20000314

Notices for ST on year-old imports

Leather exporters protest to CBR

RECORDER REPORT

KARACHI: Leather exporters have protected to the Central Board of Revenue (CBR) against customs notices to pay sales tax on hides and skins imported into the manufacturing bonds and processed and exported about a year ago.

The Chairman of Taxation Sub-Committee of the Pakistan Tanners Association (PTA), Habibur Rehman Shaikh has appealed to Member Exports, (CBR) to direct the Customs Collector to withdraw show cause notices issued to the leather garment exporters.

He pointed out that the exporters were allowed duty free import of raw material into manufacturing bonds under SRO 1319. The exporters were unaware of the levy of sales tax on skins and hides imported into the bonds. Had they known of the levy earlier, they would have paid sales tax during the processing stage and would have claimed the refund of the same.

Habib, said that there was no point in demanding sales tax on goods which had already been processed and exported about a year ago. The notices were tantamount to harassment of the PTA members, he alleged.

The PTA Sub Committee on Taxation reminded the Member Exports that the issue was discussed at a high level meeting in Islamabad and the PTA delegation was assured that if would be resolved shortly. The meeting was attended by Member Coordination, CBR and Members CBR for Export, Customs and Sales Tax.

Earlier Secretary (STT), CBR, in a letter had informed the PTA that the matter regarding levy of Sales Tax on raw hide and skin was examined in depth and it was held that " Hides & Skins" ( of PCT Chapter 41) are not covered by SI. No. 2 of the Sixth Schedule to the Sales Tax Act, 1990 as "Agricultural produce of Pakistan not subjected to any further process of manufacture". Being not otherwise exempt under any of the provisions of section 13 of the Sales Tax Act 1990 or under any of the entries in the Sixth Schedule thereof, the supply of "Hides & Skins" are liable to sales tax. The view point of the CBR was also confirmed by Law and Justice Division, added the CBR Secretary.