Large Taxpayers Unit (LTU), Karachi has attached the banks accounts of Karachi Electric Supply Company (KESC) for recovery of a surcharge of Rs 152 million, which is due on account of advance tax deducted by the power utility from commercial consumers.
Sources said the Karachi LTU had earlier invited the high officials of the company to resolve the issue, but to no avail. The tax department after getting go ahead from the board issued notices under Section 140 of Income Tax Ordinance, 2001 to some 12 banks to freeze the bank accounts of KESC. They said the company would charge advance tax in the manner as electricity consumption charges under section 205 of Income Tax Ordinance 2001. However, KESC, which is liable to withhold advance tax at the specific rate from the commercial consumers on electricity consumption, has not been depositing the same for several months in the national kitty.
The Karachi LTU had issued tax-demand orders to the company under section 161 of the Ordinance but the utility failed to pay this deduction because of insufficient funds. Sources said the company, which had to act as withholding agent, committed serious offense by utilising the payments of advance tax for operational purposes, which forced the department to take stern measures. The department has not only adjusted its sales tax refunds against the said levy but also served surcharge notices, sources said.
They said the attachment of KESC's bank accounts was legal. To a question, they dispelled the impression that around Rs 1.6 billion was due on tax department as KESC's sales tax refund, saying that the Karachi LTU has already paid Rs 5.3 billion to the company since 2007 and the due amount was not more than Rs 600 million.