LAHORE: If not completely then largely, the Federal Board of Revenue’s track & trace system has failed to control tax evasion in the sugar industry, said reliable sources in the Large Tax Office (LTO), Lahore.

According to the sources, the conveyer belts used for the purpose fail to hold sugar bags in proper position after automatic pasting of barcode; therefore the camera installed on the conveyor belt was unable to grab and transmit it to the head office.

Accordingly, a large number of bags were left unreported to the FBR despite making best efforts to track and trace both production and sale of sugar automatically. The Board had no option but to handle the situation manually by deploying its staff under section 40B of Sales Tax Act, 1990.

The sources said the field staff ensured documentation of 99 percent sales of sugar sector by taking control of sugar bags, placing barcodes manually and placing them properly on the conveyor belt for the Board’s cameras.

“We took control of godowns containing empty bags for putting barcodes before handing them over to the mills’ staff for filling purposes,” said one inspector, requesting anonymity. According to him, the mills’ management was not ready to cooperate and they carried out their task under a highly hostile environment.

“Since most of the mill owners have political background, therefore, they used to threaten us of treating harshly soon they are in power,” he added.

Also, he pointed out that the mills’ management was not ready to provide them appropriate accommodation, meal and timely medical treatment in case of illness. Another inspector said he had faced acute breathing problems for at least two months after returning from a sugar mill as it was not possible to sustain the production process by an ordinary person like him.

Sources said the LTO Lahore has set an example for the rest of the LTOs in the country on making the track and trace system viable. They have pointed out that many sugar mills have their head offices in Karachi and most of the inspectors avoided to visit sugar mills present in the province of Punjab, preferring to make false entries to keep their books intact. They have further added that many sugar mills in Punjab are planning to shift their head office in Karachi to avoid a strict vigilance of the LTO Lahore.

Meanwhile, a good number of tax commissioners have also pointed out that deputing office staff to sugar mills under section 40B leads to a dearth of necessary staff at the LTO, badly affecting the pace of work in general. Some 60 percent staff is supposed to be out of offices to perform duties at sugar mills, which hampers normal working at the LTO. Not only the LTO, but staff from the local Regional Tax Offices (RTOs) is also engaged to meet the demand of availability of staff at mills to monitor production and sale.

Copyright Business Recorder, 2022