Computerised arms licences: FBR asked to confirm sales tax chargeability

ISLAMABAD: The Federal Tax Ombudsman (FTO) on Tuesday directed the Federal Board of Revenue (FBR) to confirm the chargeability of sales tax under the Sales Tax Act, 1990, on computerised arms licences, in the form of cards being supplied by the National Database and Registration Authority (Nadra).

The FTO issued an important order here on Tuesday on the chargeability of sales tax by the Nadra.

A complaint was filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against inaction on the part of the FBR to take cognisance of the fact that the Nadra, Islamabad, was not charging sales tax on the supply of goods in the form of machine readable passports, vehicle registration cards, and computerised arms licences.

The complainant stated that he is registered as an informer and according to him the supply of goods/ services by the Nadra was subject to levy and deposit of sales tax/ FED, but no tax/ duty was being charged by the Nadra. Therefore, the complaint is against the FBR for their inefficiency in taking cognisance of the fact that the Nadra is not charging sales tax on the supply of (i) machine readable passports, (ii) vehicle registration cards, and (iii) computerised arms licenses.

The FTO’s findings stated that the Nadra is paying sales tax on the supply of machine readable passports to the Directorate General of Immigration and Passport, Islamabad as the supply of services @ five per cent of value in the light of the ICT (Tax on Services) Ordinance 2001. They are regularly filing sales tax returns as informed by the Large Tax Office (LTO), Islamabad.

The Nadra is charging and paying sales tax @ 17 per cent of value (as goods) of chip-based vehicle registration cards and as per contention of the LTO, Islamabad sales tax is not chargeable on the supply of computerised arms licenses by the Nadra in terms of ICT (Tax on Services) Ordinance, 2001. However, they are silent about the chargeability of sales tax (on goods) under Sales Tax Act, 1990.

In the light of elaborate discussion and legal provisions as supra, the Revenue Division is required to examine chargeability or otherwise of sales tax under the Sales Tax Act, 1990 on computerised arms licenses in the form of cards, being supplied by the Nadra, Islamabad to the federal government, and the provincial governments on the analogy of chip-based vehicle registration cards, the FTO order added.

Copyright Business Recorder, 2023