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Electronic monitoring of excisable goods: Big manufacturers resisting FBR stride

Electronic monitoring of excisable goods: Big manufacturers resisting FBR stride

ISLAMABAD: The FBR’s strenuous efforts to evolve an electronic monitoring system have met with stiff resistance from cigarettes, beverage, cement and sugar sectors as they appeared unwilling to install machines for security marking, tax stamps and security ink/labels on excisable goods.

The board wanted to install some electronic network for monitoring/tracking of manufacturing activities, sales, clearances, through electronic or other means of fertiliser, cigarettes, cement, sugar and beverages sector.

It is to be noted that a company has been convincing the authorities to affix tax stamps etc on cigarettes/tobacco, soft drinks and other excisable commodities subjected to the FED, expecting it would help increase tax collection.

One the options to electronically monitor manufacturing activities, is to affix security marking, tax stamps/security ink to the cigarettes packs. However, two multinational cigarette manufacturing companies have been resisting the development with the argument that the installation of expensive equipment for this purpose would result in substantial increase in the price of cigarettes. The electronic system is expected to avert any possibility of tax evasion by the manufacturers.

On the other hand, small cigarette manufactures have simply refused they cannot afford installation of any such expensive equipment for electronic monitoring to get their consignments cleared. Similarly, the sugar and cement manufactures have also joined the chorus and showing least interest in any such idea of the tax authorities to monitoring manufacturing and clearance of each bag of finished product.

Authorities are also considering provision of free of cost equipment to the manufacturers of cigarettes, cement and sugar to materialise the idea.

It is to be recalled that under the Finance Act 2013, Sales Tax Act, 1990 has been amended to introduce new concept of electronic/video monitoring system. According to section 40C of Sales Tax Act, after section 40B, the following new sub-section shall be added, namely:- “40C. Monitoring or tracking by electronic or other means? 1) Subject to such conditions, restrictions and procedures, as it may deem fit to impose or specify, the Board may, by notification in the official gazette, specify any registered person or class of registered persons or any good or class of goods in respect of which monitoring or tracking of production, sales, clearances, stocks or any other related activity may be implemented through electronic or other means as may be prescribed.

(2) From such date as may be prescribed by the Board, no taxable goods shall be removed or sell by the manufacturer or any other person without affixing tax stamp, stickers, labels, etc in any such form, style and manner as may be prescribed by the Board to this effect.