Leading food company: FBR wing detects non-payment of Rs 40 million 'extra-tax'

The Directorate General of Intelligence & Investigations Inland Revenue (IR) has detected non-payment of 'extra-tax' amounting to Rs 40 million by a leading food company of Lahore engaged in manufacturing of taxable commodities including confectionery, chocolates, toffees and candies. Sources told Business Recorder here on Monday that the regional directorate of IR Faisalabad has unearthed a unique case of non-payment of 'extra-tax' by the said company.
The detection of the case would enable the FBR field formations to detect similar nature of cases by analysing and securitising the available data and record. Moreover, the detection of non-payment of 'extra-tax' by beverage or food manufacturers would also be instrumental checking cases in the food sector. According to the provisions of SRO 896(1)/2013 dated 04.10.2013 read with Chapter XIII of the Sales Tax Special Procedure Rules, 2007, every importer and manufacturer of "Specified Goods" will charge extra tax at the rate of 2% on the supplies of their goods in addition to the tax payable under section 3 of Sales Tax Act, 1990. The Directorate of Intelligence and Investigation-IR, Faisalabad detected that a food company of Lahore (having brand name of a beverage company) has not paid any extra tax since 04.10.2013 which is accumulated to the tune of Rs 40 million, whereas most of its commodities (confectionery, chocolates, toffees & candies) of the table of the specified goods notified under SRO 896(1)/2013. The said detection was conveyed to Large Taxpayer Unit (LTU), Lahore, through a letter by Directorate of Intelligence & Investigation-IR, Faisalabad.
It was conveyed through above referred letter that the food company of Model Town, Lahore, having sales tax registration number (STRN), are manufacturing taxable commodities with minor production of exempted items as mentioned at Sr No 7 of table 2 of local supplies of the Sixth Schedule of the Sale Tax Act, 1990.
It was further conveyed that according to the provisions of SRO 896(1)/2013 dated 4.10.2013 read with chapter XIII of' the Sales Tax Special Procedure Rules, 2007, every manufacturer and importer of "Specified goods" will discharge extra tax at the rate of 2% on the supplies of their goods in addition to the tax payable under subsection (1) and (2) of section 3 of the Sale Tax Act, 1990. Whereas, careful examination of soft data of food company of Model Town, Lahore, reflects that no extra tax is being paid on the taxable supplies at the rate of 2% since 04-10-2013, which is accumulated to the tune of Rs 40.117 million approximately without any lawful excuse, whereas most of the commodities of this unit fall within the purview of Sr 11 of the table of the "specified goods" notified under SRO 896(1)/2013 dated 04-10-2013. Tax payments under SRO 896(1)/2013 dated 04-10-2013 have been made by the similar defaulter business concerns of Faisalabad as a result of efforts of Directorate of Intelligence and Investigation-IR, Faisalabad.