GENERATION AND SUPPLY OF ELECTRICITY TO SISTER CONCERNS

GENERATION AND SUPPLY OF ELECTRICITY TO SISTER CONCERNS <!--[if gte mso 10]> GENERATION AND SUPPLY OF ELECTRICITY TO SISTER CONCERNS By Akhtar Javed, Advocate, Lahore Messrs Rauf Textile and Printing Mills (Pvt.) Ltd. Karachi, (the Company) is engaged in the business of textile printing and processing. It also owns gas generator for the generation of electricity. The in-housed produced electricity is also supplied to three other sister concerns of the group. The company claimed adjustment of input tax paid on gas used in the generation of electricity but did not charge sales tax on electricity supplied to its other sister concerns. The company was of the view that the Special Procedure for Collection and Payment of Sales Tax (Electric Power) Rules, 2000 was not application to it so it was not required to charge sales tax in the power bills issued to its sister concerns. While conducting audit of the sales tax record, the auditors of the Collectorate of Sales Tax (West) Karachi raised an objection to the extent that the Company was required to charge the sales tax on electricity supplied to its sister concerns. 2. The Collector of Sales Tax (West) Karachi referred the matter to C.B.R. for an advice. The learned Collector was also of the view that the company was required to pay sales tax on supply of electricity to its sister concerns. 3. The matter has been examined in C.B.R. The Board vide its Letter C.No. 1(3)/STR/2000 dated 27-8-2002 has been pleased to observe that the activity of the company comes within the scope of Rule 3(m) of Special Procedure for Collection and Payment of Sales Tax (Electric Power) Rules, 2000 notified vide S.R.O. 124(I)/2000 dated 15-3-2000, hence is liable to pay sales tax on the electricity supplied to its sister concerns.