ISLAMABAD: The government plan to check tax evasion in sugar sector through effective monitoring have yielded wonderful result as Track and Trace System recently implemented by the Federal Board of Revenue (FBR) has proven as a useful tool to end ‘Out of book’ sugar production. ‘Out of book’ sugar production was a major cause of tax evasion in the past. It also used to fleece the growers as the shrewd millers used to bait them to sell their produce out of the mills at weighing stations installed by their own frontmen for cash. The cunning millers later used to crush this sugarcane stock for ‘Out of book’ sugar production. ‘Out of book is basically a sophisticated term for illegal buying of sugarcane and production of sugar without showing it in the record of the mills. Since sugarcane purchased by the millers through their frontmen used to go in the mills without any record, sugar produced from such crop was not shown in the priduction record.
Sources said ‘Out of book’ sugar production was a common practice in Southern Punjab and some parts of Sindh . Since sugar recovery in Southern Punjab and Sindh remains on average 11 %, majority of the mills operating in these areas used to evade tax of hundreds of billions of rupee by not showing at least 1 % recovery and hence were indulged in misdeclaration of their actual production.
“I think showing 1 % less recovery than actual was a main tool for the mills situated in Southern Punjab and some parts of Sindh to make ill-gotton money that was later used for laundering and buying properties in Europe, United Kingdom and the United States”, sources said.
With coming in of Track and Trace System, this ugly practice has come to an end and now as each bag produced is formally tagged and monitored through Track and Trace System, the rogue millers have no opportunity to misdeclare actual production and go for ‘Out of book production’. The
“Out of book” sugar production used to work as a double-edged sword. On one hand, it was a major source of Sale Tax evasion and deprieving the farmers of actual price of their produce and on the other it used to hurt the industry, which was not a part of dirty practice of making ‘Out of book’ production by flooding the market with unaccouted for stock . An official of ministry of Agriculture and Food Security told NEWSMAN and daily DANISHWAR requesting not to be named that in post Track and Trace System days around 0.5 million tons sugar used to be produced by influential millers ‘Out of book’ every year. “The millers involved in ‘Out of book’ sugar production historically used to dodge the entire chain right from buying of sugarcane from the growers to sale of sugar in the market without any tax to make illegal money to the tune of hundreds of billions of rupee”, the official divulged.
After sugar sector, the government has extended Track and Trace System to other manufacturing sectors like cement, fertilizer and pharmaceutical industry. The tax experts believe that honest implementation of Track and Trace System can stop tax evasion of Rs 1000 billion per annum. The only thing which is a prerequsite to it that the policy makers should make Ttack and Trace system working honestly.