PESHAWAR
Sarhad Chamber of Commerce and Industry and tea importers rejected the Federal Board of Revenue decision to fix the minimum retail price (MRP) of tea at Rs1,200 per kg for levying sales tax that would make the commodity more expensive and demanded withdrawal of it immediately.
In a joint statement here issued on Tuesday, SCCI president Fazal Moqeem Khan, member of Pakistan Tea Association central executive body and the chamber executive committee Ashfaq Ahmad and importers attached with tea sector and others, said the imposition of tax would further increase price of tea and become unaffordable for the inflation-stricken people.
They said importers have inflicted huge financial losses on the head of demurrage and rent of containers on a daily basis.
Tea importers explained the MRP at the import stage would have an adverse impact of Rs150-300 per kg on imported tea prices, which would become negative impacts on tea business and prices will also exorbitantly increase.
Tea importers said before fixing the MRP for sales tax purposes, it is crucial to consider that the definition of “manufacturer” in Section 2(16) of the Sales Tax Act 1990, includes activities such as blending, mixing.
processing, and packaging, as clarified in Circular No. 3(11) ST-L&P/2013-94433-R dated July 17, 2019. Based on this, tea imported for these processes qualifies as “raw material”.
Accordingly, sales tax should be based on the import value, as per Subsection 46(f) of Section 2 of the Sales Tax Act, 1990, rather than the minimum retail price, Ashfaq said.
SCCI chief said that MRP cannot be applied at the import stage as the tea has to follow various value-addition procedures before it is made shelf-ready.
“This MRP disrupts the supply chain and eradicates the role of wholesalers and distributors who play a vital role in the business, while MRP at the import stage also eradicates the basic right of commercial imports,” the PTA executive member said.
Ashfaq Ahmad said tea is a part of our daily diet, a staple food item, not a drink.
Most people in rural and urban areas consume tea as per their earnings, he added.
PTA executive council member feared further fixing of MRP will incentivise unscrupulous elements to exploit the situation, and thus, import of low-priced teas will find its way through illegal channels.
