KARACHI: The Federal Board of Revenue (FBR) has decided to impose heavy penalties on non-compliant sugar millers, if they fail to install the Video Analytic System (VAS) at factory premises by January 31, 2021. According to the notice issued by the FBR, seven vendors have been authorized for VAS and the details of the vendors were shared with Pakistan Sugar Mills Association (PSMA) to initiate the process.
It said that the board in order to ensure the implementation of VAS directed the PSMA to provide mill wise updated status of deployment of VAS by December 31, 2020, which was later extended to 31 January, 2021.
In response to the said directives, only a few sugar mills have issued final quotations to the vendors for the installation of the system. However, a large number of sugar mills are not willing to implement the system as they have either issued provisional quotations or not issued any quotation during the process of VAS.
It has also been observed that FBR pre-qualified vendors have failed to install the VAS on the sugar mills, which have issued final quotations to the pre-qualified vendors for the system.
On the other hand, the Video Analytics Rules, 2020 clearly laid down responsibilities of the manufacturer to provide unhindered availability of production facilities for installation of the system Besides the rule 150ZQT(2) of the aforesaid rules also provides severe penalty of non-removal of goods from business premises by non-compliant manufacturing units.
Therefore, it has been decided to take action by imposing heavy penalties on non-compliant sugar mills and non-compliant vendors if they fail to install the VAS at the factory premises by January 31, 2021.
Meanwhile, sources said that the decision to install VAS was aimed at plugging the revenue leakages, amounting in billions; adding that the majority of sugar mills were involved in tax evasion. They said that only the Large Taxpayers Unit (LTU), Karachi has detected a whopping Rs 200 billion revenue leakage in the financial ledgers of 29 sugar mills during audit.
They said that the sugar production was more than the domestic demand, which was 5.3 metric ton but the sugar millers in connivance with the Benami investors, who might be a relative or a family member of the mill owners, monopolized the demand and supply chain of the commodity, creating artificial demand in the market that left the consumers with no option but to buy the commodity at high price.
Majority of sugar millers through their Benami investors bought sugar in bulk during the crushing season at low prices and hoarded the same at sugar mills and controlled the sales to create artificial demand, resulting in an increase in sugar price.
In addition, the sugar millers are operating multiple bank accounts and keep transferring funds from one to another to conceal the inflow and outflow of funds as over 90 percent of stock are used to sell to the unregistered persons, they said and added that they were also involved in figures manipulation for subsidies from provincial and federal governments; suppression of sales & production, etc. Therefore, the VAS is being installed to monitor daily production, which would avert all malpractices being carried out by the sugar millers, they maintained.
Copyright Business Recorder, 2021