The government has turned down the proposal of regularising the non-customs duty paid vehicles plying roads in tribal areas by giving a one-off concession in duties and taxes.

Earlier, the Revenue Division prepared a plan to regularise the non-customs duty paid vehicles and submitted it to the cabinet for approval, sources told The Express Tribune.

The division told the cabinet that the Customs Act 1969 was extended to the erstwhile Federally Administered Tribal Areas (FATA) in 1984 and Provincially Administered Tribal Areas (PATA) in 1975.

Accordingly, duties and taxes were imposed via border customs stations in ex-FATA/ PATA, but only at the import stage.

Inside ex-FATA/ PATA, neither the customs officials were deployed nor the provisions of law (customs) were enforced, particularly in relation to the non-customs duty paid vehicles.

After the 25th Amendment to the Constitution in May 2018, FATA/ PATA was merged with Khyber-Pakhtunkhwa (K-P), where all federal laws were extended automatically.

In a meeting held on May 31, 2018, the Economic Coordination Committee (ECC) approved certain tax concessions for ex-FATA/ PATA residents.

However, the federal cabinet on July 18, 2018 argued that in view of “the peculiar nature, geography as well as economic backwardness of ex-FATA/ PATA, a phased approach for the enforcement of federal tax laws was necessary”.

This slightly expanded the scope of tax remissions with regard to non-customs duty paid vehicles along with the approval that such vehicles “may be allowed to be used in FATA/ PATA for a period of five years ending June 30, 2023”.

However, these vehicles may be seized if they cross over to other areas of the country.

On the expiry of five years, the vehicles may be surrendered and an option may be given to the residents of merged areas wherein the vehicles may be regularised on the payment of leviable duty and taxes along with the surcharge.

Provided that the local administration of pre-merger tribal areas has verified/ authenticated the numbers of such vehicles along with details of make, model and chassis number reported to the customs authorities by the end of September 2018.

FBR’s OM – dated June 8 and July 24, 2018 – requested for the provision of information of non-customs duty paid vehicles registered with the local authorities.

In response, the provincial government divisions provided details of about 155,000 such vehicles registered with the local authorities.

However, the smuggling of vehicles had continued in these areas (particularly in the Malakand Division) and it had become a threat to the law and order situation, because of their potential misuse.

Since non-customs duty paid vehicles could not be registered with the provincial excise authorities, their owners used self-made registration plates, making it extremely difficult to track and trace them.

The K-P government, K-P parliamentarians and ex-FATA/ PATA residents through multiple forums had demanded a one-time concession to regularise and register such vehicles by paying duties and taxes.

In this regard, it was proposed that the final settlement of the matter, promised in the second quarter of 2023, be preponed and an ex-FATA/ PATA-specific one-time concession to regularise and register these vehicles be granted.

Salient features of the proposed concession are that these vehicles would be classified into three categories for the applicability of concessional duties and taxes as the vehicles reported with the local authorities up to September 30, 2018 and whose particulars were shared by the K-P government with the FBR.

These include vehicles that may have entered ex-FATA/ PATA, but their particulars were not reported to the local authorities or those not available with the FBR – below 1,800cc and non-customs duty paid vehicles (both registered and unregistered) since October 1, 2018 – over 1,800cc.

Residents of ex-FATA/ PATA would only be eligible for non-customs duty paid vehicles’ regularisation and a resident would be entitled to register only one vehicle.

These vehicles would have to be registered with the excise office of the district of the registrant within 30 days and the vehicles, post-registration, would not be sold or transferred for two years.

The cabinet considered the summary titled “Regularisation of Non-Customs Paid Vehicles Plying in Ex-FATA/ PATAs via One-Time Concession in Duty and Taxes” and did not approve it.

Published in The Express Tribune, January 19th, 2022.

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