ISLAMABAD: As the Federal Board of Revenue (FBR) is gearing up to implement the track-and-trace (T&T) system in all four identified sectors, some tobacco companies have filed another case against the tax collection body.

As the FBR has banned all tobacco companies from selling cigarettes without tax stamps, some companies who earlier filed a case against the FBR have again filed a writ petition in the Peshawar High Court (PHC) seeking relaxation from the T&T system.

The cigarette makers have argued that their old stocks manufactured up to June 30 should be allowed to be sold because the T&T system was implemented from July 1.

On the other hand, the FBR maintains that the old stocks have to be cleared by June 30 and the current laws apply to sales made during the new fiscal year. The next hearing is set for July 13.

The implementation of the track-and-trace system was already delayed after 12 cigarette manufacturers earlier filed a case in the PHC, demanding that the cost of implementing the system had to be borne by the FBR.

However, soon after the PHC turned down the request in the last week of June, FBR teams from July 4 started stopping the movement of those cigarette stocks from the factory premises that did not have tax stamps containing the Unique Identification Marking (UIM) of the T&T system.

Of the 40 registered cigarette makers, 21 are operational at present, of which only three have implemented the T&T system, whereas 18 have yet to sign the agreement with the FBR in this regard and therefore their sales have been stopped.

Tariq Hussain Shaikh, project director of the T&T system, said the three cigarette manufacturers who have implemented the tracking system included two multinationals, namely the Pakistan Tobacco Company and Philip Morris.

The only local company to have installed the system is the Khyber Tobacco Company (KTC), which expects that its contribution to taxes was around Rs2 billion in the 2021-22 fiscal year. KTC Chief Technology Officer Shahid Sattar said the move would help the company enhance its presence in the Pakistani market and improve the quality of its products to international standards. He said the export target set by the government for KTC was $100 million during 2022-23.

FBR’s Mr Shaikh said the T&T system would help overcome huge losses from the four sectors — tobacco, sugar, cement and fertiliser. The system has already been implemented in the sugar sector from Nov 23, 2021 for the crushing season 2021-22, registering an increase of around 34pc in terms of sales tax compared to the previous year.

The system has been implemented in the fertiliser and cigarette sectors from the start of the current fiscal year, whereas it is scheduled to be implemented in the cement sector from October.

Published in Dawn, July 10th, 2022

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