to sources, the disinclination shown by the FBR to resume manual procedure has left the release of billions of rupees sales tax refunds of these sectors in an uncertain state. They further said the Board has haphazardly set up the Centralised Sales Tax Refund Office (CSTRO) without proper arrangements under the pressure of international lenders, which has dragged the business community especially these major sectors in financial crisis.
Despite claiming to expedite the process of sales tax refund through CSTRO, the office is not only creating problems for textile, petroleum, chemical and other zero-rated sectors to get their billions of rupees refunds released but it has also become one of the major impediments in the implementation of the Reformed GST, they added.
They said the Sales Tax Automated Refund Repository (Starr) has no provision to process special cases including section 66 of the Sales Tax Act 1990, etc, but the CSTRO has been directed to issue Refund Pay Orders (RPOs) of those claims that are filed electronically.
To a question, they said the tax collecting authority has so far kept itself mum over the request of the Karachi Large Taxpayers Unit (LTU) to draft proper guideline to flush out those sales tax refund claims falling beyond Starr ambit.
Moreover, they said the refund claims in cases where verification from Starr is not helpful were earlier sanctioned on the basis of companies'' declaration and the tax departments issued the sales tax refund cheques against the bank guarantee to the effect that the company would pay back the amount refunded to them on the basis of their declaration, if found inadmissible at any later stage, along with penalties involved. But after the creation of CSTRO, the board has withdrawn the said power from the tax departments, putting the release of these refund claims into abeyance, they said.