Under guise of war relief: Rs1.6b tax liabilities of three industrial units waived off

Decision taken to favour the influential despite opposition from FBR.

ISLAMABAD:

In yet another controversial decision, the federal government has waived off Rs1.6 billion tax liabilities against three industrial units, owned by influential personalities, under the guise of relief to the war-torn tribal areas.

In its meeting on Wednesday, the Economic Coordination Committee (ECC) of the Cabinet waived off the sales tax liabilities, which were supposed to be deducted at the import stage, despite opposition by the Federal Board of Revenue (FBR) and a decision of the Peshawar High Court (PHC) that had previously rejected two such pleas of the industrialists, sources revealed.

The federal government wrote off the liabilities of M/s Star Plastic Industries, M/s Roshni Mat Industries and M/s Excellence Plastic Industries, which are located in the tribal areas. Senator Ghulam Ali pleaded the case in the ECC meeting, first in November last year when the case was presented before the committee, and then on Wednesday, sources said.

Former finance minister Dr Abdul Hafeez Shaikh had constituted a sub-committee to verify the exact location of these three industries, their ownership and merit of the claimants. According to the summary, the sub committee could not physically verify the industries but got it verified from local agents.

Sources said the FBR had opposed the summary while arguing that under the law these liabilities cannot be written off. However, the board left the decision on the chairman of the ECC, Finance Minister Saleem Mandviwalla.

The FBR also contended that since legal proceedings had already attained finality, the liabilities for these industries cannot be waived off. The PHC had also rejected the plea in this regard twice in the past.

While talking to The Express Tribune, Senator Ali confirmed that the ECC has waived off the past liabilities of these three industrial units. However, he neither accepted that the units were owned by him or his relatives nor did he disclose the names of the owners.

Forwarding summaries

Wednesday’s meeting of the ECC will also go down in history as the one in which irregularities in forwarding summaries to the ECC and procedural ones were admitted by the government.

Planning Commission Deputy Chairman Dr Nadeemul Haque raised objections over tabling summaries in the ECC at the eleventh hour, which, he contended, were a violation of the laid down procedure. He also highlighted that the summaries were forwarded without seeking views of relevant ministries.

Officials said that Cabinet Secretary Nargis Sethi admitted in the meeting that she was overrun whenever she raised questions regarding procedural violations.

Sources said most of the decisions in the ECC were taken by the chairman despite opposition by a majority of the members. For instance, former finance minister Shaikh had approved a summary of reducing the age limit for the import of used cars from five to three years — despite significant opposition by a majority of the committee members.

In the meeting two decisions of giving freight subsidies to the sugar industry and waiving off sales tax to three units were taken despite opposition by a majority of the members.

Meanwhile, the petroleum ministry on Thursday prepared a summary for authorising the Sui Southern Gas Company to award a $46 billion LNG import contract. The quality of the summary can be checked from the fact that it does not even carry names of the bidders. However, the summary is most likely to get approved because high stakes are involved in the deal.

Published in The Express Tribune, March 8^th, 2013.