ST cut on sugar imports: PAC grills tax authorities over FBR's decision
PAC member Riaz Fatyana raised the issue during a session chaired by Junaid Akbar Khan, pointing out that the drastic reduction was implemented through a Statutory Regulatory Order (SRO), which he said served vested interests.
'This decision reeks of favouritism,' Fatyana said. 'It appears to have been designed to give financial advantage to specific groups.'
Committee member Sanaullah Khan Masti Khel didnot minces words, calling it a 'broad daylight robbery' and accusing the authorities of colluding with sugar cartels.
MNA Moeen Aamir Pirzada added that the practice of exporting sugar first and then importing it back was an engineered cycle designed for profit manipulation.
The committee expressed strong reservations and summoned top officials from the FBR and the Ministry of Commerce to appear in the next session to explain the rationale and legality of the tax reduction.
'This is not just mismanagement; it's systemic exploitation,' said Masti Khel.
The PAC warned that it would not let the matter slide without a thorough investigation and accountability.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
19 hours ago
- Business Recorder
Export-oriented industry rates: MoC opposes gas/RLNG supply to Ghani Glass
ISLAMABAD: Ministry of Commerce (MoC) has opposed provision of gas/RLNG to M/s Ghani Glass Limited as per rates made available to the export-oriented industry. According to the details, in 2019, M/s Ghani Glass Ltd. filed a Writ Petition in the Lahore High Court and prayed that the concessionary gas/RLNG tariff-fixed at Rs. 600 per MMBTU granted to the zero-rated/export- oriented sectors, may be extended to the Petitioner, as well. Petroleum Division, Oil and Gas Regulatory Authority (OGRA), Sui Northern Gas Pipeline Limited (SNGPL), and Federal Board of Revenue were the original respondents in the Writ Petition (Annex-I). Ministry of Finance and Ministry of Commerce were not impleaded as parties, in this case, until April 07, 2025. The Lahore High Court, in its judgment of April 10, 2025, directed: (i) Ministry of Finance in coordination with the Ministry of Commerce and other relevant stakeholders to, within 90 days, place the case of M/s Ghani Glass Ltd. before the ECC of the Cabinet to develop a uniform policy ensuring that only export-oriented industry receive tariff concession rather than making sector-based classification that allow non-exporting industry to benefit unfairly;(ii) in case of placement of the Case, the ECC was directed to consider within 60 days, the request of the petitioner for grant of concessional tariff in respect of price of Sui Gas/RLNG with specific reference to the point of discrimination excluding glass from the export-oriented sectors;(iii) the relevant authority was also directed to look into charging concessionary tariff from the petitioner from the date of filing of the case (i.e., 2019) till the period the benefit was extended to five zero-rated/export-oriented sectors ; and (iv) ECC was directed to take into consideration the potential of glass industry to further increase export abroad to fetch maximum foreign exchange. Furthermore, the said forum was also tasked to determine whether it is feasible to charge high prices to any export-oriented industry as compared to the price prevalent in other countries. According to Commerce Ministry, the Federal Board of Revenue in an SRO 1125(1)/2011, granted zero-rated sales tax status to the five key sectors: textiles (including jute), carpets, leather, sports goods, and surgical instruments. In 2018, the Petroleum Division extended concessionary tariff on RLNG at PKR 600/MMBTU to the exporters of the same five zero-rated sectors. Following the withdrawal of SRO 1125(1)/2011 through the Finance Bill 2019, an administrative gap emerged regarding the continuation of concessionary gas tariffs. Ministry of Commerce, therefore, declared the erstwhile zero-rated sectors as 'Export-Oriented Sectors' through an OM of December 13, 2019. Accordingly, concessionary gas tariffs continued till 2023 and were discontinued afterwards. Commerce Ministry further stated that concessionary energy tariffs which were being granted to the five export-oriented sectors have been discontinued and are no longer available to any sector. Tariff concessions were granted to those sectors whose share in Pakistan's total exports were significant in 2011, while share of the glass sector with an annual export $ 15.9 million was negligible. Ministry of Commerce on the advice of Ministry of Law & Justice, filed aCivil Petition for Leave to Appeal (CPLA) on June 12, 2025 in the Supreme Courtof Pakistan and has contested the judgment of Lahore High Court. Commerce Ministry was of the view, that the claim made by M/s Ghani Glass Limited for grant of tariff concessions on gas/RNLG is untenable and may not be entertained. Copyright Business Recorder, 2025
