LAHORE: The Federal Board of Revenue (FBR) has failed to charge minimum tax on turnover from the National Transmission and Dispatch Company (NTDC) on the presumption that it purchases electricity from Generation Companies (GENCOs) to further sale to Distribution Companies (DISCOs), said sources.
They said the assessing officer was of the view that regardless of whether the purchase of electric power is on behalf of the DISCOs, it constitutes sales/purchase in its essence. But the NTDC officials challenged this view, saying that this contention has no basis as the entire statutory and structural framework clearly suggests that although the invoice is issued by NTDC, this does not constitute sale and the purpose of NTDC was merely to act as an agent for settlement and this purpose cannot be lost sight of at the whims
of FBR.
The sources said the assessing officer had relied upon the power/electricity sales bill issued by NTDC for collection from DISCOs, which contained separate heads under which the invoice was raised and included the component to be paid by the DISCOs in respect of sale of electricity. However, the NTDC contended that it was liable to pay minimum tax on turnover if required by the law and not otherwise. Therefore, the impact of any past clause of the law, which got excluded later on by the legislature, had no impact on the controversy. The NTDC stressed that it does not carry out the sale of goods, i.e., electricity, especially when the FBR itself admits that DISCOs are paying minimum tax on turnover, including the purchase price of electricity.
The sources said NTDC intimates DISCOs the generation part of the transfer charge during a billing period by deducting from the transfer charge the Use of System Charges. The amounts under the head capacity transfer charges, energy transfer charges, and total transfer charges are to be transferred to the respective GENCOs in proportion of their shares as calculated under the formula devised for the purpose. This is where the assessing officer misconstrued the documents and interpreted them to the contrary. However, the actual state of affairs is that NTDC generates Electricity Sales Bills to be paid by different DISCOs and the only amount that it retains is regarding Use of System Charges, which is also established from the audited accounts of NTDC.
Copyright Business Recorder, 2024
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