KARACHI: Federal Investigation Agency (FIA) – Anti-corruption-circle – has initiated an inquiry regarding misuse of concessionary SRO 1125(I)/2011 and approached Chief Collector Appraisement South seeking complete record of imports on which exemptions were availed by the importers.
FIA has sought record pertaining to the import of sodium metabisulphite (2832.1090) throughout Pakistan during 2011 to 2017. It has been found that large quantity of sodium metabisulphite has been imported and subsequently cleared by availing undue benefit if sales tax zero rating under SRO 1125(I)/2011, while the exemption was not available for sodium metabisulphite.
It may be mentioned here that SRO 1125(I)/2011 has been grossly misused causing revenue loss to the tune of billion of rupees to the national exchequer.
Sources said Inland Revenue officials were involved in the scam as they had registered paper companies as manufacturer importers to avail undue exemptions. An official said unless Inland Revenue was cautious in registering the companies as manufacturer importers, the menace could not be eliminated.
It may be mentioned here Commissioner Regional Tax Office-III, Karachi has taken notice of misuse of SRO 1125(I)/2011 by fake importers and manufacturers.
The investigation and prosecution branch of RTO-III is conducting investigation against registered persons who are involved in the misuse of SRO 1125(1)/2011. It was reported by the Assistant Commissioner-IR of the Investigation and Prosecution branch that after the change in tax structure for textile sector manufacturers and for commercial importers effective from July 2017 (specifically of finished fabric) units registered as manufacturer cum importers are misusing facility of zero rated imports of fabric under SRO 1125(1)12011 and after importing finished fabric at zero percent Sales Tax, supplies are declared to have been made to textile sector registered units to avoid payment of Sales Tax at the rate of 6.0 percent under aforesaid SRO.
Whereas in actual the imported finished fabric is sold/dumped in local markets for onward sales to end consumers, thus causing heavy loss to National Exchequer.