Islamabad – The Federal Board of Revenue (FBR) has intensified its enforcement efforts to combat tax evasion in the sugar industry, launching a series of operations against non-compliant sugar mills in Punjab and Sindh.
As part of these actions, the FBR has sealed several mills, confiscated unstamped sugar stocks, and suspended nine officials implicated in malpractice and connivance with mills to evade taxes.
On the directives of Prime Minister Shehbaz Sharif, the FBR introduced an improved production monitoring system at the start of the 2024-25 sugarcane crushing season. This system employs five layers of oversight, including track-and-trace stamps, automated bag-counting hoppers, video surveillance, digital eye-counting technology, an electronic invoicing system for sugar dispatches, and the physical presence of FBR staff to oversee production and sales. Additional monitoring by the Federal Investigation Agency (FIA) and Intelligence Bureau (IB) ensures transparency.
To enhance the system’s efficacy, integrated CCTV cameras and random inspections by senior officers and the Inland Revenue Enforcement Network are in place. Law enforcement agencies, including police and Pakistan Rangers, provide additional support to ensure strict compliance.
This season, Pakistan’s sugar sector, which comprises 80 operational mills, expects a sugarcane crop of 70 million metric tons, producing over 7 million metric tons of sugar. With over 1 million metric tons of opening stock, the country is poised to meet domestic demand while exporting sugar, molasses, and ethanol to bolster foreign exchange reserves. The permanent deployment of FBR staff during the last season curbed sugar smuggling, stabilized prices, and mitigated hoarding.
Key Enforcement Actions
In Punjab, a large sugar mill was sealed by LTO Lahore for failing to install required cameras and hand over the Network Video Recorder (NVR). Similarly, godowns of another mill in Khushab District were sealed for inspection of unstamped sugar bags. Investigations are ongoing, and further legal actions are expected.
In Sindh, the Deputy Commissioner Inland Revenue (DCIR) of LTO Karachi discovered a concealed production chute at a mill in Shaheed Benazirabad district, hidden behind a high brick wall. The undeclared chute, evading FBR’s monitoring system, was sealed, and 1,200 metric tons of sugar were confiscated. A hefty penalty of Rs. 25 million was imposed.
In Mirpurkhas Division, the FBR sealed production chutes at a mill that violated sales tax rules by withholding its NVR. The mill paid a penalty of Rs. 0.5 million for de-sealing. A separate case in Tando Allahyar revealed that a mill disconnected its chutes from the monitoring system. FBR promptly seized 150 metric tons of non-tax-paid sugar and impounded five vehicles transporting it.
Additionally, nine FBR officials involved in collusion with mills were suspended following credible reports from monitoring agencies.
The FBR reaffirmed its zero-tolerance policy toward tax evasion and emphasized its commitment to safeguarding government revenue. These actions reflect a broader campaign to ensure compliance within the sugar industry and uphold transparency in tax enforcement.