
Importer evades Rs.40.96 million GST by mis-declaration as manufacturer
By Nasir Mahmood
Deputy Commissioner Inland Revenue, Corporate Tax Office, Lahore, Hina Mustafa has ordered an automobile importer Company M/s Fusion Engineering (Private) Limited to pay General Sales Tax amounting to Rs. 40,960,878/- towards willfully/deliberately mis-declaring and availing the benefit of reduced rate of tax on import of “EVEE” Electric Scooters and selling in the market through its 56 dealers.
The Order said there were no locally manufactured auto parts used in the said electric motorcycle. Therefore, the intent of legislator is intentionally forgone to pay sales tax @18% in a bid to illegally take benefit of sales tax reduced rate @1% on sale of imported Chinese origin electric scooter “EVEE”.
According to details M/s Fusion Engineering (Private) Limited deals in supply of motorcycle/ vehicles. As per rules every manufacturer of motorcycles has to submit Annexure-J (Production Data) of sales tax returns and production and sale data but the registered person/ Fusion Engineering (Private) Limited declared “Zero” in Annexure-J of Sales Tax Returns from which it is abundantly evident that no manufacturing/ production of electric motorcycles were made locally by the registered company. As such the reply of the Company was mere an afterthought to hoodwink the revenue from levy of legitimate taxes. All parts of electric scooter “EVEE” were made from China as the Company had imported CKD kits of electric scooters and all parts of electric scooters, which were imported through GDs from China.
The Company declared sale of electric scooters in sales tax returns and declared “HS code 8702” whose description as per Custom Tariff is “motor vehicle for transport of ten or more persons”, as already admitted by the Company which is also misdeclaration in sales tax returns because the Company sold out the imported electric scooters with the brand name “EVEE” to its 56 dealers and end consumers and charged sales tax @1% by way of wrongly claiming benefit reduced rates in terms of section 3(2) (aa) of the Sales Tax Act 1990 read with S. No.70 of Eighth Schedule to the Sales Tax Act 1990 but the requisite conditions are; (1) “70(vi) Electric motorcycle (Respective Heading)”. (2) “Locally manufactured electric vehicle (Electric Motorcycle) local supplies only”.
According to Deputy Commissioner Hina Mustafa the Company Fusion Engineering (Private) Limited has not manufactured/ developed the electric motorcycle as it has no EDB certificate regarding electric motorcycle which is locally manufactured.
Fusion Engineering (Private) Limited provided EDB certificate vide No.TBSII-164 dated 10-10-2023 issued by Engineering Developed Board, Islamabad where following products were registered under Clause (i) of SRO 656(I)/2006 dated 22-06-2006;
(a) Road Star RSCL-150, 150cc Cargo Loader, and
(b) Evee Electric Scooty (Flipper)
The judgment by the Deputy Commissioner Hina Mustafa said that Fusion Engineering (Private) Limited has neither manufacturing set up of electric scooty and electric motorcycle nor any amendment in particulars of registration was available by them. In the subject SRO registered person is to submit Annexure-A (In-house facilities) and Annexure-B (List of components intended to be imported) but same were not provided to the undersigned for verification purpose, the judgment added.
-Published in September-2024 edition of MOBILE WORLD Magazine
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