Islamabad, June 10, 2024 – Pakistan has conditionally approved the export of 150,000 metric tons of sugar, following a request from the Pakistan Sugar Mills Association (PSMA). This decision aims to balance the needs of local markets while fulfilling the demands of sugar producers.
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Sugar Mills Concerned About Molasses Export Tariff Hike
Islamabad, March 18, 2024 – The Pakistan Sugar Mills Association (PSMA) has expressed concerns over the looming possibility of increased tariffs for Molasses exports, citing potential ramifications on both domestic production and foreign reserves.
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PSMA, 84 sugar mills served show cause notices for cartelization
ISLAMABAD: The Competition Commission of Pakistan (CCP) on Tuesday said it issued show cause notices to 84 sugar mills and their association for cartelization.
The CCP said that it had issued show cause notices to Pakistan Sugar Mills Association (PSMA) and its 84 member mills on multiple instances of prima facie cartelization in violation of Section 4 of the Competition Act, 2010.
The show cause notices have been issued after the CCP decided to initiate proceedings under Section 30 of the Act on the recommendations of an enquiry into the anti-competitive activities in the sugar sector.
The CCP’s enquiry has found multiple instances where the Pakistan Sugar Mills Association (PSMA) is acting as a front-runner for cartelization in the sugar industry.
“Evidence gathered during search and inspections conducted on the premises of PSMA and JDW Sugar Mills seems to suggest these anti-competitive activities have continued since 2010.”
The impounded data included exchange of emails between a senior official of one of the Sugar Mill (Member of PSMA) and PSMA Punjab zone office bearers regarding sensitive commercial information such as mill-wise, district-wise sugar stock position, and even the quantity of cane crushed, sugar produced, recovery percentage, carry forward old/raw sugar, total sugar, quantity sold, balance and sold percentage.
“Moreover, an analysis of the WhatsApp messages exchanged in a group of PSMA officials, the same senior official of that Sugar Mill was found to be in constant communication with regard to price and stock related data of sugar mills.
“The impounded data indicated the senior official’s continued involvement in sharing/receiving sensitive information regarding sugar industry since 2012 when he was nominated as the focal person for coordinating the sugar stock position by PSMA,” the CCP said.
Furthermore, the PSMA’s platform was also being used by member sugar mills to collectively make commercially sensitive decisions such as reduction in domestic stocks/supplies of sugar, which led to an increase in or maintenance of desired price levels in the relevant market.
PSMA and its members have been provided an opportunity of hearing to plead their case with reference to the prima facie specific violations indicated therein.
PSMA and all 84 sugar mills prima facie violated the Act by collectively deciding to export sugar and thereby fixing the quantities of sugar to be supplied in Pakistan.
Similarly, they also violated the Act by reducing stocks of sugar through exports; hence collectively raised and maintained prices of sugar in Pakistan.
Moreover, in the crushing season 2019-20, 15 sugar mills in Punjab under the auspices of PSMA, collectively decided to delay crushing of sugarcane leading to reduction in quantity supplied in the market.
In Punjab, 45 sugar mills used PSMA’s platform to share business sensitive information with each other.
Lastly, PSMA and sugar mills divided quantities of sugar in tenders issued by USC on various occasions.
“The CCP found 19 mills in Punjab to have violated the Act with reference to a tender dated 2019 whereas, 30 mills from all over Pakistan have been issued show cause for an earlier tender.”
The findings of CCP’s previous sugar enquiry report in 2009 had found that PSMA and its members had engaged in fixing of prices and collusion in the purchase of sugarcane, production of sugar, and sale or trade of sugar.
In the instant matter it appears that PSMA and its member mills sought to keep prices stable, inter alia, by controlling supply of sugar available in the domestic market.
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FBR launches crackdown against sugar mills for benami transactions
ISLAMABAD: Federal Board of Revenue (FBR) has launched investigation against sugar mills after detection of large scale benami transactions.
A statement issued on Thursday, the FBR said that Benami Zone II, Lahore has taken up the investigation of 5 sugar mills for the verification of benami transactions.
