by: Zulfiqar Ali
The Food Department of Azad Jammu and Kashmir has waived and refunded over Rs 43 crore as General Sales Tax (GST) to contractors supplying government wheat and flour. This amount was already deducted from their bills as GST.
There is no legal mechanism in Azad Kashmir under which tax can be waived or refunded after deduction. According to an order issued by the Food Department Secretariat on April 15, 2026, the Rawalpindi-based Food Department Directorate deducted Rs 356.434,381 as General Sales Tax from 32 contractors from July 2022 to September 2023. The order states that this amount has now been waived to the contractors and will be refunded to them.
Similarly, two separate orders issued by the Food Department Secretariat have stated that from July 2022 to September 30, 2023, an amount of more than Rs 74.2 million was deducted from the bills of 70 contractors in Mirpur, Poonch and Muzaffarabad divisions, which has been waived and refunded.
According to experts, this decision of the Food Department is contrary to the opinion of the Inland Revenue Department. It should be noted that the authority to grant tax exemption or remission lies with the Inland Revenue Department, not the Food Department. After these details came to light, more questions have been raised about the alleged waiver of more than Rs one billion in GST to contractors by the Food Department from July 2019 to September 2023. The authorities are still silent on this issue, while experts are raising questions under which law this tax was refunded.
It should be noted that the Azad Kashmir Assembly had imposed 16 percent GST on transportation services, which was reduced to 15 percent in 2022. However, the Food Department claims that it first came to know about this tax on October 21, 2022, when the Accountant General objected to the non-deduction of this tax.
The Food Department also says that they had invited tenders for the financial year 2022-2023 in June 2022, hence the Food Department did not collect GST in the financial year 2022-2023 as well. The Food Department’s stance is correct, but according to documents, the Food Department has been deducting GST from contractors since July 2022.
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