Business Recorder
19 hours ago
- Business Recorder
SRO 706 (I)/2010 tractor tax refund: FBR to seek Law Division's opinion
ISLAMABAD: The Federal Board of Revenue (FBR) will legally file reference with the Law and Justice Division seeking clarification whether SRO 706 (I)/2010 was legally issued under which input tax on agricultural tractors was exempted to the tractor manufacturers through refund. Federal Board of Revenue (FBR) Member Inland Revenue (Operations) Dr Hamid Ateeq Sarwar, Friday, informed the Public Accounts Committee that the FBR has accurately issued SRO706 (I)/2010 to ensure that the prices of tractors should not increase at that time. To clear ambiguity, the Auditor General of Pakistan (AGP) and the FBR can seek clarification from Law and Justice Division about the legality of this SRO. Tractor-manufacturing company: FBR raises Rs18bn sales tax demand During the PAC meeting, officials of the AGP directed the FBR to submit the update on the demand of Rs18 billion raised against a tractor company during an internal audit conducted on the directions of the Federal Tax Ombudsman (FTO). The officials of the AGP further pointed out whether the farmers were able to get the benefit of SRO706 (I)/2010. As the matter involves interpretation of law, the same should be referred to the Law and Justice Division, FBR Member Inland Revenue operations added. According to the audit brief submitted by the AGP before the PAC on Friday, as provided in Section 13(1) read with Sixth Schedule of the Sales Tax Act, 1990, the supply of tractors has been exempted from the chargeability of sales tax. Conflicting with the above provision of the law, FBR issued SRO706 (I)/2010 dated 2nd August 2010 by exercising its powers under Section 13(2) of the law, wherein, the input tax on agricultural tractors was exempted to the tractor manufacturers by way of refund subject to the condition that 'manufacturer shall sell exempt agricultural tractors against proper tax invoice with zero sales tax at the price agreed with federal government'. The condition 'at the price agreed with the Federal Government' was also deleted on 28.04.2007. Audit is of the view that through said SRO, supply of tractors has been turned zero rated whereas it was an exempt commodity as contained in the 6th Schedule to the Act. The refund of input tax against supply of tractors by treating them as zero rated through an SRO was in conflict with the basic provisions of the Act. Hence, refund sanctioned in this way was unlawful causing a loss of government revenue to the tune of Rs7,069.311 million during tax periods in case of one manufacturer only, as per information available to Audit. The LTU, Lahore informed that refund of sales tax was allowed as per existing law/rules/instructions of FBR. As per Sections 72 and 42 of the Sales Tax Act, 1990 and Federal Excise Act, 2005, the field officers were bound by such law/rules/instructions of FBR. As such no loss occurred on the part of officers of LTU. Audit is of the view that administrative officers were bound to comply with the provisions of the Act of the parliament in public interest rather than to blindly follow the instructions of FBR while sanctioning such refunds. Hence, the reply given by the department is irrelevant and not tenable. The AGP objected that special excise duty was levied under Section 3A of the Federal Excise Act, 2005 on goods specified in SRO 655(1)/2007 dated 29-06-2007. Later on, special excise duty was exempted vide SRO 675 (1)/2011 dated 01.07.2011 issued under Section 16(2) of the Act, effective from 01.07.2007 by way of refund to the purchaser i.e. manufacturer of tractors. After issuance of SRO of 2007, vendors of agricultural tractors