20000128

CBR seeks permission to recover Rs 2 billion from sugar mills

ISLAMABAD: The Central Board of Revenue (CBR) has asked the federal government for its permission to launch an operation against sugar mills of Punjab and NWFP to recover outstanding arrears of sales tax totalling Rs 2 billion on account of bagasse used as in-house fuel during 1996-97.

CBR official sources told Fortuna that a formal request in this regard had been made to the Economic Coordination Committee (ECC) by the CBR Chairman Riaz Hussain Naqvi.

Sources said the CBR chairman in a summary for the ECC has informed that bagasse used as in-house fuel by sugar mills was not exempted during the period from 13-6-97. He informed the ECC that when demand for recovery of sales tax on bagasse was raised, some of the sugar mills in Punjab filed writ petitions before the High Court which granted an injunction against recovery.

However, CBR chief said most of the sugar mills in Sindh started paying the arrears in easy installments.

CBR said Lahore High Court in its judgement dated April 14, 1998 dismissed the petitions and held that sales tax on self use of bagasse by sugar mills was payable. These mills appealed the High Court decision before the Supreme Court and obtained injunctive orders against recovery of sales tax. The appeals are still pending final adjudication by the Supreme Court.

In another 2 cases of sugar mills in Sindh, the CBR pointed out that the Appellate Tribunal had granted the stay order which had now expired.

The CBR chief has recalled that earlier, the ECC vide its decision contained in Para A (v) of case No. ECC/2/217/18/98 dated 26.11.98 issued the direction: that "the CBR should await the outcome of the court decision on payment of sales tax on bagasse used as fuel".

He pointed out to the ECC that the Revenue Division feels that the ECC may review its aforesaid decision on the following grounds of the decision being discriminatory as most sugar mills in Sindh were paying their dues in installments but sugar mills in Punjab and NWFP had not paid the dues accrued during 1996-97.

He also referred to the fact that the stay orders were specific in relation to each of the seven parties in appeal before the Supreme Court. These stay orders could not be deemed to apply to other sugar mills not in appeal before the Supreme Court.

He also pointed out that huge arrears of Rs 1989.226 million including principal amount of Rs 483.421 million are blocked due to the ECC decision, and also that sugar mills may wish to pay off these arrears by availing of the amnesty of 75 percent of additional tax and penalty scheme announced by the government under notification No SRO 1349/1/99 dated 17-12-99 read with notification No. SRO 1377/1/99 dated 30-12-99.ÑFortuna