KARACHI: Textile industry leaders have confronted the Sindh Revenue Board (SRB) over the levy of sales tax on the supply chain of value-added textile sector.

They argued that supply chain is not a service but a manufacturing activity which falls under the ambit of federal taxes.

Towel Manufacturers’ Association of Pakistan (TMA) chairman Farreukh Maqbool approached chairman SRB and strongly argued that the supply chain of value added textile sector starts from sowing and plucking of cotton from fields for converting into finished cotton yarn and different made-ups.

He further said that all these activities fall under the preview of federal government as they undergo different manufacturing processes and activities starting from ginning, spinning, weaving, sizing, dyeing, stitching of garments or home textiles etc.

“These are manufacturing activities which could be carried out by an individual, small scale industries or under one roof of a large manufacturing facility of a composite unit and in no way could be termed as a ‘service industry’ to be taxed by provinces,” he maintained.

Pakistan Bedwear Exporters Association chairman Shabir Ahmed said even by definition the word “manufactured” in the business directory is to make goods with tools and/or machines by effecting chemical, mechanical or physical transformation of materials, substance or component or simulating material process usually or repeatedly by large scale with division of labour.

In support of his argument, Mr Ahmed quoted Section 2 (16) (a) of the Sales Tax Act 1990 which states: “Any process in which an article singly or in combination with other articles, materials, components, is either converted into another distinct article of product or is so changed, transformed or reshaped that it becomes capable of being out to use differently or distinctly and includes any process, incidental or ancillary to the completion of the manufacture product.”

Published in Dawn September 29th, 2016