CNG stations de-registration: FBR withdraws decision

The Federal Board of Revenue (FBR) has withdrawn a major budgetary decision (2007-08) pertaining to de-registration of Compressed Natural Gas (CNG) stations with the sales tax department.
Sources told Business Recorder on Thursday that the CNG stations would remain registered with the collectorates of sales tax and federal excise for documentation and proper monitoring of this sector.
The board has issued instructions to the collectors of sales tax that the CNG stations should not be de-registered. These companies would continue to remain registered with the department and maintain record required under the Sales Tax Act, 1990.
Sources said the decision has been taken in the last collectors conference and communicated to the field formations for compliance. It would be instrumental in proper monitoring of sales tax collection from the CNG stations and analysing whether the sales tax from this sector has reduced following implementation of the new system.
Under the new arrangement, announced in budget 2007-08, the gas companies will charge sales tax @ 24 percent of the gas charges billed to the CNG stations. This 24 percent includes 15 percent normal sales tax presently being charged by gas companies plus 9 percent worked out on the basis of value addition by CNG stations.
It was also announced that the CNG stations will be de-registered from the sales tax department after the enforcement of the new system. They will not be required to file monthly sales tax return or to keep any records under the Sales Tax Act, 1990. In this connection, the CNG stations will submit their last sales tax return under the existing rules by July 15, 2007, for the tax period June 2007.
During the post-budget seminars, tax authorities had assured de-registration of CNG stations as per budget 2007-08. However, the decision has been withdrawn through issuance of instructions to the field formations.
When contacted, tax experts said that an anomaly has been created due to withdrawal of a budgetary decision pertaining to CNG stations. On one hand, the CNG stations would operate under the Presumptive Tax Regime (PTR) requiring minimum documentation on the income tax side. Whereas, registration of these stations with the sales tax department would require proper documentation of the entire sector. Thus, two different regimes would simultaneously apply on one sector, expert added.