Short payment of ST withholding: Apparel Forum terms FBR notices 'illegal and incorrect'

The FBR's notices on short payment of sales tax withholding had panicked value-added textile exporters, said Pakistan Apparel Forum on Saturday and called the move 'illegal and incorrect'. Chairman, Pakistan Apparel Forum, Jawed Bilwani said a large number of forum members had complained about the notices from tax officer for short payment of sales tax withholding. Showing concerns, he said that hundreds of apparel textile exporters were panicked from notices.

He said notices were 'incorrect' and added that textile sector was liable to pay sales tax at reduced rates of two percent and three percent, whereas the notices served on the exporters were for 17 percent sales tax on their purchases. "The irony is that all the notices contained incorrect details and application of law." Giving example, he informed that textile sector was liable to pay sales tax at reduced rates of two percent and three percent. "While issuance of notices to them was for sales tax at 17 percent on their purchases were assumed and sales tax withholding were calculated accordingly," he said.

He termed the notices as factually 'illegal and incorrect', and said the tax officers failed to exclude transactions which were not subject to sales tax withholding under special procedure of sales tax withholding. The FBR's move, which he dubbed 'short' of professional management, had poor impact on the exporters global businesses and on industry as a whole. He asked the FBR for placing a stringent check and balance system to avoid such inaccuracies in future and undertake correct measures to facilitate the industrial taxpayers.

"In the absence of any legal provision and proper mechanism where any illegal action of the tax officer could be questioned, business community are left at the mercy of the high-handedness of these tax officials," Jawed Bilwani regretted. He feared the already troubled industry would plunge into further financial crisis if such notices continued to strike the apparel textile exporters. He said the energy crises, deteriorating law and order situation, international recession and high cost of business had already scaled down manufacturing. He urged the FBR to spare the business community from such 'futile exercise'. He also asked the Finance Minister to take a serious note of 'illegal notices' to apparel textile exporters.

Copyright Business Recorder, 2014