ISLAMABAD: The intelligence and investigation (I&I) wing of the Federal Board of Revenue (FBR) is likely to invoking Section 38 of Sales Tax Act, 1990 for recovery of Sales Tax from manufacturers/importers of ghee and cooking oil evaded under conditional exemption granted vide Sr No 24 of Sixth Schedule of Sales Tax Act, 1990.
The law empowers the agency to move into the premises, stocks, accounts and records to check payments of sales tax on edible oil and vegetable ghee including cooking oil.
According to the exemption granted vide Sr No 24 of Sixth Schedule of Sales Tax Act, 1990, the exemption from Sales Tax can only be applied to those manufacturers or importers who are being charged FED in value added tax (VAT) mode on supply of their products – edible oil and vegetable ghee. As per the current practice, Customs authorities collect FED @Rs 1 per Kg. and 17 percent FED at import stage from importers/manufacturers, whereas, neither any importer charges 17 percent FED in VAT mode or 17 percent sales tax on sale of their products as per requirement of above provisions of the Act.
Thus the conditions set forth for availing exemption under Sr No 24 are not being fulfilled by the manufacturers/importers either by avoiding or evading FED in VAT mode.
Therefore, the Directorate General of Intelligence and Investigation is likely to take action against all such manufacturers/importers under section 38 of the Sales Tax Act, 1990 for recovery of Sales Tax evaded under the cloak of exemption.
