Sales Tax Instructions

Sales Tax Instructions, 2009
A question has arisen as to the value of supply of the electricity supplied by
independent Power Projects (IPPs) to M/s. WAPDA and M/s. KESC. The contracts
between M/s. WAPDA/KESC and different IPPs envisage a tariff structure comprising a
number of categories e.g. the consideration of money on account of Energy Purchase
Price (E.P.P.), Capacity Purchase Price (C.P.P.), Energy Purchase Price Premium, Excess
Energy Bonus and Supplemental Charges (S.C.) etc.
2. The EPP is payable by WAPDA/KESC on account of purchase of
"electrical energy" while the consideration received by I.P.Ps on account of CPP is for
net capacity of the plant which is to be paid during the contractual period. The payment
of CPP, etc. is not reliable to the supply of electricity.
3. The issue has been examined in the Central Board of Revenue and it is
ruled that the value of supply of electricity by IPPs is the amount received on account of
Energy Purchase Price only. Therefore, any amount in excess of EPP received on account
of Capacity Purchase Price, Energy Purchase Price Premium, Excess Bonus,
Supplemental Charges etc. is not to be included in the value of supply as defined in
clause (46) of section 2 of the Sales Tax Act, 1990. However, the assessment of sales tax
is to be done in accordance with the provision of sections 7, 8 and all other relevant
provisions of the Act, rules and notification. The IPPs will be entitled to claim full input
tax adjustment against the sales tax paid on purchase of furnace oil and other tax-paid
purchases for making supply of electricity subject to the provisions of section 8 and the
notifications issued thereunder.
4. This ruling applies only to IPPs including HUBCO and KAPCO, because
of their peculiar arrangements with WAPDA/KESC and is not applicable to any other
person, including Captive Power Projects, engaged in the production and supply of
electricity.
[Rescinded vide STGO No.3 of 2004 dated 12 th June, 2004]
[Issued by the CBR, Islamabad under the signature of Mr. Zulfiqar A. Kazimi, Secretary
(STR).]
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C. NO.1/1-COORD/2000 DATED 31 ST JANUARY, 2000
SUBJECT:- PROBLEMS OF DISTRIBUTORS
In a meeting of the Finance Minster with representative of FPCCI on 22-1-2000,
various matters pertaining to the peculiar difficulties of Distributors as discussed in
previous meetings with the Finance Minister as well as Members of CBR, were reviewed.
The Finance Minster approved the following:-