LAHORE, Dec 3: Export refunds of many exporters are being held back by the sales tax administration in Lahore on the excuse that their suppliers (registered under the law) have gone missing and are untraceable.

Some 450 such suppliers registered with the collectorate under the sales tax law are said to have “changed their address without notifying their new premises to the sales tax department, leading to a delay in the release of refunds of millions of rupees mostly to commercial exporters and, in many cases, to the manufacturers- cum-exporters.”

Lahore Sales Tax Collector Akhtar Ali told Dawn here on Monday that the “missing” registered suppliers are those who are showing huge “turnover” but are not paying taxes due to them according to the volume of their sales. He said the department could not audit the record of such suppliers because they have shifted to another premises without informing the collectorate.

He did not agree that genuine exporters were suffering because of the department’s inability to trace new address of the missing suppliers.

“Most exporters whose refunds have been held up are commercial exporters, who did not actually buy any goods from such suppliers. Actually, these exporters have bought only (flying) invoices from them to seek refund against the goods purchased from unregistered suppliers. Majority of such invoices, on investigation, have been found to be inaccurate and false. They also are unable to help us track their suppliers. In cases where we have been led to the new premises of their suppliers by the exporters, we’ve found serious discrepancies during the audit of record. In these circumstances, we cannot release refunds,” says Ali. He added only a few genuine exporters had their refunds stopped on this count.

“In a couple of instances when a manufacturer-cum-exporter led us to his supplier, the latter failed to justify his own purchase from his own suppliers. But there are only few such cases,” added the collector. The issue has cropped up as some exporters are not following the law, he said, adding his department is not delaying refunds on any frivolous or false pretext.

The Lahore office, he claimed, released refunds of Rs1 billion only during the last month. Since the start of the current fiscal year, he said, “we have released something close to Rs6-7 billion to the exporters to satisfy their refund claims.”

However, the exporters don’t agree with his explanation. “It’s not our job to check the credibility of suppliers registered with the department. It is the duty of the sales tax officials to keep a track of the suppliers and the absence of suppliers must not be used as an excuse to stop or delay our export refunds,” a leading exporter of knitwear said.