CNIC/NTN exemption to sugar sector: FBR urged to avoid discriminatory treatment

The Federal Board of Revenue (FBR) has to remove a major flaw in the national documentation drive by withdrawing exemption granted to sugar sector for not submitting computerised national identity card numbers or National Tax Numbers (NTNs) of unregistered persons receiving supplies from the sugar mills.
A senior Member of the Tax Reform Co-ordination Group (TRCG) and Revenue Advisory Council (RAC) told Business Recorder here on Friday that the FBR has committed a mistake by exempting one sector from the documentation provisions under the drive to broaden the tax base. The FBR has to remove the anomaly, otherwise some other powerful sectors would also try to obtain similar exemption.
The FBR had suspended a major documentation measure for obtaining CNICs and NTNs of the unregistered buyers/sellers of the sugar mills. In this connection, the FBR suspended the implementation of SRO.821(I)/2011 for sugar mills. This sector-specific instruction of the FBR has facilitated the sugar sector to avoid documentation of unregistered buyers and sellers within the said sector.
Under SRO 821(I)/2011, the FBR had directed that registered manufacturers, importers and exporters, making taxable or dutiable supplies to unregistered persons, shall issue an invoice containing "CNIC/NTN" of such unregistered persons. Member of the TRGC said that exemption from documentation provision for one sector has encouraged other influential groups to approach the Board for obtaining similar exemption. If the FBR is serious in continuation of the documentation exercise, it cannot do discriminatory treatment to one sector.
The CNIC or NTN is mandatory only for purchase and sale made by manufacturers, importers and exporters from or to unregistered persons with effect from September 1, 2011. This SRO 821(I)/2011 had notified major amendments in the sales tax law on the pretext of broadening the tax base, which is one of the important measures to increase the number of sales tax registered persons. Resultantly, all registered manufacturers, importers and exporters are compulsorily required to provide CNIC or NTN against taxable supplies to the unregistered buyers.
Member of the TRCG added that this special treatment would open a window of opportunity for other sectors as well to build their pressure to seek similar exemption by submitting CNICs/NTNs of the unregistered buyers and sellers. FBR Chairman Salman Siddique had informed the Senate Standing Committee on Finance that the exemption granted to the sugar industry from submission of the CNICs/NTNs of their unregistered buyers and sellers is a temporary arrangement. The FBR has also started a consultative process with the stakeholders on the issue of obtaining the CNICs/NTNs of the unregistered buyers and sellers.