The Federal Board of Revenue (FBR) has rejected an application of sales tax zero rating facility on supply of electricity and natural gas of an industrial company located at Workers Road, SITE Karachi. According to the FBR's instructions issued to the Chief Commissioner Regional Tax Office Karachi, the application of the unit was rejected due to claiming inadmissible input tax on purchase of items.
Refer to the Board's letter of 10.07.2015 pertaining to the zero rating facility of sales tax on supply of electricity and gas bills in respect of the said industries. The RTO Karachi is requested to furnish the report of the said unit to the Board at the earliest, the FBR added. The FBR has communicated the said industrial unit that the request for allowing zero rating facility on electricity bill has been examined in the Board.
On scrutiny of the record data in the Board, it has been revealed that the said industrial company has adjusted inadmissible input tax amounting to Rs 1.692 million on account of purchase of items which are, not allowed under section 8(1)(a) & (b) of the Sales Tax Act, 1990 read with SRO 490(1)/2004 dated 12-06-2004 and shown 61 percent consumption of electricity, as percentage of sales which is alarmingly high indicating abnormal activity. In these circumstances, as the company is non-compliant with the above provisions of Sales Tax Act, 1990 and notifications issued thereunder, the company's request for grant of zero rating on supply of electricity reference numbers BL 004504 &. 9021831000 (2) respectively, cannot be acceded to at this stage, the FBR added.
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