The private sector has sought tax waiver on purchase of imported sugar from Trading Corporation of Pakistan, and some bidders have moved court for tax relief. Sources told Business Recorder on Tuesday that private sector is reluctant to lift the auctioned sugar from TCP and is trying to get tax exemption from federal government on sugar purchase.
Therefore, lifting process is very slow, despite the agreement, which binds the buyers to lift the auctioned commodity in 10 days after the letter of acceptance. Following the federal government directive, the TCP plans to offload 50,000 tons imported refined sugar in open market to meet the rising demand of supply gap and stable the commodity prices in domestic market. In the first week of November 2010, TCP announced to offload 50,000 tons of sugar in open market through 5 tenders of 10,000 tons each with condition of minimum quantity of 1,000 tons.
Although at that time market was witnessing massive shortage of sugar, yet the TCP received poor response from private sector and in the five tender only 27,000 tons of imported sugar was auctioned to the private sector. Interestingly, a large number of bidders were not related to sugar business and most of bidders were associated with textile, steel, pharma and other businesses.
Sources said that total27,000 tons of imported sugar was sold to the private sector, out of which only 25 percent, or 6,861 tons sugar, has been lifted so far by the private sector, while remaining sugar is still lying in the TCP stores. Although, successful bidders were bound to lift auctioned sugar in ten days from TCP godown, later on they requested TCP to extend the deadline. The last date for lifting of sugar was fixed at December 3, 2010 and as per tender condition buyers have to pay rent if sugar is not lifted. The rent was Rs 10 per ton per day for the extended date.
Sugar was auctioned at a minimum price of Rs 65,000 per ton (excluding tax) and maximum price of Rs 77.500 per ton (excluding tax) to the 9 different parties. As per tender's terms and conditions, successful bidder has also to pay 8 percent tax to the Federal Board of Revenue (FBR).
Some three companies, namely Ismail Industries, B.P Industries, and Uni Corn Steel Corporation have lifted complete quantity of purchased sugar from TCP godowns after paying tax. Some other bidders are seeking tax waiver on purchase of sugar and they have approached Sindh High Court. They have pleaded in the court that federal government has supplied sugar to provinces at Rs 65 per kilogram without tax. Therefore, they should also be provided tax exemption on sugar purchase from TCP.
In this regard sources in TCP also confirmed that some of successful bidders are seeking waiver and TCP has already clarified to the court that tax collection is not the corporation's matter and it is being directly deposited into FBR's account. TCP official said that total 27,000 tons sugar was sold through 4 tenders, at a price of Rs 70,000 per metric ton, 77,500 per metric ton 73,000 per metric ton and 65,000 PMT (excluding taxes), opened on 6th, 8th, 10th and 12th November, 2010 and all parties submitted bid bonds 2 percent of the bid value.
Successful parties have so far lifted 6,861 metric tons. However, during the period of lifting the Federal Government fixed price at Rs 65,000 per ton without taxes for delivery to Provincial Governments which brought down market prices, they said.