December 11, 2002	Wednesday	Shawwal 6, 1423

FAISALABAD, Dec 10: Textile exporters have severely criticised the Central Board of Revenue for its unrealistic and impracticable formulation of sales tax rules and regulations, putting the textile exporters into difficulties and complications of procedural rigmarole and depriving them of their sales tax refund claims.

According to a survey carried out in the local yarn market by this correspondent here on Tuesday, the textile exporters expressed their helplessness in the face of section 73 of the Sales Tax Act, which provides that any sum exceeding Rs50,000 showing transfer of payment in favour of buyer from business account of the seller and vice-versa shall not be admissible for input tax credit, if it is not made through proper banking channel or through crossed cheque or crossed bank draft.

The textile exporters were further bound by strict limitation of the section 73, which is practice requires that any cheque/draft/ pay order must be shown paid/settled within 120 days from the date of sales tax invoice.

On the part of buyer, the regulation requires that a receipt of such payment should be from business account and tax to be verified/confirmed separately by the CBR. These provisions, the exporters said, were very cumbersome and hindered the free flow of normal business transactions.

They pointed out that it was not possible for the traders and exporters to be bound to a particular bank for payment and that the buyer and seller should have account in one and the same bank. The textile exporters pointed out that the weakness of Section 73 have already been conceded by the CBR and has in writing stated that it has made mistakes in interpreting the law. The CBR has, therefore, issued many clarifications regarding this section. Result of these clarifications is that the section 73 has further become complicated and cumbersome.

The textile exporters pinpointing another anomaly in section 73 which runs against the business practices, said that export proceeds were realized in 180 days as bulk of the export business was done on credit basis with foreign buyers.

Yet another difficulty faced by the textile exporters is that the outstanding balance is adjusted rather than payments which is in the normal course of business. It is, therefore, not possible for the exporters to fulfil requirements of 120 days provision of section 73 of Sales Tax Act.

Khurram Iftikhar, chairman, All Pakistan Cloth Exporters Association (APCEA), pointed out another difficulty being faced by the commercial exporters. He said the department required production of bank credit advice (BCA) to establish the fact that goods were exported and the amount of goods exported was repatriated to enable the sales tax department to verify and tally the refund amount and refund period with the consignments and export proceeds recovered. This, he said, was a very long-winded and complicated procedure resulting in nothing but delay in payments of sales tax refund to the commercial exporters.

Rana Arif Tausif, senior vice chairman, APCEA, said the CBR instead of facilitating the exporters was making the refund system further complicated and cumbersome resulting in blockage of exporters’ precious capital.

In all other countries of the world, the governments provide facilities to their exporters for promotion of exports. But in Pakistan the situation was quite reverse as the exporters huge funds were held up with the sales tax department and the exporters were at the mercy of credit lenders and bankers on costly interest rate. The exporters appealed to the government to take immediate cognizance of the matter and take action before the situation develop into crisis.