Sales Tax Instructions

Sales Tax Instructions, 2009
SALES TAX RULING/INSTRUCTION No.64/2002
C. No. 1(33)STR/99 DATED 11 TH OCTOBER, 2002
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.
2. 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.