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021011
GOVERNMENT OF PAKISTAN REVENUE DIVISION CENTRAL BOARD OF REVENUE
SALES TAX INSTRUCTIONS/RULING NO. 64 /2002
(SALES TAX WING)
C. No. 1(33)STR/99.
Islamabad, the 11th October, 2002.
M/s. UCH Power Limited,
Redco BMW Arcade, 78-E, Blue Area,
P. O. Box No. 3021,
Islamabad.
SUBJECT: -
UCH POWER LIMITED - NOTICE FOR RECOVERY UNDER SECTION 48 OF THE SALES TAX ACT, 1990.
I am directed to refer
to your letter dated 5.12.2001 on the above subject and to state that:
(i) rule 4(3) of SRO 124(I)/2000 dated
15.3.2000 deals with the valuation of electric power and says that in case of
IPPs (including HUBCO & KAPCO), the value of the supply of electric power will
be “energy purchase price” only and any amount received in excess thereof on
account of capacity purchase price, energy price premium, excess bonus,
supplemental changes etc shall not be treated as component of value of supply;
(ii) the provisos of rule 4(3) deal with the disputes of price between WAPDA/KESC
and IPPs. The upshot of these provisos is that if WAPDA or KESC disputes and
does not pay any amount, it shall issue a certificate, which shall be treated as
Credit Note for IPP for the purpose of section 9 and similarly, if IPP receives
any amount from WAPDA or KESC for any other tax period (due to price-related
dispute), IPP shall pay tax on such amount in the return for the tax period in
which such amount is received;
(iii) rule 5(1) of above SRO allows WAPDA and KESC to deposit sales tax on
“collection basis”. No such facility has been provided or is available to IPPs
or captive power units; and
(iv) rules 5 and 6 speak of WAPDA & KESC only and do not mention any thing about
IPPs or captive power units, which means that for the purpose of filing of
return and determination of sales tax liability by IPPs, Captive Power Units or
any other person engaged in the generation, transmission, distribution and
supply of electricity, the standard provisions of sections 26 and 7 of the Sales
Tax Act, 1990 shall apply. Hence for the purpose of payment of sales tax, all
the supplies made during a tax period will have to be accounted for by IPPs,
CPUs or other persons (other than WAPDA & KESC) in the tax return regardless
whether or not price/value of supplies has been received from the buyer.
3. In view of the foregoing correct interpretation of the relevant provisions of
rules 4, 5 and 6 of SRO 124(I)/2000, dated
15-03-2000, your contention that you as IPP are required to deposit tax for
particular tax period only on that component of EPP which you have received from
WAPDA during that tax period is not correct. You are, therefore, advised to
please pay sales tax on all supplies made by you during a tax period on the
basis of energy purchase price, regardless whether or not payment for such
supplies, whether in full or not, has been received by you from the buyers
during the tax period.
(Iftikhar Qutab)
Chief (Sales Tax-III)
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