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Appraisement West seeks FBR direction on zero-rated ST facility under SRO 1125

Appraisement West seeks FBR direction on zero-rated ST facility under SRO 1125

KARACHI: The Customs Appraisement West has sought clear Federal Board of Revenue direction regarding extension of zero rated sales tax facility to the commercial importers of fabric under SRO 1125(1)/2011

The FBR issued the said SRO to support five major export-oriented sectors to boost the economy. Presently, commercial importers are claiming benefit of zero percent sales tax vide certain entry of the said SRO.

During scrutiny of clearance of finished fabric covered under SRO 1125 (1)/2011, it has been observed that commercial importers are 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 defeating the intent and rationale behind the issuance of SRO.

The conditions laid down in the SRO clearly outline the class of imports and supplies and their respective rates of sales tax. As per the SRO, all commercial importers are entitled to zero-rated facility if the goods are useable as industrial inputs. However, at the time of import, when the commercial importers are asked to provide evidence of supply to the industrial sector, they are unable to do so.

The Appraisement West requested that the Board may kindly examine the issues highlighted above and may issue necessary directions/clarification regarding extension of zero-rated facility of Sales Tax vide SRO 1125 (1)/2011 to the commercial importers dealing exclusively in import of finished fabric and its supply to the retailers.

There are so many companies that have been importing large quantity of fabric for dyeing and then re-export. These companies are actually paper companies and get registration for nominal bribe of Rs0.25 million.