ISLAMABAD (March 20 2004): The registered consumers of electricity are not entitled to claim 'input tax adjustment'/refund against the old bills paid before June 2, 2003.
The CBR on Friday issued a clarification to all the collectors of sales tax on two major issues saying firstly, amended SRO 529 (I)/2003 allows registered consumers to claim input tax adjustment against electricity bills wherein the registration number is written in hand and duly verified and attested by an official of Wapda/KESC.
It appears that certain units have obtained the Wapda official's signatures on the old bills and claimed input adjustment thereon. But the amendment SRO does not have any retrospective effect.
Thus, if the bills were paid before June 2, 2003 and units have now obtained signatures of the Wapda officials thereon, they cannot claim input tax adjustment or even refund against these bills.
However, when read with sub-rule 7 (2) of the Special Procedure for Collection and Payment of Sales Tax (Electric Power) Rules, 2000, if such old bills are paid in the current tax period, input tax may be adjusted, subject to the conditions mentioned in the sub-rule.
Clarifying the latter issue, the CBR quoted Special Procedure for Collection and Payment of Sales Tax (Electric Power) Rules, 2000 and said that the registered consumers were entitled to claim input tax adjustment against an electric power bill (invoice) in the tax period in which the bill was paid. Provided the bill contained registration number and address of the business premises of such consumer.
In case of arrears, the usual practice of Wapda/KESC is that the instalment to be paid is mentioned in the current bill along with current liabilities. Thus, if the new management is paying arrears of old electricity bills in instalments, it would be doing so on the current monthly bills.
They will, thus, be entitled to claim the paid amount as input tax, provided the conditions are fulfilled, most importantly, that electricity was used in the manufacture of taxable goods.
However, in case they are paying the instalments/arrears in any other manner, they will have to claim refund under Section 66 of the Sales Tax Act, 1990.