Extension of Customs Act to Malakand

Federal govt advised against reversal of decision: FBR

PESHAWAR: The Federal Board of Revenue (FBR) has advised the federal government against the reversal of the decision to extend the Customs Act 1969 to the protected Malakand division, particularly in respect of non-customs paid (NCP) vehicles as it will have negative impact on the ongoing military operation against the terrorists and also the economy.

An official of the FBR, on condition of anonymity, told The News on Monday that the Prime Minister was all set to announce the withdrawal of the Customs Act from Malakand division during his May 20 visit to Mingora, Swat where he also announced a number of major projects.

However, the FBR advised Prime Minister Nawaz Sharif at the eleventh hour not to announce the withdrawal of the decision as it would not auger well for both the economy and the Operation Zarb-e-Azb in North Waziristan.

It may be mentioned here that after the terrorist attack on the Army Public School and College in Peshawar on December 16, 2014, the provincial apex committee had asked the PTI-led Khyber Pakhtunkhwa government to work out measures for the registration of the NCP vehicles and control the narcotics business in the region.

However, the provincial government tended to use it to its own ends and through a summary on June 12, 2015 it requested the Governor to approach the President of Pakistan to allow the province to also impose a number of taxes in Malakand division.Chief Minister Pervez Khattak in his summary to the Governor said the provincial government was proactively collecting taxes from the settled districts of the province.

However, the districts falling in the Provincially Administered Tribal Areas (Pata) were largely out of the tax net as Article 247 provides for the procedure for extension of any law to these areas. This has rarely been exercised when it comes to the taxation measures. It said the FBR chairman also proposed extension of taxes to the Pata in one go even though it may have serious implications and may lead to agitation by the people.

However, to proceed in the matter in a mild way as a first step, the summary said the federal government should extend the Customs Act 1969 to enable the Excise and Taxation and Narcotics Control Department to register the NCP vehicles in Malakand division and the rest of Pata under the Motor Vehicles Registration Act “in the garb of mitigating measure of misuse of such vehicles in the subversive activities”.  The same proposal was made by the apex committee.

The summary was sent to President Mamnoon Hussain, who extended the Customs Act to Malakand division and Kohistan on March 28, 2016.However, there was agitation by NCP cars dealers mainly supported by local leaders of the Jamaat-e-Islami, which is coalition partner of the PTI in the provincial government. This prompted the provincial government to send another summary requesting the federal government to annul its decision of extending the Customs Act to Malakand.

The FBR official said they advised the federal government against the reversal of the decision as the people of Malakand would largely suffer if the Customs Act was withdrawn.To a question, the official said the Customs law had no connection with the collection of Income Tax, Sales Tax and Federal Excise Duty as these were separately administered by Inland Revenue Services (IRS).

The Customs Act deals with commerce and trade which doesn’t necessarily mean taxation, the official added.“Similarly, the extension of Customs Act has nothing to do with the common man. Rather it is an issue with a few car dealers dealing in the NCP vehicles and this could also be addressed through legal mechanism, including one-time amnesty,” he said.

The official said the withdrawal of the Customs Act would rather deprive the common people of the region of the benefits of the act that include industrialisation, dry port, and extended facilities to increase trade with China and Afghanistan. He said the implementation of Customs Act would regulate local trade that would lead to the establishment of private warehouses, bonds and industrial zones, which would connect Malakand division to the Chine-Pakistan Economic Corridor (CPEC).