KARACHI, June 12: The SRO 507(I), 2003, which prohibits supply of locally manufactured goods to persons not registered or enrolled under the Sales Tax Act, has almost suspended industrial activities and their sales.

Majority of the industrial units belonging to various sectors have approached the Central Board of Revenue (CBR) and Finance Ministry to get the implementation of the SRO 507 suspended immediately, thus allowing resumption of normal industrial activities and smooth collection of targeted tax revenue.

Industrialists told Dawn that the SRO had effectively hit the sales of industrial units because they could not force majority of their customers to obtain sales tax registration.

“We have taken up the matter with the member, sales tax who has admitted that the SRO has caused problems to industrial units,” chairman Site Association of Industry, Haroon Farooqi told Dawn on Thursday. He said the member, sales tax, has sought proposals from the association so that remedial measures could be taken. He said that at least 40 manufacturers have restricted their sales.

Site Association had discussed the SRO on Wednesday with representatives of 40 industrial units to review the impact and adopt future course of action.

According to the notification, the government has prohibited supply of goods manufactured by consuming raw materials, parts, sub-components and components imported under various concessionary notifications to any person who is not registered or enrolled under the Sales Tax Act. If any such supply is made, the registered person shall not be entitled to re-claim or deduct input tax in respect thereof.

“Current status of the registered persons under the Sales Tax Act is about 10-15 per cent. To restrict local industry to cater to only 15 per cent market/consumers is a serious blow to it,” the chairman Pakistan Electronics Manufacturers Association (PEMA), Sarfarazuddin said in an SOS to the finance minister urging him to withdraw the SRO immediately.

“It is surprising that imported goods have not been brought under this SRO for obvious reasons,” he said.

Pakistan’s future is dependent on the growth of engineering sector. Such move like SRO 507 would seriously affect the growth of the local industry whereas the SRO would greatly help importers, smugglers and un-organised sector, he added.

“The government’s decision has restricted and reduced the market size for locally produced products and has opened all doors for the importers and smugglers who are still out of the sales tax net,” he said.

An industrialist said that the government’s measure would result in massive unemployment and seriously hurt the government policy to alleviate poverty. He said the stoppage of sales of the affected industrial sales would prove an imminent threat to revenue collection in this crucial closing month of the current fiscal year.

Meanwhile industrial sources said that the economic managers, after receiving various representations from the associations and individual companies, are now actively reviewing the situation and considering to suspend the SRO 507.