The Law Division has opposed tax exemption worth Rs10 million for import of 10 vehicles by the Ministry of National Food Security and Research.
Officials said that the issue was taken up in a recent meeting of the Economic Coordination Committee (ECC) of the cabinet.
During discussion, the Ministry of National Food Security and Research secretary highlighted that exemption from federal excise duty (FED) was being solicited in terms of Section 13(2)(a) of the Sales Tax Act 1990 and Section 16(2) of the Federal Excise Act 2005.
A representative of the Law and Justice Division stated that tax exemption could only be allowed according to the required procedure under the relevant law. However, the instant case was prima facie and was not covered by the relevant provisions.
The ECC chairman noted that in view of the difference of opinion on the interpretation of law, necessary advice of the Law and Justice Division was required.
The Ministry of National Food Security and Research pointed out that a national emergency, to combat locust threat, was declared by the federal government through a cabinet decision on February 11, 2020.
The food security ministry approached the UN Food and Agriculture Organisation (FAO) for the issuance of End User Certificates for import of 10 soft skin 79 Series pickup 4.2 L-3, which would be used by the ministry for desert locust control operations.
Later, the Ministry of Foreign Affairs advised the food security ministry to request the Federal Board of Revenue (FBR) for the grant of FED exemption.
In response, the FBR said that the instant case fell within Chapter 99 of PCT 9901, which deals with goods imported by UN organisations under the Privileges and Immunities Act 1948 (XX of 1948), as certified by the Ministry of Foreign Affairs, Pakistan.
Therefore, the Ministry of Foreign Affairs may be requested to proceed accordingly. The matter was then conveyed to the foreign affairs ministry.
Meanwhile, the FAO provided a reference from the FBR wherein the revenue board underlined the need for approaching the federal government, which was empowered under Section 13(2)(a) of the Sales Tax Act, 1990 and Section 16(2) of the Federal Excise Act, 2005 to grant duty exemption on goods import subject to specified conditions and circumstances.
The FAO requested a one-time exemption from FED, ie Rs10.3 million, for 10 soft skin land cruiser 79 Series pick-up 4.2 L-3 imported by the FAO and to be used by the Department of Plant Protection for its locust control operations. The Ministry of Foreign Affairs conveyed that it had no objection to the proposal.
Likewise, the Ministry of Finance also said that it had no objection to placing a summary before the ECC. The FBR stated that the federal government may be empowered under Section 13(2)(a) of the Sales Tax Act, 1990 and Section 16(2) of the Federal Excise Act, 2005 to grant duty exemption on imported goods.
The Ministry of National Food Security and Research proposed that a one-time exemption from FED, ie Rs10.3 million, may be approved by the ECC.
The ECC approved the duty exemption for 10 vehicles imported by the FAO and to be used by the Department of Plant Protection for locust control operations subject to clearance from the Law and Justice Division in relation to applicability of the relevant law.
Published in The Express Tribune, March 25th, 2021.
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