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Sales tax to be leviable on LPG industry at all stages

ISLAMABAD (June 20 2003) : The Central Board of Revenue (CBR) has directed the liquid petroleum gas (LPG) industry that sales tax would be leviable at all the stages starting from supply till sale at retail outlets.

The CBR on Thursday directed all collectorates of sales tax to immediately implement the decision.

The CBR has categorically stated that all persons engaged in the sale/supply of natural gas, including LPG, at any stage from bore-holes and wells to retail sales, are required to get registered with the Sales Tax Department.

Therefore, all persons engaged in any taxable activity of production, supply, transmission, distribution or retailing of LPG, are liable to follow the provisions of the Sales Tax Act-1990 and Collection and Payment of Sales Tax on Natural Gas Rules-1999.

According to details, it was not clear whether producers of LPG are liable to charge and pay sales tax on supplies made by them from bore-holes and wells in terms of the collection and payment of Sales Tax on Natural Gas Rules-1999.

After thorough examination of the issue, the CBR ruled that the provisions of the Collection and Payment of Sales Tax on Natural Gas Rules-1999 are explicit and un-ambiguous.

Rule 3 enlists stages of collection and payment of sales tax and identifies stage-wise the persons responsible to charge and pay sales tax on the supply of natural gas.

In case of LPG, the liability to collect and pay sales tax commences from the event of supply from bore-holes and wells and continues until the same is sold to the ultimate consumers.

As such all the persons engaged in the sale and supply of natural gas, including LPG at any stage from bore-holes and wells to retail sale, are liable to get themselves registered under Section 14 of the Sales Tax Act-1990 and discharge their statutory responsibilities as per the law.

The person paying sales tax (output tax) is, however, entitled to take adjustment of the tax (input tax) already paid at the previous stage.

Consequently, all persons involved in any taxable activity of production, supply, transmission, distribution or retailing of LPG, are liable to follow the provisions of the Sales Tax Act-1990 read with Collection and Payment of Sales Tax on Natural Gas Rules-1999 notified vide SRO 1040(I)/99.

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