KARACHI, July 6: Exporters will lose millions of rupees in sales tax refund claims following the issuance of SRO 538(I)/2005 by the Central Board of Revenue that denies any refund claims after June 30, 2005.

The SRO states: “No exporter of textile and textile articles, leather and articles thereof, carpets, surgical and sports goods will be entitled to claim any adjustment or refund of sales tax paid on his stock after the expiry of the tax period ending on June 30, 2005.”

The step has been taken under the first provision to sub-section (1) of section 10 of the Sales Tax Act, 1990.

Exporters argue that under sub-rule 28 of chapter V of the Sales Tax Rules, 2004 and/or sub-rule 29 of chapter V of the Sales Tax Rules, 2005, a refund claim is deemed to have been established once the monthly sales tax return is filed and all supportive documents have been received in the refund division.

Towel Manufacturers’ Association of Pakistan (TMA) Chairman Syed Usman Ali said that under the Sales Tax Rules, 2004, a bona fide manufacturer-cum-exporter, who had filed the return and submitted the supportive documents with the department before the expiry of June 30, 2005, was entitled to refund since the impugn SRO 538(I)/2005 did not attract the provision.

He urged the CBR to entertain sales tax refund claims of all those exporters who had submitted their refund claims before June 30, 2005, and it should also issue a clarification to this effect.

Mr Ali apprehended that if the CBR did not allow exporters to get their genuine refund claims of sales tax, many small and medium size exporting houses would face financial crisis, which would ultimately affect their export commitments.