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FBR directs to recover sales tax worth Rs992.69m from five ship breaking companies

FBR directs to recover sales tax worth Rs992.69m from five ship breaking companies

ISLAMABAD: Federal Board of Revenue (FBR) directed the Large Taxpayer Unit II (LTU) Karachi to recover Rs992.69 million from five ship breaking companies in the head of sales tax and fix the responsibility against the persons at fault.

According to the details, five ship breakers including Al Hamza Commodities STRN 1750730002346, Imran Ship Breaking Company STRN 601720401437, M/s Usman Enterprises STRN 601720400519, M/s Horizone NTN 2137119-9 and Sharry Ship Breakers NTN 3021526-9 registered with LTU II Karachi did not pay sales tax on supply of re-meltable scrap (25.9 percent of the total tonnage of the ship imported for breaking).

The exemption on supply of re-meltable scrap was withdrawn by rescinding the notification on 26th June 2014 thus re-meltable scrap had become liable to sales tax at standard rate.

Federal Board of Revenue said that the sales tax was required to be recovered under SRO 484 (1) 2015 but the large tax payer unit did not initiate any legal proceedings to recover the dues. This resulted in nonpayment of sales tax of Rs992.69 million.

It is important to mention here that according to rule 58-H Sub Rule (2B) of the sales tax special procedure rules, 2007 as amended through SRO 484 (1) 2015 dated 30th June, 2015, local suppliers of re-metalable iron and steel scrap shall be charged to sales tax at the rate of Rs5,600 per MT.

FBR also noted the taxpayer had approached the Sindh High Court and court had granted stay to them, now as the period of stay had been expired and recovery proceeding may be initiated.