Lahore: The Federal Board of Revenue (FBR) and its sub-organs have been creating unfair hurdles and using delaying tactics to clear the billions of rupees’ sales tax refunds of the tractor industry despite the full assurance of the Ministry of Industries & Production and FBR’s high-ups.
According to a statement issued here on Monday, a high-level delegation of the Pakistan Association of Automotive parts and Accessories Manufacturers, comprising Chairman Abdul Rehman Aizaz and the Senior Vice Chairman Mr Abdur Razzaq Gauhar, called on Federal Minister of Industries & Production Khusro Bakhtiar and Secretary Industries and Production Hamid Ateeq Sarwar to seek support in this regard.
The delegation apprised the ministry that tractor manufacturers and their vending industry were inter-connected and if more than Rs6 billion sales tax refunds, held for the last 18 months by the FBR, were not released on an immediate basis to the tractors industry, the circular effect would choke everyone, including the vending industry. The delegation was very kindly assured of the immediate release of the sales tax refunds due for long.
The Ministry of Industries & Production (MOIP) also supported the stance of the PAAPAM’s delegation and saw no legal or administrative hindrance to release the sales tax refunds by the FBR.
In another meeting with the FBR Chief Operations & Refunds Officer Muhammad Abu Bakar Siddique, the PAAPAM delegation was told that the FBR also observed no reason to stop the tractor industry’s refunds. He directed the delegation to contact the Large Taxpayer Unit (LTU) Lahore chief commissioner and get the refunds without any delay to avert any crisis in the vending industry, which was facing a serious liquidity crunch.
However, when the PAAPAM tried to contact LTU Lahore chief commissioner Qesar Iqbal he did not even bother to spare time to meet the tractor vending industry’s representative despite repeated requests.
“The post meetings behavior of the FBR’s LTU officials is contradictory to the considerate attitude of the higher-ups of the FBR and the Ministry of Industries & Production,” observed the PAAPAM Chairman Abdul Rehman Aizaz and Senior Vice Chairman Abdur Razzaq Gauhar.
Meanwhile, the PAAPAM requested the tractor industry to continue its support in releasing the payments inclusive of Sales Tax to avoid any financial hit to the vendors, who were already struggling hard to maintain the supply chain amid rising prices of all inputs. Only Millat Tractors (MTL) has the plan of producing 45,000 more tractors this year to enhance the country’s GDP. But it requires an uninterrupted supply chain of the parts by the vendors. Every hurdle creates problems not only for tractor industry but also for its vendors, so both have the commitment to jointly deal all crises.
Aizaz said that the tractor vending industry was already operating only on marginal profitability and working hard to supply parts to the tractor industry aimed at increasing inputs. He said if long outstanding sales tax refunds’ payment was not made immediately to the tractors’ manufacturers they would be unable to continue payments to the vendors.
Consequently, the tractor parts manufacturing vendors will have no option except to close their operations. They have limited financial resources and working capital lines from the banks. Besides clearing the overdue sales tax refunds at the earliest, the Federal Board of Revenue also needs to ensure that SRO 363(1)/2012 should be followed in the spirit in ERS of FBR that bounds the government to refund the sales tax in 3 days, he pointed out.
Senior Vice Chairman Abdur Razzaq Gauhar said that around 250 vendors were engaged in making parts and accessories for the local tractor industry and providing job opportunities to hundreds of thousands of families.
The PAAPAM representatives, appreciated the government for its commitment to pay the refunds to the industry at a fast-pace, appealing the Minister of Finance and FBR Chairman to launch the same efficient system for the auto-sector as well to clear the sales tax refunds of the tractor industry on regular basis within the minimum possible time, following the SRO 363(1)/2012, the PAAPAM added.
The PAAPAM further requests the FBR authorities that because of the importance of the tractor industry as the lifeline of farm mechanization, a speedy and efficient sales tax refund system be introduced as food security of the people is not lesser important than exports. Besides this, hurdles should be removed at the earliest and FBR’s business-friendly policy should prevail across the board as per PM’s slogan of promoting ‘Ease of doing Business’ to ensure smooth operations of the industry.