LAHORE -At least 10 sugar mills, which are simultaneously producing steels through their melting units of 5-15 million tons capacity, have been evading tax of billions of rupees since their installation.
There is no account of the number of units produced by the sugar mills, as the steel melting units of sugar mills are operating on electricity generated through bagasse. Similarly, the billets are also manufactured on a 24-hour basis as these units are not affected by loadshedding compared to the steel melting industry.
This results in further tax evasion on part of sugar mills, as the sales tax is calculated on the basis of electricity consumed by steel melting units in the melting industry.
Other than evading sales tax, the sugar mills are also evading income tax on the income earned from their steel melting units. In fact, their income from the steel melting units might be undeclared.
According to Pakistan Steel Melters Association chairman Mian Muhammad Saeed, 800 electricity units are consumed for the production of one ton of steel. A 15-ton capacity steel melting furnace produces 150 million metric tons steel if it operates 24 hours a day. A legal steel melting unit of the steel melting industry that operates on electricity supplied by Wapda pays Rs3,200 tax against production of one ton of steel. On the other hand, the steel melting unit owned by the sugar mill with an installed capacity of 30 tons produces 300 tons of steel daily. One-day tax evasion of this unit alone is Rs960,000; Rs28.8 million per month and Rs345.6 million a year. Since the steel melting units are operating in this sugar mill for the last four years, thus the tax evasion reaches Rs1.3824 billion, observed PSMA Chairman Mian Muhammad Saeed. He said that after including 17 percent sales tax in this amount, the tax evasion approximately reaches Rs2 billion for this unit alone. The other units that were installed later also indulge in the same activity.
The Pakistan Steel Melters Association leader suggested the govt that panel capacity tax should be levied from the date of production on these steel melting units of sugar mills, while sales tax should also be imposed on them from the date of commencement of production in order to provide level-playing field for all, and recovering the loss incurred by the national exchequer.
The PSMA head demanded the level-playing field for all sectors within the country, as the Punjab industry gets gas supply only for two days a week while industry in Sindh and KP is enjoying gas supply allover the year.  He said that the business community was unable to understand that instead of taking measures to control line losses and enhance cheap power generation up to capacity, the policies are being evolved to add to the miseries.
He said that how the industry would remain competitive at such a high price of electricity which is one of the basic industrial raw materials. “We already have the highest tariff in our region as in India, the electricity tariff for industry is 10.50 cents, in Bangladesh 10.75 cents and in Sri Lanka it is again 10.75 cent, leaving Pakistan totally uncompetitive and unviable in the international market place,” Mian Saeed said.