KARACHI, March 20: The Sindh government is providing Rs1.7 billion subsidy per year for keeping petrol prices at par with other provinces. The relief is in the form of exemption of infrastructure cess on import of petrol, oil and lubricants (POL), sources in the ministry of excise and taxation told Dawn on Thursday.

They said that the infrastructure cess was levied on all imports at the rate of 0.5 per cent of the cost and freight (C&F) value, but the cess was never collected on POL imports since the levy was introduced in 1994.

“The federal government often takes credit for providing subsidy on petrol, but a few people know that the Sindh government is also extending subsidy on petrol by not collecting infrastructure cess on import of POL products,” they observed.

Director General Excise and Taxation Asif Marghoob Siddiqui fully supports any relief to the consumers but is more concerned about revenue target, which he believes is difficult to achieve in the absence of infrastructure levy collection on import of POL products. He said when this levy was introduced the POL products were only imported by the government, thus it was not collected.

He said that after the deregulation of POL business the department had a right to demand infrastructure cess on the imports of POL products. “We have written to the government to either allow the department to collect levy on POL imports or direct the ministry of finance to pay compensation for the revenue shortfall on this account”.

He disclosed that POL constituted 30 per cent of the total imports of the country and the department could generate Rs1.7 billion which could be added to the total collection of Rs5.5 billion on account of this cess.He further said that the payment of infrastructure cess through bank guarantees by some parties, who have taken stay order from the Sindh High Court, was another cause of shortfall in the revenue collection. “These parties are not paying the cess directly and instead are depositing bank guarantees equal to the cess amount on their imports,” he explained.

He said that the total amount of bank guarantees reached to Rs5.2 billion during the last eight years.

The bank guarantee amount for the first eight months of the current fiscal is Rs756 million. However, this amount cannot be added to the revenue of the ministry unless the court case is resolved, he said.

Meanwhile, Karachi Customs Agents Group Secretary General Arshad Jamal supported the cess exemption on POL imports in the interest of common consumers.