Sources told Business Recorder here on Saturday that sales tax is not applicable on the local production and supply of finished products by the manufacturing units located in Fata. However, the imports of industrial raw materials/inputs, etc, have been made by four industrial units from the tariff area and cleared from the relevant Model Customs Collectorates located in Pakistan. Thus, sales tax is applicable on the import of raw materials which was ultimately consumed in the manufacturing units located in tribal areas.
The FBR will submit the facts to the ECC of the Cabinet and final decision would be taken by the ECC. If the ECC would exempt the levy, the FBR will not recover sales tax due at the import stage from industrial units of Fata during the period under review. At present Sales Tax Act 1990 is not extended to the tribal areas. The goods produced in the industrial and manufacturing units of the Fata/Pata are subject to tax in the territorial areas of Pakistan. Legally, there is no tax in case the goods produced in the tribal areas are subsequently consumed in the same areas, sources added.
During last meeting, sources said that Chairman Senate Standing Committee on Commerce Haji Ghulam Ali had drawn the attention of Committee members towards the depleting situation of industry established in Fata. According to him, the FBR has given a notice that Rs 1.582 billion is outstanding amount of tax on that industry from 2004 to 2011. He also shared a letter written to Prime Minister describing the case of waiver of Rs 1.582 billion and approved by him to put up for order and also signed by Chairman FBR with a written note of an urgent basis but till date this case has not been entertained. The committee had decided to discuss the issue of relief to industry located in Fata and sales tax issue for Fata industrial units in the next meeting of the Senate Standing Committee on Commerce.