Purchasers with the largest quantities as declared by the mills in their sales tax returns, were randomly summoned to ascertain their authenticity as buyers of sugar.
The exercise unraveled the occurrence of benami transactions at a large scale during the preliminary investigation.
Keeping in view the HR constraints, logistical limitations and narrow timelines involved in the proceedings, detailed scrutiny was initiated in two sugar mills initially i.e. Alliance Sugar Mills and Hunza Sugar Mills. As far as rest of the sugar mills are concerned, information will be gathered including information from the banks and proceedings will be started after concluding the already initiated cases.
Show cause notices u/s 22 of Benami Transaction (Prohibition) Act 2017 have been served upon M/s Hunza Sugar Mills and M/s Alliance sugar mill whereby the mills with the actual buyers of sugar and sugar mills brokers have been alleged to have conducted benami transactions.
Perusal of the sales tax returns of Alliance Sugar Mills and Hunza Sugar Mills showed that sugar worth PKR 19,125,774,948 and PKR 5,164,464,58 respectively, for TY 2017-2020, had been sold by mills to unregistered persons.
To check the authenticity of these buyers, Benami Zone II, Lahore issued summons to multiple purchasers who in their written statements denied knowledge of any such transaction.
During the course of investigation, it was extracted that the unregistered purchasers being shown in sales tax returns of the aforementioned sugar mills were ostensible owners including low paid workers or truck drivers, rather than the real owners, which to date remain unaware of their involvement in sugar purchase.
The provisions of the law stipulate that subject to the issuance of notice to show cause u/s 22, the Initiating Officer has to attach the benami property within 90 days incase the Initiating Officer intends to file the reference in the case.
The law additionally provides 60 days to the IO for the drafting of the case statement to further forward it to the Adjudicating Authority. In case the IO finds no aspect of benami transaction during the course of investigation within 90 days of issuance of show cause notice, he is bound by law to drop the proceedings.
With the filing of reference, the Adjudicating Authority is under obligation to issue notice to the beneficial owner, benamidar and any interested party within 30 days of receipt of reference requiring them to file their reply.
In case benamidar/beneficial owner is involved in the commission of benami transaction, the Adjudicating Authority would pass order holding the property referred in reference as benami property and passing order to that effect.
The law binds Adjudicating Authority to decide reference within one year from the date of filing of reference. The Adjudicating Authority, after holding the property benami, initiates proceedings for confiscation of benami property.
Besides confiscation of benami property, the law provides prosecution of benamidar, beneficial owner and abettor etc. Subsequent to the trial, the law provides that the person involved in benami transactions would be sentenced to imprisonment extending from one year to seven years and additional payment of 25 percent of fair market value of the property involved.
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FBR to monitor sugar production through surveillance cameras
ISLAMABAD: Federal Board of Revenue (FBR) will monitor production of sugar through surveillance cameras that will be installed at sugar mills.
In this regard a Memorandum of Understanding (MoU) was signed between FBR and Pakistan Sugar Mills Association (PSMA).
The signing ceremony was held at FBR headquarter. Member IR Operations Dr. Muhammad Ashfaq Ahmed signed the agreement on behalf of the FBR and PSMA President Sikandar Khan signed on behalf of the association.
The FBR on September 21, 2020 issued rules regarding monitoring of production through video links.
On the occasion, Dr. Muhammad Ashfaq, Member IR-Operations said that the FBR was taking all measures to reduce interaction between tax officials and taxpayers and trying to facilitate taxpayers for ease of doing business.
In this regard vide analytics has been introduced, he said, adding that through this technology the monitoring of production would be done through advanced cameras.
He said that FBR would take help of this technology to monitor sugar production for accurate estimates and tax collection.
PSMA President Sikandar Khan praised the FBR initiatives and said that the sugar mills had voluntarily agreed on electronic monitoring of sugar production.
He hoped that the efforts of FBR to use technology and it would improve image of the tax organization.
Tariq Shaikh, Project Director briefed the participants on video analytics and said that recognized vendors would provide technological support to sugar mills and through this the production sites would be directly connected to FBR’s control room.