ISLAMABAD: The industrial units in erstwhile Federally Administered Tribal Areas (FATA) and the Provincially Administered Tribal Areas (PATA) would now be required to submit the "consumption certificates" to the Federal Board of Revenue (FBR) to ensure that the tax-exempt goods are ultimately consumed within the tribal areas.
If the goods produced from the exempted raw materials are transferred or supplied outside the tribal areas, the applicable tax rates would be applicable on such tax exempted goods, the FBR added.
The FBR has issued Circular No 05 of 2021, here on Friday, on the procedure for Issuance of 'Consumption Certificate' for Import of Industrial Inputs by FATA/PATA-Domiciled industries.
In order to earnestly implement and enforce the tax-related incentives and benefits extended by the parliament to residents of the FATA/PATA, Circular No 9 of 2021 dated March 1, 2021, was issued. The circular takes account of safe arrival of industrial inputs imported by FATA/PATA domiciled industries from the port to the intended manufacturing sites.
Section 13(1) read with Serial No 151 of Table I of Sixth Schedule to the Sales Tax Act, 1990, exempts import of "industrial inputs" to FATA/PATA-located industries "on presentation of a post-dated cheque for the amount of sales tax payable and the same shall be returned to the importer after presentation of a consumption...certificate...in respect of goods imported as issued by the Commissioner Inland Revenue having jurisdiction.”
This particular benefit is subject to a further condition that if the goods produced from the exempted raw materials are transferred or supplied outside the tribal areas, the tax exempted shall be paid at the applicable rate, the FBR said.
This makes "consumption certificates" issued by Commissioner Inland Revenue (CIR) the centerpiece of the tax-exempt cycle of importation of industrial inputs, production of finished goods by FATA/PATA-domiciled industries and there ultimate consumption within the FATA/PATA regions.
It is therefore that a standardized procedure for the issuance of Consumption Certificate is being rolled out, so as to ensure fair operationalisation of the exemptions enshrined in the law.
The FATA/PATA-based manufacturer/Registered Person (RP), who is also an "active taxpayer" in terms of Section 2(1) of the Sales Tax Act, 1990 ("the STA, 1990"), and intending to import raw materials for consumption at his own manufacturing site would make a written application to the CIR concerned providing production capacity of the manufacturing unit, and if the same has increased over time, the month from which the enhanced production capacity was installed along with particulars of the additional manufacturing capacity.
They would be required to provide month-wise quantity of raw material imported and purchased locally since July, 2020 (or 1st month of the tax year); quantity of stock available from earlier imports; month-wise details of gas and electricity consumed since July, 2020 (or 1st month of the tax year); month-wise particulars of goods produced; month-wise details of post-dated cheques (PDCs) deposited with Customs authorities, if any; list of buyers of the goods produced; bank statement for the relevant periods; electricity and gas bills for the relevant period; month-wise proof of Federal Excise paid only in case of goods covered under the Federal Excise Act, 2005.
The CIR would ensure that particulars supplied by the RP are verified before the issuance of Consumption Certificate. In case any data are not verified, the RP would be given an opportunity to complete the application, provide the required information, and make up the deficiency.
The Consumption Certificate issued will be directly mailed to the Collector Customs concerned with a copy thereof being duly marked to Member (IR Operations) and Member (Customs Operations), and under no circumstances will be handed over to the taxpayer. If the CIR decides to reject the application for a Consumption Certificate, the previous PDCs deposited would be encashed, the FBR added.
Copyright Business Recorder, 2021