FBR to tapfinance ministry for Rs2.45bln recovery

PSM’s unpaid taxes

KARACHI: The Federal Board of Revenue (FBR) will request the finance ministry to settle Rs2.45 billion in unpaid taxes outstanding against the state-owned Pakistan Steel Mills (PSM) for the last three years, sources said on Tuesday. 

The sources said the Large Taxpayers Unit Karachi has already issued a notice to the PSM to recover Rs2.37 billion on account of unpaid taxes. The Appellate Tribunal Inland Revenue also ordered the mills to defray an additional Rs76.4 million. 

“Now, the FBR will ask the ministry of finance for the recovery of Rs2.45 billion from the PSM, which failed to clear its sales tax liability,” said a source. PSM officials expressed their unawareness about any notice. They said such matters will be resolved at the ministry level.

The lose-making PSM has defaulted on billions of rupees in payments on various accounts. Six months ago, Sui Southern Gas Company Ltd cut the gas supply to the mills due to the non-payment of bills to have brought the production down to zero. 

The mills managed to generate revenue, even after the halt in productions, through selling stocks from the available inventory. But, that was not sufficient to bring the company back in the black.

The FBR sources said the tax liabilities belong to the tax years 2013, 2014 and 2015.  The sources said the default surcharge on the total payable amount will be calculated at the time of payment.

“There appear grim chances of payment from the PSM, but the FBR will send a last notice to the mills for the recovery,” an official said on condition of anonymity. “In case the PSM fails to comply with the last notice, the FBR would go to finance ministry for the settlement.”

The cash-strapped company is facing gravest difficulties in paying salaries to its employees and the government has to frequently bail out the mills, especially for salary payments.

A source said there is an option to attach the bank accounts of the mills, “but the revenue body knows the company’s financial position.”

The mills defaulted on the payment under the head of short-paid, not-paid and sales to black-listed/suspended units during the last three tax years.

The PSM officials said the PSM is facing serious financial crunch and eying further injections from the finance ministry.