An issue of jurisdiction
between Inland Revenue officials of Karachi and Quetta to deal with the sales
tax matters of the ship breaking industry is hampering sales tax collection
from ship breakers. Sources told Business Recorder here on Saturday that Regional
Tax Office-III (RTO) Karachi has approached the Federal Board of Revenue (FBR)
against transfer shipbreakers cases'' from Karachi to Quetta for sales tax
collection, as head offices of many ship-breaking companies are at Karachi and
transfer of jurisdiction to result in legal complications.
The Chief Commissioner
Inland Revenue RTO-III Karachi has informed FBR about the revenue potential of
the shipbreaking sector and hindrances in its realisation. According to the
Chief Commissioner, CIR/Z-IV of the RTO-III Karachi has been dealing with the
shipbreaking sector for about 7 months and has an in-depth knowledge of
the issues relating to the sector. Additionally, concerned Commissioner also
has an excellent command over the laws and procedures relating to the
assessment of such cases and is well-versed with the legal issues being faced
in cases pertaining to the sector before appellate foras. Transferring of
shipbreakers'' cases to Quetta at this point would result in loss in terms of
compromise on the quality of assessment of the subject cases. Another important
factor is that head offices of majority of ship-breaking concerns are at
Karachi and transfer of jurisdiction will result in hardship for these concerns
in terms of change of contact point for assessment and allied issues.
Recently, Commissioner IR
ZONE-IV RTO-III Karachi has informed FBR that the official is dealing with this
sector for the last seven months now and has studied its various aspects.
Though the number of total cases in the sector is not more than 45, its revenue
potential, if realised to the maximum, can be much higher than a number of
other bigger sectors. However, this potential is not being realised to the full
because of certain issues.
Referring to the issue of
jurisdiction, sources said that the jurisdiction over the ship breaking sector
was assigned to Zone-IV, RTO-III, Karachi vide FBR''s Notification No
57(2)/jurisdiction-2011/103739-R, dated 30/6/2012 and remained with Zone-IV in
latest jurisdiction order, as under: "..All individuals, corporate or non-corporate
persons or classes of persons of the following sectors whose place of business
is situated in the areas falling within the limits of former Civil Division of
Karachi: ship breaking".
At present there are
around 41 to 45 cases of shipbreakers as per details obtained from the
Pakistan Ship Breakers Association. Two of these cases have the status of
Company and the rest are AoPs and Individual. Out of these, only 13 cases are
registered in RTO-III, Karachi. Most of the remaining cases are registered in
RTO-Quetta, whereas others are registered in RTO-II, Karachi, and a few others
at RTO-I, Karachi, RTO Hyderabad, and one odd at RTO Lahore. Though there seems
little justification for ship breakers, operating at Gadani, to get registered
at stations like Lahore, their registration at RTO Quetta is understandable
because mostly their business activity is at Gadani, Balochistan, whereas
jurisdiction of Zone-IV, RTO-III, Karachi, is restricted to the limits of Civil
Division, Karachi. Gadani, a sub-division of District Lasbella, Balochistan, is
in the territorial jurisdiction of Commissioner Zone-II, RTO Quetta.
Source: business
recorder. 15 December 2013
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