LAHORE: The Federal Board of Revenue (FBR) has recovered Rs13.86 billion from the bank accounts of three power distribution companies (Discos), on account of general sales tax on the supply of electricity to Azad Jammu and Kashmir, and served notices for the recovery of another Rs52.76 billion on same grounds, despite strong opposition from the Power Division.
The FBR has recovered Rs10.50 billion from the bank account of Islamabad Electric Supply Company (IESCO), Rs1.78 billion from Peshawar Electric Supply Company (PESCO), and Rs1.58 billion from Gujranwala Electric Power Company (GEPCO) on account of GST on the supply of electricity to AJK.
Official source told that the Board has also served notices to IESCO for the recovery of Rs47 billion and Rs5.76 billion to GEPCO on the account of GST on the power supply to AJK, the source added. The GST collection will have an annual impact of Rs12.726 billion on the Discos that are currently providing power to AJK.
The Power Division on the other hand disputing the levying of GST on electricity supply to AJK, by FBR, has termed it as violation of the agreement signed between government of Pakistan and AJK, in 2003, at the time of Mangla Dam raising, and proposed that no GST should be charged on the power supply.
To stop FBR from recovery of GST from the ex-WAPDA distribution companies, the Power Division has moved a summary to ECC arguing that an agreement for raising of Mangla Dam was signed among the then Ministry of Water and Power, WAPDA and Government of AJ&K on June 23, 2003.
According to the agreement, the Ministry shall ensure that the CBR (now FBR) does not levy the GST on electricity generated in and supplied to AJ&K since the GST is applicable in Pakistan and AJ&K already charges GST through its tax department.
All rules prescribed by the Government of Pakistan with respect to GST would be applicable to the government. Consequently, the relevant DISCOs (IESCO, PESCO & GEPCO) are supplying electricity to AJ&K without charging any GST and treating the same as zero rated in accordance with the provision of the bilateral agreement.
