The manner and procedure of issuance of general orders by the Board for grant, withdrawal or rejection of zero-rating on electricity and gas is provided through Sales Tax General Order No. 17 of 2015. As per procedure, on receipt of application by the registered manufacturer for granting approval for receiving electricity and gas from the utility companies without levy of sales tax, the LTU or RTO having jurisdiction over the case of the applicant shall complete the process of physical and other necessary verification and furnish a report to the FBR on a prescribed proforma conveying recommendation for grant of zero rating or otherwise.
In certain cases, the recommendations by the Large Taxpayer Units (LTUs) and Regional Tax Office (RTOs) are not expressed and hence the Board is unable to accord the approval and instead the discrepancies in the report or the sales tax profile of the applicant are conveyed to the LTU/RTO with the direction to resolve these discrepancies at the earliest and send expressed recommendations to the Board so that cases could be finalized at the earliest as per law.
As per a recent letter of the FBR, addressed to the chief commissioner LTU, Lahore, five leading cases of the textile sector are mentioned to be pending at the Board for want of expressed recommendation of the LTU on the discrepancies mentioned against each registered unit. The letter states that the Board has already informed and repeatedly requested the field formations to resolve these discrepancies at the earliest. The Board's aforesaid direction pertains to the cases of Nishat Mills Limited, Servis Industries Limited, Kamal Limited, Suraj Cotton Mills Limited and Shahraj Fabrics (Pvt) Limited.
When tax consultant of All Pakistan Textile Mills Association (APTMA) was contacted for comments, he observed that all the cases mentioned in the FBR matters are of leading exporters of Pakistan and even their cases for approval of zero-rating of utilities have been pending for months with the FBR and the issue has not been prioritized by both the FBR and field formations with the result that due to delay in granting approval of zero-rating, the amount of sales tax refunds due to these exporters is increasing and delay in processing of sales tax refund is another irritant for the export sector.
Copyright Business Recorder, 2017