ISLAMABAD: Sensing violation of the Supreme Courts orders, the Senate Standing Committee on Finance rejected Sales Tax (Amendment) Bill 2014, saying that it will put additional sales tax burden on consumers through CNG stations.
The committee chaired by Senator Nasreen Jalil decided not to recommend tabling of the Sales Tax (Amendment) Bill 2014 in the National Assembly. The committee members from both the ANP and MQM opposed the bill, the PPP abstained from the panel while the PML-N Senator favoured of the bill.
The committee chairman pointed out that the committee was not going to recommend the bill to the National Assembly due to lack of unanimity over the issue. She said that the committees could not defy the court order and nor could offer any remedy to the government.
She said that there were clear orders of the court and committee could not go against court orders. If an ordinary citizen has grievances on the issue of sales tax on CNG, the committee cannot recommend the Bill to the National Assembly against the will of the general public.
Federal Finance Secretary Dr Waqar Masood said the recommendations of the committee on Sales Tax (Amendment) Bill 2014 should be backed by a strong rationale. Whatever is the recommendation of the committee of the National Assembly, there should be a solid basis and logic behind the decision.
On the occasion, FBR Chairman Tariq Bajwa informed the committee that the Supreme Court vide its judgements dated June 6, 2013 and December 10, 2013 declared the extra sales tax at 9 percent on the supply of CNG as against the Constitution and law. Accordingly, the court directed the FBR to deposit Rs28 billion collected as extra sales tax with effect from July 1, 2007 to December 10, 2013 with the Registrar Supreme Court of Pakistan. According to him, as the prevailing legal dispensation empowers the FBR to issue refund of sales tax only to the registered persons; it was found that the FBR is legally incapacitated to implement the directions of the Supreme Court of Pakistan. Immediate loss of revenue amounting to Rs28 billion and future loss of revenue (not precisely quantifiable at this stage) can be effectively saved by urgently bringing certain amendments in the Sales Tax Act, 1990.
Briefing the committee, Chairman Federal Board of Revenue (FBR) Tariq Bajwa said that there was no change in the price of CNG for consumers due to Sales Tax (Amendment) Bill 2014. No new tax was imposed on CNG stations as only the mode/stage of collection had been changed.
Insofar as consumers of CNG were concerned, there is no change in the rate of sales tax being charged on the compressed natural gas, he said and asked: “When the Sales Tax Amendment Ordinance was promulgated on March 23, 2014, was there any news of price increase from any quarter?”
The government has authorised the gas companies to collect the sales tax on supply of gas to CNG stations instead of direct collection from the CNG stations. The rate and amount of sales tax payable on CNG remained the same as already notified by Ogra through its notification dated December 12, 2013. Thus, there will be no change in the consumer price of CNG or the amount of sales tax collected from the consumers. The price of CNG shall remain the same as already notified by Ogra.
The FBR Chairman added that legally it was not possible to return back Rs28 billion sales tax to consumers of CNG. The sales tax law only allows refund to the registered persons and we cannot trace all the consumers on whom the burden of sales tax has already been passed.
