The collectorate in a letter stated that SRO 1125(I)/2011, which was issued to support five major export-oriented sectors of the country, is presently being misused by the commercial importers of finished fabric.
It further stated that the collectorate during scrutiny of clearance of finished fabric observed that commercial importers were involved in massive misuse of the zero rated facility and routinely importing and supplying finished fabric to retailers for sale to the general public which is against the rationale behind the issuance of the said SRO.
The Collectorate through letter cited that all commercial importers were only entitled to avail zero rated facility if the goods were useable as industrial inputs. However, the importers remained unable to produce either a nil sales tax return or show supplies to retailers, non-industrial or unregistered persons at zero percent sales tax when asked at the time of import to provide evidence of supply to the industrial sector, the collectorate added.
Keeping it in view, the Collectorate recommended the Member IR (Policy) to issue directives regarding the disentitlement of said tax concessions to the commercial importers in case of not meeting the required criteria.
The Collectorate also requested that board may examine the said problems highlighted by the department and issue necessary clarification regarding the extension of zero rated facility of sales tax under SRO 1125(I)/2011 to the commercial importers dealing exclusively in the import of finished fabric and its supply to the retailers.