ISLAMABAD: The Fertilizer Industry appears to be reluctant to install a Track and Trace system and has urged the government review the enforcement of non-compatible track & trace systems installed on the fertilizer manufacturing facilities.
According to sources privy to the development, the fertilizer manufacturers of Pakistan Advisory Council (FMPAC) have requested the government to review the enforcement of non-compatible track & trace systems (TTS) installed in the fertilizer manufacturing facilities.
In a letter addressed the Finance Ministry, the FMPAC said that the TTS deployment project was initiated for the fertilizer industry in February 2022 in compliance with SRO 250(I)/2019 issued Feb 26, 2019 and Sales Tax General Order No 3 of 2021 issued on March 11, 2021, by the Federal Board of Revenue (FBR),
It reads the tripartite agreements – between the manufacturers, FBR and FBR licensee (M/s AJCL/MITAX/Authentix Consortium) – were signed on April 14, 2022 and the TTS was made operational in the entire fertilizer industry from a set deadline of July 1, 2022.
However, the fertilizer industry has raised serious concerns about the suitability of the system for fertilizer production facilities after confronting multiple technical issues during, and post implementation of T&T system project.
The letter states that the incompatibility of the system with the harsh and humid outdoor environment of the fertilizer industry renders it ineffective and unfit for continuous use.
The stamp detection efficiency is far less [as low as 50%] than guaranteed value of more than 99%. Stamps reconciliation also generates error with actual production reporting, etc.
Despite the best efforts of the FBR licensee, FBR and industry, these technical issues remained unresolved.
Commenting on the matter, FMPAC Executive Director Brig (r) Sher Shah Malik said that the fertilizer industry is one of the most compliant sectors of Pakistan and has always supported the government’s efforts on documentation of the economy.
He further stated that the Track & Trace system is neither considered suitable for the fertilizer industry, nor is serving any of its stated objectives of enhancing tax revenue, reducing counterfeiting, and preventing smuggling of illicit goods.
He explained that Fertilizer is exempted from GST and Fertilizer sector as a whole is a compliant and transparent sector and pays its all taxes with no understatement of its sales and production, hence T&T system has no impact on revenue collection.
The FMPAC ED claimed that there is no evidence of counterfeiting urea and other fertilizers. The domestic prices of urea have always been substantially lower than the international market, hence there is no possibility of smuggling of illicit goods into the country. Moreover, it is worth noting the complete system including spares and tax stamps are imported and are an undue recurring cost under the prevalent foreign exchange reserves situation.
Fertilizer industry cautioned the government that the enforced obligation of the T&T system with its unreliable operational efficiency can disrupt the fertilizer supply chain, leading to serious consequences for the agriculture sector.
