KARACHI: With detection of serious anomalies in financial ledgers, the Federal Board of Revenue (FBR) has created a tax demand of Rs400 million against 16 sugar mills which are involved in stocking 770,538MT sugar worth Rs33.7 billion to suppress its sales.
The FBR has also posted its officers at sugar mills across Sindh to monitor sugar production under section 40-B of Sales Tax Act 1990 and directed the millers to submit a weekly monitoring report to ascertain the facts behind severe dip in revenue collection from sugar sector, which is up to 80 percent.
The weekly monitoring report submitted by the field formation revealed that some 16 sugar mills reportedly stocked 770,538MT sugar worth Rs 33.7 billion to suppress sales, following low sugar ex-mill price since last November. This practice is aimed at evading FED besides concealing annual income of sugar mills. After examining the financial ledgers of the sugar mills, the Large Taxpayers Unit (LTU), Karachi issued tax recovery notices to 16 sugar mills across Sindh and raised tax demands to the tune of Rs400 million.
On the other hand, statistics reflect that tax refunds to the sugar mills in Tax Year 2013 was also 150 percent higher than tax payments, showing an alarming performance wherein tax refund claims were over Rs550 million against tax payables of over Rs350 million.
The sustainability of sugar mills declaring huge losses even during sugar price boom during 2011 raised questions about the declared claims of the sugar mills and there were suppression of sales by sugar mills. They said current domestic price of sugar stood at approximately Rs50 per kg ($510/ton), which is linked with international market prices, at around $537/ton.
