22 May | 2024

Lahore, Pakistan

Industrialists demand fair inquiry into ‘controversial’ raids on cigarette factories

Tobacco industry officials reject police-led ‘joint’ probe; urge AJK govt to involve FBR or hire experts to ensure broad inquiry into ‘controversial’ raids on factories

Officials of tobacco industry – while rejecting police officer-led ‘joint’ investigation – demanded of the Azad Jammu Kashmir government to involve the Federal Board of Revenue (FBR) or hire experts from the open market to ensure a comprehensive and unbiased inquiry into what they call ‘controversial’ taxation enforcement raids on cigarette factories.

In a statement, Walton Tobacco Company and National Tobacco representative Arif Zia raised concerns about authorities’ approach to tackle things in right directions, and suggested alternative measures such as modern surveillance techniques, track-and-trace systems or CCTV cameras, to combat potential cigarette smuggling.

Arif Zia suggests modern surveillance techniques, track-and-trace systems or CCTV cameras to combat potential cigarette smuggling

In the recent saga of taxation enforcement, the police force made waves by conducting raids on cigarette factories in Mirpur, and Bhimber districts, affecting businesses as well as financial loss to the state authorities, as per officials. The representative shared substantial tax contributions of the Walton Tobacco Company and the National Tobacco – a major contributors to the state revenue.

Despite significant tax payments, the police raids sparked controversy, and disturbance for the industry. The managers of the companies accused police officers of forcefully entering the factories, breaking doors and scaling walls, and subjecting staff to harassment. The revenue authorities claimed to have seized ‘raw’ material valued at three billion rupees, but ‘actual’ cigarettes were reportedly found during the raids.

The authorities sealed off the Walton Tobacco Company and its warehouse in Mirpur city and confiscated its ‘raw’ material. On the other hand, the National Tobacco Company and others in Bhimber evaded closure due to court intervention. However, the authorities resorted to sealing the warehouse of these companies and confiscating ‘raw’ materials, disrupting business operations and causing undue financial strain, as per the industry officials.

Before completion of any investigation, the repeated statements and press conferences of some ministers or government functionaries also raising concerns about premature conclusions and undermine credibility of the authorities. The officials said that they were ready to seek intervention of Federal Minister for Kashmir Affairs to address their problems. They demanded diligent examination and investigation to uncover truth behind these allegations.

‘Confiscation of non-taxable raw material could impact companies adversely’

The tobacco industry officials demanded thorough investigation to uncover underlying motivations and implications, ensuring accountability and transparency in governance. They stated that an effective investigation cannot be conducted solely by the police-led team. They asked the authorities not to draw conclusions or form opinions solely based on the presence of raw materials. They said that the raw material was not taxable, but the final product was.

Arif Zia – the industry representative – advocated for a more strategic approach to taxation enforcement that does not disrupt legitimate business operations. The officials suggested that instead of confiscating raw material and demanding a fivefold increase in taxes, the authorities should have allowed production to continue. They also suggested enhancing surveillance measures to thwart any attempt to smuggle untaxed cigarettes.

The official said that the confiscation of non-taxable raw materials could not only result in losses for the government but also adversely impact tax-paying companies and the economy. The possibility of cigarette companies seeking damages from the government for the confiscation of raw materials adds another layer of complexity to the situation, highlighting concerns about fairness of the actions and the government’s financial capacity to address such claims.