Ginning, oil milling: RTO, PCGA agree on voluntary tax assessment
HYDERABAD: A meeting was held at the Office of the Chief Commissioner, Regional Tax Office (RTO) Hyderabad, between Sajjad Akbar, Chief Commissioner, RTO Hyderabad, senior officers of RTO Hyderabad, and Ramesh Kumar, Vice Chairman, Dr Jassu Mal Tleemani, Ex-Chairman PCGA, along with members and representatives of the Pakistan Cotton Ginners Association (PCGA).
At the outset, the participants were apprised of the policy of RTO Hyderabad to encourage amicable resolution of tax matters and voluntary compliance, with the objective of ensuring payment of taxes legitimately due under the Sales Tax Act, 1990, and other applicable provisions of tax law, without resorting to litigation or working penal provisions, wherever such matters can appropriately be resolved through cooperation, engagement and voluntary compliance within the applicable legal framework.
The meeting thereafter held detailed deliberations regarding cotton ginning production/ recovery ratios and prevailing market rates of lint, cottonseed, cottonseed oil, oil cake and oil dirt for Tax Years 2025–2027, particularly with reference to their implications for determination of taxable supplies, input/ output tax liability and assessment under the Sales Tax Act, 1990 and the rules made there under.
The matters which were identified for further examination and verification included reasonability of the department’s position regarding recovery ratios and industrial output, particularly the 41 percent lint recovery and 55 percent cottonseed recovery ratios; the quantity of cottonseed available for crushing; the appropriate oil recovery ratio, i.e. 4.5 percent as against declared by cotton ginners at approximately 2–3 percent; the appropriate oil cake recovery ratio; i.e.; 85 percent as against declared approximately 80 percent; the reasonableness of 2 percent oil dirt recovery; prevailing market rates of lint, cottonseed, oil, oil cake and oil dirt; and the effect of cotton variety, quality, moisture content, trash, machinery and processing technology on recovery rates.
Following detailed deliberations, the PCGA representatives acknowledged their responsibility to discharge all taxes lawfully due under the Sales Tax Act, 1990 and other applicable tax laws and expressed their willingness to accept reasonable and representative average market rates based on prevailing national and regional industry conditions, subject to verification of relevant records and application of the applicable provisions of law.
The participants further agreed that the determination of recovery ratios, taxable production and market rates should be founded on reliable, verifiable and evidence-based industry data, duly taking into consideration variations arising from cotton quality and variety, moisture content, processing technology, operational practices and regional market conditions.
The Chief Commissioner, RTO Hyderabad, assured the PCGA representatives of the department’s full cooperation and reiterated the commitment of RTO Hyderabad to adopt a fair, transparent, reasonable and evidence-based approach while determining the parameters relevant to tax assessment and determination of sales tax liability, strictly in accordance with the Sales Tax Act, 1990, the rules made thereunder and other applicable law.
It was further agreed that RTO Hyderabad would continue its engagement with ginners and oil millers to facilitate compliance and ensure that applicable sales tax and other taxes are properly deducted, collected, declared and paid in accordance with the Sales Tax Act, 1990, while discouraging practices that could result in the avoidance, suppression or understatement of legitimate tax liabilities.
The department’s approach of resolving tax matters through engagement, facilitation and mutual understanding, wherever permissible under law, was appreciated by the members and representatives of PCGA.
The PCGA representatives agreed to provide available national and regional industry data relating to recovery ratios and prevailing market rates. The data furnished by the PCGA will be examined by the department and further deliberated upon by both sides for appropriate determination of the relevant parameters for the purposes of tax assessment and compliance under the Sales Tax Act, 1990 and other applicable tax laws.
It was agreed that the matter would be taken up for further consideration and finalisation at the next meeting scheduled to be held on 30th September.
The meeting concluded in an atmosphere of mutual understanding, cooperation and goodwill, with both sides reaffirming their commitment to a transparent, evidence-based and lawful approach towards tax assessment, sales tax compliance and determination of legitimate tax liabilities under the Sales Tax Act, 1990.
Copyright Business Recorder, 2026