ISLAMABAD: The internet services are exempted from the federal excise duty (FED), the Supreme Court said in a ruling and dismissed the FBR appeal against a high court decision.
On 7 February 2020, Justice Maqbool Baqar of the the apex court ruled that the Whatsapp, Skype and other voice communication through internet does not attract the FED.
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The bench issued verdict on an appeal moved by Islamabad’s commissioner of inland revenue against an order of the Islamabad High Court.
The issue since internet services were exempted from payment of FED under the Federal Excise Act (FEA) 2005, would the transmission of ‘voice content’ through internet required levy of the duty or not.
The internet company was issued a show cause notice by the FBR for non-payment of FED on account of services falling within the ambit of “telecommunication services”, and the issue brought before a tribunal which held that since internet services were exempted from FED, voice content transmitted through internet also enjoyed such exemption. The tribunal decision was also upheld by the Islamabad High Court.
The apex court in its decision over the appeal declared that although telecommunication services attract levy of FED, internet service has been exempted from payment of excise duties.
The decision said the internet company, was an internet service provider (ISP) and it charges for such service only. Although a customer may utilise internet facility for different purposes, such as browsing and downloading. The company has no concern with such facilities nor does it provide or control the same or charge any fee or amount.
The fee or amount that an ISP collects from its customers is for internet connectivity only, the verdict interpreted.
Since there is a zero charge in respect of internet service as neither any amount is paid nor any prescribed, no duty can therefore be charged, the verdict said.
