MULTAN, Nov 8th: Pakistan Cotton Ginners Association (PCGA)has announced to suspend the purchase of "Phutti" (Raw-cotton)from the growers as a protest against the continuation of new system of sales tax and federal cabinet's refusal to restore the old system. Farmers sharply reacted on ginners' decision describing it stab in their back in spite of earning profit of millions of rupees during this season.Sources said that ginners have been divided into two groups one belonged to the owners of composite units and others are only ginning units.The second group has reportedly announced to continue the purchase of "Phutti" from the farmers as usual.They stated that it was a dispute between the composite units and the Federal Board of Revenue (FBR)because they did not pay taxes during the last four and five years and made lame excuses to evade taxes.Now they are defaulters of more than Rs.5 billion but they were developing pressure on the Government to accept merely Rs. 1.5 billion. 90 percent factories have so far been closed in Sindh after completion of their season and 60 % ginning factories are working in South Punjab.Oil mills owners have no recognised and appropved association and there are two association are working in the field but both are reluctant to pay taxes .In past they had rejected the SRO-188 issued on March 2015 under which they had to pay 2 percent sales tax on oil and 5 percent on oil-cake. On the other hand the supreme court declared this SRO unlawful because it was not approved by the parliament.Taking advantage of this situation,owners of composite units flately refused to pay the taxes to FBR. However,some law abiding people continued the payment of taxes as per law.Now Federal Board of Revenue (FBR) has issued notices to pay the sales tax of Rs.more than 5 billion on cotton seed oil,oil cake to owners of oil mills and composite units of cotton ginning across the country since 2015.Sources told that earlier FBR had imposed 6% of fixed sales tax on sale of 40kg of cotton seed and removed 2% of sales tax on cotton seed oil and 5% of sales tax on cotton seed oil cake which was appreciated by the cotton ginning industry; however, some owners of oil mills challenged the FBR decision and moved the Sindh High Court to remove the fixed sales tax on sale of 40 kilogram of cotton seed.The Sindh High Court ordered in favor of oil mills owners and ordered to remove the fixed sales tax of 6% but then FBR challenged the high court decision and submitted a petition in Supreme Court of Pakistan where the apex court cancelled the SRO. 188 as it was not approved by the then federal cabinet.Sources added that after the cancellation of SRO, the FBR has sent notices to pay the sales tax on cotton seed oil, cotton seed oil cake from 2015 to owners of oil mills and composite units of cotton ginning across the country.
