Exempt power supplies in Pata: FBR fails to add correct column to ST declarations – Business & Finance

LAHORE: The Federal Board of Revenue (FBR) has not added a column to sales tax returns to account for exempt supplies of electricity by the Peshawar Electric Supply Company (Pesco) to the Provincially Administered Tribal Area ( Pata) despite clear instructions from the courts.

Hussain Sherazi, a tax consultant, said the issue of ineligible input tax claimed on exempt supplies results in underpayment of sales tax.

According to him, the issue was again thoroughly discussed at the Tax Appeal Court, Lahore Bench. He said there is no column in the sales tax return that addresses the special situation of Pesco’s inability to collect sales tax on energy supplies made to Pata due to orders made by the courts. Therefore, the Pesco had listed these supplies in the exempted column.

He said sales tax was included in electricity bills issued to the consumer in June 2004, but Civil Judge Swat suspended its collection on the grounds that the Sales Tax Act 1990 was not applicable. at the PATA. But the sales tax declaration form does not address any eventuality where the competent courts have suspended the collection of sales tax, he added.

He said that clarification was repeatedly sought at the arbitration/assessment and appeal stages to guide the Pesco regarding the column in the statement where under the relevant figures relating to the tax of output payable by consumers to Pata but suspended by court, can be shown. However, no such indication was ever provided and, by force, these supplies of electricity to Pata were in the exempt column which are otherwise taxable supplies given the letter C of the FBR. No. 3 (30) STP/99 dated 2003-10-22. It is well established law that a party should not be compelled to suffer as a result of any act or omission on the part of a court, he said.

Sherazi said even the department was unclear about the placement of those supplies on the sales tax return. In such unavoidable circumstances, the mere listing of such supplies to Pata in the exempt column does not make them exempt as stated in the show cause notice, he said.

He said the Council should take stock of the situation and resolve the issue once and for all in order to streamline sales tax collection in the Pesco area.

Copyright Business Recorder, 2022

Rosemary C. Kearney