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GST vs petroleum dealers

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Petroleum dealers demand increase in commission

Nov 22 -28, 1999

The petroleum dealers, who have gone to Supreme Court for increase in their commission, have said that their commission has gone down from 7 per cent to merely 1 per cent due to time to time increase in POL prices in the country. The POL dealers' commission was fixed at 7 per cent in 1972.

Abdul Sami Khan, vice president of Karachi Chamber of Commerce and the President of Pakistan Petroleum Dealers Association(PPDA) while elaborating his point of view told PAGE that the government had constituted a committee comprising of representatives from three major POL marketing companies including SHELL Pakistan, CALTEX , PSO and PPDA to evolve recommendations regarding commission structure of the marketing companies as well as of the dealers. According to recommendations of that committee it was suggested that the commission of the marketing companies be fixed at 4 per cent and 5 per cent may be allowed to petroluem dealers in 1996. The secretary petroleum Dr.Gulfraz had assured that the government would consider the recommendations. However, the government has not arrived at any decision so far. Currently, the case is being heard by the Supreme Court.

Sami Khan said that the petroleum dealers were also agree to go out of court settlement if government agrees on as the delay is doing nothing but unrest and anxiety among the dealers all over the country.

He said that the government has also imposed 10 per cent presumptive tax on petroleum dealers. PPDA has demanded of the government that the petroleum dealers be exempted from filing returns after payment of the presumptive tax, Sami observed. The purpose of deducting presumptive tax is to allow the tax payer exemption from filing returns however this genuine demand is also lying pending with the authorities.


As a result of these complexities and drastic slash in profit investment in new fuel stations have almost to come a standstill. He pleaded that despite rapid expansion of Karachi population hardly two or three new pumps have been setup in three years which is indicative of declining interest of the investors in this sector. When his attention was drawn towards the shift of oil to gas and arrival of CNG filling stations instead of oil pumps, he said it is also not so easy to set up a CNG filling station. One has to go from pillar to post to seet NOCs from a large number of agencies of setting up a CNG station. Every thing has been made impossible for the investors to come in by the complicated system of NOCs and bureaucratic chains purposely laid to trap the investors for vested interests. Such hassels thoroughly discouraging the investment, will have to be removed by taking radical steps if the new economic managers are serious to attract investment in Pakistan, Sami said.

Meanwhile the All Pakistan Petroleum Dealers and Cartel and Transportation Association(APPCTA) has sounded a note of warning to resort to a countrywide strike if the 10 per cent GST is not removed. They also demanded of the government to increase their commission on sale of POL products.

In a memorandum to the Ministry of Finance, the APPCTA has pointed out that the association was about to go on strike when the government was changed on October 12 and they postponed their decision to go on strike in the interest of the country due to change of the situation.

They expressed the hope that the new government would now redress their problems, otherwise the assocition will be forced to stage demonstrations and strike.

They elaborated the issue that the retailers pay 10 per cent sales tax on fuel oil and three per cent extra tax on lubricants. Through an Ordinance the President had removed the three per cent extra tax on the sales of lubricants. The bill for approval from Assembly was to be tabled when the change of hands took place on the eventful day of October 12.

The Association also said that the previous government had earlier promised to increase the commission but it has not yet been announced. The dealers association has already filed a petition in the Supreme Court of Pakistan requesting for 100 per cent increase in their commission. The Supreme Court on Nov 4, 1999, has given more time to the government to settle the dispute.

The Petroleum Ministry had earlier prepared a summary for increase in dealers commission. The Ministry was looking forward to notify along with increase in the POL prices. The summary was to be presented in the cabinet meeting on Oct 13, 1999. It is learnt that the increase in petroleum dealers' commission was linked with the increase in POL prices by the former government of Nawaz Sharif. On the other side the IMF and other i nternational lending agencies are also demanding for increase in POL prices in Pakistan due to increase in international prices.

However the new government should have to be extra cautious before taking any decision regarding increase in prices because it would be extremely unpopular decision in the backdrop of high rate of inflation and price hike which have pushed prices of even essential food items beyond reach of the common man.