The Pakistan Steel Mills (PSM) management has been causing losses of millions to the exchequer in awarding different types of contracts and in the head of General Sales Tax (GST), Pakistan Today has learnt.
Sources said that the PSM marketing department announces contracts of different types and many companies registered with the PSM take part in the bid, following which the contracts are awarded to the highest bidder. Most of the contracts are of sale of scrap, and the successful company has to pay two percent of the amount it had offered for the material at the time of the bid and the rest of the amount is to be paid within 10 days of the auction, the sources added.
They said that the bidder’s two-percent is treated as a security deposit and returned to the company after the contract period ends. Along with the remaining amount, the company also has to pay 24 percent of the contract amount as GST, following which it is allowed to take the material described in the contract, they added. They also said that in many cases, the PSM management awards contracts on preferential basis at the rate of previous dates and the management also does not stress upon its favourite contractor companies to pay their due GST, thereby causing heavy losses to the exchequer by this practice.
For this illegal awarding of contracts, the companies pay millions of rupees as bribes to the PSM management, which is then distributed among the senior officials, they added. Sources told Pakistan Today that in September last year, the PSM had announced sale of scrap that was being kept in Yard No 22. Many companies took part in the bidding and Amjad Traders won the contract with the rate of Rs 92 million, whereas Shaikh Brothers and RU Brothers came in second and third respectively, the sources added.
They said that Amjad Traders was directed to submit the remaining amount as well as the 24 percent GST; however, since the company could not submit the remaining amount, its contract was cancelled and the two-percent amount – approximately Rs 2 million – forfeited. According to PSM rules, fresh bidding needs to be carried out in this situation, but the management awarded the contract to RU Brothers at Rs 92 million last month without fresh bidding or without even inviting tenders, they added.
It is pertinent to mention here that in September 2010, the rate of scrap was Rs 25,000 per tonne and the current rate is Rs 39,000 only in the contract. Sources said that while many contractor companies, in connivance with the PSM management, do not pay GST and cause heavy losses to the exchequer, the Federal Board of Revenue (FBR) has failed to taken any necessary action against this illegal act. They said that Arsalan Enterprises was awarded contract of Yard No 17 for Rs 170 million, Amna Enterprises was awarded contract of Yard No 1 for Rs 300 million and Talha Brothers was awarded contract of Yard No 1 for Rs 13 million.
These three companies have not paid the GST and thus far, no action has been taken against them by the PSM management or the FBR.
