Sales Tax Instructions

Sales Tax Instructions, 2009
[Issued by the C. B. R., Islamabad, under the signature of Mr. Aamer Amin Bhatti,
Secretary (ST&CE-L&P), addressed to the Collector, Customs, Sales Tax & Central Excise,
Hyderabad/Quetta/Multan, the Collector, Collectorate of Sales Tax & Central Excise, Lahore/
Faisalabad/ Gujranwala/Rawalpindi/Peshawar, the Collector, (Enforcement), Sales Tax House,
Karachi. Copy to P. S. to Member (Sales Tax & CE) CBR, Islamabad and Mr. Suhail Afzal, Chief
STARR/BPR, Customs House, Lahore.]
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C. NO.1(11)STR/2004
DATED 14 TH APRIL, 2005
SUBJECT: ISSUE OF CHARGEABILITY OF SALES TAX ON
GENERATION AND SUPPLY OF ELECTRICITY BY M/S.
KHAYABAN-E-IQBAL (PVT)LIMITED AND M/S FTC
MANAGEMENT COMPANY (PVT)LIMITED FOR SELF
CONSUMPTION TO OWNERS AND TENANTS OF BUILDING –
CLARIFICATION REGARDING
I am directed to refer to the subject cited above and to state that a question has
been raised as to whether or not electric power generated, distributed and used in private
properties or buildings either by the owners or by the tenants of such buildings is liable to
sales tax. The question has been examined in the Board in consultation with the National
Electric Power Regulatory Authority (NEPRA) and it is observed that:-
(i)
Under rule 32 of the Sales Tax Special Procedure Rules, 2004, the
provisions of Chapter V thereof have been exclusively confined to such
companies engaged in the import, production, generation, transmission
or distribution of electric power as are licensed under he regulation of
Generation, Transmission and Distribution of Electric Power Act, 1997
(XL of 1997).
(ii) Under clause (e) rule 33 of Sales Tax Special Procedure Rules, 2004
(earlier notified vide SRO 124(I)/2000 dated 15.03.2000), the definition
of distribution excludes the distribution facilities located on private
property used solely to move or deliver electric power to the person
owning such facilities or to the tenants of such private property.
2. It, therefore, follows that generation, distribution and utilization of
electricity in private properties or buildings is not liable to sales tax because the
provisions of the said Chapter V are not attracted in case of private properties or
buildings where the generation and distribution arrangements have been made internally
for use of electricity exclusively within the property or building premises without any
intention for furtherance of regular business or otherwise on non-commercial/nonbusiness
basis.