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LAHORE: In a surprise development the Punjab government on Tuesday ordered the sugar mills in the province to provide it complete particulars including National Tax Numbers and CNIC of dealers purchasing sugar from them to the provincial administration, FBR and other departments concerned.
The provincial direction comes on the heels of withdrawal of a similar order by the FBR.
A spokesman for the provincial government said “the decision has been taken after withdrawal of SRO 821 by the FBR so that no shortage of sugar could occur in the market.”
The provincial order has been issued on the instruction of Chief Minister Shahbaz Sharif under section 144.
The millers rejected the provincial order, saying the Punjab government did not have the authority or jurisdiction to issue such directions. “Under the Constitution, the subject of tax collection rests with the federal government and the FBR. How can the Punjab government give such an illegal order in violation of the constitutional provisions?” asked a leading miller who requested anonymity.
A senior provincial official, however, defended the order telling Dawn that the action was not taken to collect tax but only to prevent hoarding and shortages of the commodity in the run-up to commencement of the next sugar harvest in the province.
Nonetheless, his explanation did not satisfy the sugar millers.
The FBR had decided to suspend implementation of its order for sugar manufacturers requiring them to collect and record NTN and CNIC numbers of all their sellers and buyers in view of the massive difficulty they could face in executing it as each individual mill has to deal with several hundred growers for procuring sugarcane.
When contacted Pakistan Sugar Mills Association (PSMA) chairman Javed Kayani said the commodity’s ex-factory prices were showing a steady decline on the availability of sufficient stocks with the millers and withdrawal of the FBR order requiring them to record NTN or CNIC numbers of their sellers (of cane) and buyers (of sugar).
He said the ex-factory price of sugar had declined to Rs68-70 per kilo (inclusive of a carrying cost of Re1 per month) from Rs74-76 a kilo over the last several weeks.
He said the availability of sufficient sugar stocks of 700,000 tons with the mills for the next couple of months and the FBR decision to give a waiver to the industry from the conditionality of obtaining NTN and CNIC numbers (under the SRO 821) of their sellers and purchasers had played a crucial rule in stabilising the market and bringing the commodity’s domestic prices down.
He said the PSMA had opposed the proposed amendment in the Sales Tax and Excise Duty returns calling for submission of NTN or CNIC for sales and purchases made from unregistered persons because it had no legal backing in the Sales Tax Act, 1990, and required the taxpayers (mills) to provide a lot of information to the FBR as its ‘agent’ increasing the “burden of compliance”.
“The most controversial part of the proposed returns was the remarks pertaining to purchases and sales, which suggested that all manufacturers, importers and exporters were required to record CNIC or NTN for all purchases whether acquired from registered or unregistered person. There is no such legal bar under the Sales Tax Act, 1990 for such compliance and thus, such requirement simply becomes arbitrary, unwarranted and unlawful and could not sustain the test of judicial scrutiny,” he said.
He said the “quantum of work desired to be performed by manufacturers by requiring recording of NTN or CNIC numbers of all sales and purchases has altogether been ignored.
For instance, every sugar mill installs a number of depots far away from the mills premises for procurement of maximum cane. The number of such depot range from 50 to 100 depending upon crushing capacity of a sugar mill. The cane supplied at a depot is instantly recorded and acknowledged by issuing a CPR to the grower against it.
The growers are unregistered persons and do not even operate any bank account at all. Since a number of CPRs (say 500–800 depending upon the crushing capacity of a mill) are issued to the growers daily, it was impossible for the mill to record CNIC number of each purchase at the mills.
In the same way sugar is sold not only to unregistered shopkeepers for sale in retail but also directly to poor community in small packing of 1–2 kg. Requiring copies of NTN or CNIC from such unregistered persons would have not been possible,” he defended his opposition to the FBR proposal.
Further, Kayani said, the person registered other than manufacturer, importer, and exporter did not require provision of CNIC and NTN of unregistered buyer or supplier, which created discriminate treatment.
