Millions of rupees in taxes remain disputed in a case as the Federal Board of Revenue (FBR) has failed to make a decision whether Hummer will be classified as a luxury or commercial vehicle.
A special panel constituted for the purpose has not been able to determine the category of the expensive General Motors brand, Hummer, despite a lapse of four months, informed sources said.
The authorities released the luxury car in June after charging import duties applicable to commercial vehicles through a provisional release order of the Federal Tax Ombudsman (FTO), bringing the remaining amount into dispute.
Luxury vehicles are charged duties at the rate of 150% of the value while commercial vehicles are only charged 20%, according to the law.
After the importer and FBR officials disputed the category and value of the vehicle, the FTO intervened on the complaint of the importer. It issued the provisional order, asking the FBR to release the ‘expensive vehicle’ and accept post-dated cheques of the disputed amount. The FTO also asked the FBR to constitute a committee to determine the value and the category of the vehicle.
The FTO’s order was not final as the final decision authority was given to the FBR.
While the FTO did not fix any timeline to resolve the dispute, customs laws do have stipulated timeframe. According to the Customs Act 1969, the dispute over duties valuation has to be resolved within six months which can be extended by up to 90 days in case of ‘exceptional nature of circumstances’. In case the FBR remains unable to resolve the case, the provisional taxes will be considered as the final liability of the taxpayer, the Act further states.
Customs officials had held the vehicle after finding that the importer tampered with the seating capacity to evade duties and undervalued the car. FBR officials said that the importer initially declared the vehicle value at $20,000 but after inspection by the Customs staff it was revised upwards to $51,000.
“The committee has held few meetings but no decision has been taken on the category of the vehicle,” said FBR Member Customs Mumtaz Haider Rizvi. He said the committee has also sought relevant data about the exact category of the vehicle from the manufacturer.
The FBR chairman was not available for comments.
Though the case remains undecided, the fancy vehicle can be seen rolling on Islamabad’s roads. There are allegations that the importer brought the vehicle for an important personality.
While issuing the provisional order in June, the FTO viewed that the customs classification was based on seating capacity, not luxury vehicle. It had observed that the vehicle was above ten seats and fell in the bracket of lesser duties, however, the company’s official website specifies that the car has five seats.
However, independent tax experts differ with seat capacity classification. They say that the seat capacity as a determining factor is only relevant to commercial vehicles and the Hummer is evidently a luxury one. They say purpose of the vehicle is also a crucial factor.
Published in The Express Tribune, November 15th, 2011.
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