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CBR disallows tax adjustment on diesel used in generators

ISLAMABAD (December 27 2002) : The Central Board of Revenue (CBR) has rejected a major demand of business community by disallowing adjustment of sales tax on diesel used in the generators, official sources told Business Recorder on Thursday.

The industrial sector was persistently demanding sales tax adjustment on diesel, but the CBR outrightly rejected their proposal on the assumption that the facility would be misused.

The basic reason for not extending permission was that diesel has multiple uses and the facility would be instrumental in encouraging wrong input tax adjustments, as it would be impossible to determine the actual use of diesel in generators.

Furthermore, most of the power generating units do not have meters and it is difficult to ascertain whether the power is being used for production or any other purpose.

Contrary to this, the industrial units were of the view that the generators were installed as standby arrangement due to repeated breakdowns.

The meters could be installed to monitor the production of electricity through these generators, which provide basic information for the adjustment of sales tax paid on the purchase of diesel.

Sources confirmed that the CBR has not made any commitment with the concerned industry for giving this facility.

However, the All Pakistan Textile Mills Association (Aptma) may conduct a study pertaining to collection of data on the use of generators in the industry for production purposes, installation of meters on these generators and working out input-output ratio, etc.

The CBR will examine the data in consultation with the industry to devise a system of adjustment of sales tax on purchase of diesel used in generators, if possible.

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