The Federal Board of Revenue (FBR) will remove a major hurdle faced by gas companies requiring Gas Infrastructure Development Cess (GIDC) to be paid on collection basis whereas sales tax on billed basis, creating legal concerns for cess collecting companies.
Sources told Business Recorder here on Saturday that the FBR is expected to amend sales tax rules or special procedure rules for collection and payment of sales tax on natural gas to resolve the issue in the light of observations made by the gas companies. Details revealed that the GIDC Act, 2015 (Act No iv of 2015) has been passed by the parliament and notified in the Gazette of Pakistan on May 22, 2015.
Under the Second Schedule of the GIDC Act, the maximum rate of Cess has been provided. Section 8(1) and 8(2) of GIDC Act 2015 inter alia provides that where any cess has not been paid or realized before coming into force of the act or if so paid or realized, has been refunded to or adjusted against other taxes or charges payable by the gas consumers or the company, the same shall be recoverable in accordance with the provision of the Act.
The aforesaid section of GIDC Act, 2015 makes it mandatory for the gas companies to collect cess that has been accrued under GIDC Act, 2011 and GIDC Ordinance, 2014. In compliance thereof, the gas companies have to bill arrears accumulated after a period of about 3 years. The companies have pointed out that under GIDC Act, 2015, the amount is required to be deposited under Government Treasury after its collection from the gas consumer while under Sales Tax Act, 1990, General Sales Tax (GST) levied is required to be deposited on billed basis, irrespective of the fact that the same is collected or realized from the gas consumers or not.
Due to waiver of litigation against GIDC, Act 2011 and GIDC Ordinance, 2014, the gas companies have not been able to collect GIDC from their gas consumers, accordingly, GST thereon was also not collected / realized and deposited in government treasury. However, where consumer was not able to provide injunctive orders for the collection of GIDC, the companies continued to deposit GST thereon in the manner prescribed in the Sales Tax Act, 1990 (billed basis rather collection basis as its provided in the statutes relating to GST).
The gas companies have represented that this anomaly/hardship requiring GIDC to be paid on collection basis and its GST on billed basis will create out of pocket situation for the cess collecting companies especially for SSGCL and SNGPL who are under severe financial crunch due to unavailability of annual accounts and pending notification of natural gas sale prices for consumers post August 2013.
In order to resolve the anomaly, it has been proposed that necessary amendments in special procedure rules for collection and payment of sales tax on natural gas may be made through Finance Act, 2015 or through any other appropriate mean. In view of the aforesaid position, Ministry of Finance is requested to kindly examine the matter for its resolution on urgent basis to facilitate the companies in collection of GIDC and GST in accordance with the relevant rules and regulations, sources added.
Comments
Comments are closed.