Sugar mills in Punjab bound to disclose buyers’ details

LAHORE: Punjab government on Tuesday made it mandatory for sugar mills to share details of buyers with the authorities to help in resolving the issue of anonymous and untraceable transactions that lead to massive hoarding and tax evasion.

Punjab Food Department bound sugar manufacturers under the law -- rule 16 (10) of the Punjab Sugar Factories (Control) Rules 1950 -- to provide full details of buyers in a prescribed form.

The required details will include, name of sugar mills, date of transaction, full name of buyer, father name, CNIC, mobile number, complete business address and quantity sold.

Market observers said the development will also help in increasing tax collection tremendously.

“Sugar factories do not maintain and provide proper details of buyers of sugar and the quantity of sugar sold to them,” Zaman Wattoo, the provincial cane commission said in an office order.

In most of the cases only the first name of the buyer without name of father, complete address and other contact details, is recorded and provided. With such details, the buyers cannot be traced.

“This practice is facilitating hoarding of sugar and resultant profiteering by some unscrupulous elements,” said Wattoo.

The cane commissioner said occupiers of all the sugar mills situated in the province should provide complete details of the buyers of sugar and quantity sold to them, on the return/form to the office of cane commissioner as well as the concerned deputy commissioner / additional cane commissioner on daily basis.

The commissioner also asked officials to initiate legal proceedings in case of violation of the order or provision of incorrect information.

Sugar dealers have welcomed the move.

“It is a vital development as far as fully covering sugar supply chain to document every transaction,” said an office bearer of Lahore Sugar Dealers Association. “In fact, we have been in contact with tax authorities for ensuring traceable sugar transaction levels at wholesale level and several proposals had been forwarded to FBR. As per our calculations, such documentation of two to three wholesale tiers of sugar supply chain will help dealers complete their businesses in more transparent manner.”

Revenue generation from sugar sector has been low mainly due to undocumented sales. According to an estimate, the annual turnover of sugar sector has approximately been to the tune of Rs500 billion. Against such huge value, tax collection from this sector has just been peanuts, according to sources.

In order to enhance tax collection, which has been on the decline especially after increase of general sales tax to 17 percent, documentation of transactions is indispensable at least at the first level of market.

It will bind both manufactures and sellers in a way that tax recovery would ultimately be possible. In the federal budget of 2019/20, sales tax on sugar increased from 8 percent.