PESHAWAR, July 15: The gee manufacturing units across the country would stop production from July 17 in protest against the non-acceptance of their demands by the federal government.
Haji Mohammed Akhtar, the chairman Pakistan Vanaspati Manufacturing Association (PVMA) told Dawn on Monday that the ghee manufacturing sector would go on indefinite strike from July 17 if their demands especially concerning the recently imposed 15 per cent General Sales Tax (GST) on ghee was not accepted.
“We have taken this decision as it has become immensely difficult to continue manufacturing any further under the given circumstances,” said Haji Akhtar.
The ghee manufacturers took this decision, he added, after they had been made to pay, what he claimed, 35 per cent sales tax on their item.
The government’s decision of imposing 15 per cent GST at the retail level would hit the ghee manufacturers making them to undergo heavy financial losses.
“The manufacturers can not claim in-put adjustment from the concerned tax authorities as 99 per cent of the retailers in this country are running their businesses without maintaining proper accounts,” said Haji Akhtar.
In the absence of documentation at the retail level, said the PVMA chairman, the manufacturers had been negatively hit by the government’s decision of introducing 15 per cent GST at the retail level.
“It makes us to pay 35 per cent sales tax,” said Haji Akhtar. He said the federal government in its budget for the 2002-03 financial year had already raised the rate of sales tax from 15 per cent to 20 per cent at the import stage.
According to him, the ghee manufacturers’s stand on the 15 per cent GST issue has been acknowledged by all the official quarters concerned including the federal ministers for finance and commerce apart from senior officials of the Central Board of Revenue and Finance division, Islamabad, but to no avail.
The PVMA delegations, said the association’s chairman, had been frequently holding meetings with all concerned. “But despite agreeing to our stand government appears to be adamant,” said Haji Akhtar, adding “we are not in a position to continue manufacturing any more.”
Khaleeq Kiani from Islamabad adds: earlier addressing a press conference in Islamabad, the PVMA chairman, Haji Akhtar, accompanied by executive members Sheikh Ikram, Ilyas Bilour, Rana Iqbal, Muhammad Farooq, Sheikh Fiaz, Abdul Waheed, Javed Islam and Atif Rahim demanded withdrawal of enhanced GST and the condition of payment through banks for the buyers to provide breathing space to ghee and cooking oil industry and avert the looming crisis. Akhtar said that ghee/cooking oil sector was already heavily taxed and was paying Rs25 billion annually to the government exchequer in the form of taxes and duties besides, providing livelihood to 100,000 families.
But with increase in GST from 15 per cent to 20 per cent and payment through bank this fully documented sector has been pushed close to a complete collapse, he said.
Akhtar said that in pre-budget and post-budget meetings, the PVMA briefed the government functionaries about multiple problems faced by the industry, but unfortunately all went unnoticed and now situation had gone out of their control.
Former Chairman PVMA, Sheikh Ikram termed the new payment procedure for buyers as impracticable and apprehended that if this condition was not withdrawn it would cause irreparable loss to the industry.
Ilyas Bilour said that the government wanted documentation of buyers through new procedure of payment. The payment through banks is meant for documentation of the small buyers through the miller, he said adding that this is a tax authorities’ job and not of the millers.
The chairman PVMA said that new taxes would add Rs17 per kg to the price of ghee/cooking oil and the millers believed that the consumers would not be in a position to bear such burden.
“The strike or closing down whatever may you call it but I assure every one here that the benefit of it (withdrawal of taxes) would be passed on to the end consumer,” Akhtar said. He listed five major problems, which, according to him, forced the millers for a close down.
First, Rs 10,800 customs duty on per ton RBD palm oil and Rs 9,050 per ton on Soybean oil. These duties were subject to payment of 15 per cent sales tax and 3 per cent withholding tax at import stage which are not adjustable.
Secondly, non-adjustment of enhanced sales tax and inclusion of ghee/cooking oil industry in Section 73 of Sales Tax Act, 1990.
Thirdly, non-removal of anomaly in Sales Tax in the audible oil produced from imported commercial oilseeds and imported edible oils, which was directly affecting the industry.
Fourth, Sub-section (3) and (8) of Section 148 of the Income Tax Ordinance, 2001 once again carries the word “ minimum” which was inserted by addition of Section 80 DD in the Finance Act 1999.
Fifth: imposition of one per cent surcharge on import of edible oils over and above other levies such as customs duties and taxes.