KARACHI, March 26: Hosiery and knitwear exporters have urged the government to take notice of the harassment of exporters by the CBR that has opened up five years old cases regarding “double refund of sales tax.”

In a representation to the government, chairman, Pakistan Hosiery Manufacturers Association (PHMA), Mohammad Kamran Chandna, pointed out that before the sales tax regime was imposed on the exporters in July 1996, the exporters were getting refund of sales tax on imported dyes and chemicals, which were refunded by the collectorate of customs (exports).

However, when the sales tax registration started, the CBR changed its directives to get the sales tax refund from sales tax collectorate instead of collectorate of customs (exports).

Under these arrangements, he said, the CBR continued to make sales tax refund up to December 31, 1996, where in locally manufactured yarn and other local raw materials, including dyes and chemicals, refund of sales tax was refunded from sales tax collectorate.

Whereas sales tax paid at import stage on imported raw material was refunded to exporters through collectorate of customs (exports).

Against these facts, the PHMA chairman said, the CBR has initiated cases against exporters with the issue of “double refund of sales tax during 1996” without looking into the matter that locally produced yarn was not in sales tax regime in June 1996 and it was in the central excise duty regime.

The sales tax imposed on locally manufactured yarn was used to be refunded from collectorate of sales tax and not from collectorate of customs (exports), but now the sales tax collectorate issued show-cause notice to exporters, treating as a “double refund of sales tax” which is already refunded to exporters.

He further pointed out that it is beyond the PHMA understanding as to why the high-ups in CBR remained silent for five years on the so-called crucial issue of “double refund” as under the law sales tax department cannot demand any refund after expiry of three years.