Peshawar  -  The Sarhad Chamber of Commerce and Industry (SCCI) and tea importers have rejected the Federal Board of Revenue (FBR) decision to fix the minimum retail price (MRP) of tea at Rs 1200 per kg for levying sales tax, a move that would make the commodity more expensive. They demanded an immediate revision of the decision.

In a joint statement issued here on Tuesday, SCCI President Fazal Moqeem Khan, member of the Pakistan Tea Association’s central executive body, Ashfaq Ahmad, and tea sector importers, said that the imposition of the tax would further increase the price of tea, making it unaffordable for the inflation-stricken public. They also stated that importers have been suffering huge financial losses due to daily demurrage charges and container rents.

Tea importers explained that the MRP at the import stage would result in an additional cost of Rs 150-300 per kg on imported tea, which would negatively impact the tea business and lead to exorbitant price increases.

They added that 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.”

Therefore, sales tax should be based on the import value, as per Sub-section 46(f) of Section 2 of the Sales Tax Act 1990, rather than the MRP, Ashfaq said.

The SCCI chief said that the MRP cannot be applied at the import stage, as the tea must undergo various value-addition processes before it is made shelf-ready.

“This MRP disrupts the supply chain and undermines the role of wholesalers and distributors, who play a vital part in the business. Additionally, applying the MRP at the import stage eliminates the basic right of commercial imports,” said PTA executive member Ashfaq Ahmad. He added that tea is a staple food item, consumed daily by most people in both rural and urban areas according to their earnings.

The PTA’s executive council member expressed concern that further fixing of the MRP would incentivize unscrupulous elements to exploit the situation, leading to the import of low-priced teas through illegal channels.