kept on charging this duty and the same was also being paid by the tractor manufacturers while making taxable supplies. Tax authorities of FBR allowed a refund of special excise duty (SED) to M/s Millat Tractors (Pvt) Ltd by giving the benefit of SRO dated 01.07.2011 from back date i.e. July 1, 2011 to the taxpayer. Audit is of the view that Section 16(2) of the Federal Excise Act, 2005 does not empower the federal government to exempt duty from retrospective effect as specifically allowed in case of sales tax under Section 13(4) of the Sales Tax Act, 1990. Hence, refund of SED of Rs242.826 million to Millat Tractors (Pvt) Ltd, allowed during July 2007 to May 2011, was unlawful. Moreover, the amount of special excise duty became part of the price of tractor and was passed on to consumers/farmers. In this way, tractor manufacturers enjoyed double benefit i.e. higher prices of product and refund. The officers of LTU allowed refund of special excise duty as per Sections 72 and 42 of Sales Tax Act, 1990 and Federal Excise Act. The reply was irrelevant and did not address the issue. The lapse was pointed out to the department during June to October 2013. In this regard, it is stated that recovery notice dated 03.07.2025 has been issued to M/s Millat Tractors Limited for payment of sales tax amounting to Rs1,847,840 by 15.07.2025. Further, DGAIR (North)'s letter dated 03.01.2017 has been forwarded to the board for necessary guidance and its reply is awaited. The DAC directed the LTO, Lahore to get its stance verified from audit in the light of board's clarification issued on 07.04.2017 and submit progress to audit and FBR by 30.07.2025. The PAC may like to direct the department to: i)expedite recovery of government dues; ii) justify issuance of SROs conflicting with Acts of the Parliament and fix responsibility on person(s) at fault; iii) submit SROs pertaining to exemptions, concessions and zero rating of supplies, issued during a financial year, for Parliamentary approval; and iv) conduct a fact finding enquiry on the issue as FBR has already conducted internal audit of a tractor company for the subsequent period(s) on the directions of honourable FTO and raised demand of Rs.18.7 billion on the same issue, the AGP report added. Copyright Business Recorder, 2025
Express Tribune
19 hours ago
- Express Tribune
FBR's lapses cost govt Rs397b, PAC panel told
Policymakers are expected to continue improvements on tax collection side to widen the tax net by signalling reduction in corporate and salary tax by 1% per year for the next 10 years and by reducing industrial energy tariffs. photo: file A subcommittee of the Public Accounts Committee (PAC) was left stunned on Friday after uncovering gross mismanagement within the Federal Board of Revenue (FBR), which resulted in a staggering Rs397 billion loss to the national exchequer. The meeting of the subcommittee, chaired by its convener Shahida Akhtar Ali, was informed that the losses stemmed from the non-recovery of direct and indirect taxes as well as customs duties, due to negligence and inefficiency within the FBR. The subcommittee reviewed audit reports of the FBR for fiscal years 2010, 2011, 2013, and 2014. Audit officials disclosed alarming lapses, pointing out that Rs6.5 billion worth of sales tax and Federal Excise Duty (FED) had remained uncollected. They revealed that 633 individuals had either underpaid or evaded taxes, yet officials at 10 FBR offices failed to take action against them. Moreover, despite the presence of legal provisions allowing for forced recovery without show-cause notices, these measures were not implemented. It was further disclosed that the Pakistan International Airlines (PIA) had collected FED on tickets but failed to transfer Rs2.5 billion to the FBR. Officials added that, since PIA's privatisation remains incomplete, the government would now bear this liability. The committee directed authorities to verify the recoverable amount. The meeting was informed that 514 FBR agents did not deduct withholding tax during 2013-14, resulting in a shortfall of Rs24.15 billion. Additionally, the subcommittee was apprised that Rs71 million was assessed but never recovered. An FBR member informed the subcommittee that Rs16 billion had been retrieved and verified, while Rs452 million remained under audit scrutiny.
