| Case ID |
d83277b2-3eb1-4737-88a7-0ba3b3518521 |
| Body |
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| Case Number |
Writ Petition No. 14247 of 2014 |
| Decision Date |
Jan 05, 2016 |
| Hearing Date |
|
| Decision |
The court ruled that advance tax under Section 235 of the Income Tax Ordinance should be charged on the electricity consumed rather than on the total electricity bill. The Federal Board of Revenue's clarification requiring advance tax on the gross electricity bill, which includes sales tax and other taxes, was found to be invalid. The petition was accepted, and the impugned clarification was set aside. This decision clarifies that the advance income tax cannot be levied on the sales tax component of the electricity bill, ensuring compliance with the provisions of the Ordinance. |
| Summary |
In the landmark case of Writ Petition No. 14247 of 2014 decided by the Lahore High Court, the issue at hand was the collection of advance tax on electricity consumption as per Section 235 of the Income Tax Ordinance, 2001. The petitioner, Faisalabad Electric Supply Company Limited (FESCO), contested the Federal Board of Revenue's (FBR) clarification from June 8, 2013, which mandated that advance tax be collected on the total electricity bill including sales tax. The court emphasized that the law stipulates that tax should only be collected on the actual electricity consumed, eliminating the inclusion of additional taxes in this calculation. This ruling not only reinforces the correct application of the Income Tax Ordinance but also safeguards consumers from undue taxation on components that do not pertain to actual electricity usage. The decision sets a precedent for future cases regarding tax collection on utilities, ensuring clarity and fairness in the interpretation of tax laws. This case is crucial for stakeholders in the energy sector and taxpayers alike, as it delineates the boundaries of tax obligations and promotes transparency in tax collection practices. |
| Court |
Lahore High Court
|
| Entities Involved |
FEDERATION OF PAKISTAN,
FAISALABAD ELECTRIC SUPPLY COMPANY LIMITED
|
| Judges |
AYESHA A. MALIK, J
|
| Lawyers |
Mian Ashiq Hussain for Petitioner,
Syed Muhammad Haider Kazmi vice Miss. Kausar Parveen for Respondents,
Mirza Nasar Ahmad, D.A.G.
|
| Petitioners |
FAISALABAD ELECTRIC SUPPLY COMPANY LIMITED (FESCO) through Director
|
| Respondents |
FEDERATION OF PAKISTAN through Secretary Finance and 4 others
|
| Citations |
2016 SLD 3032,
2016 PTD 2171
|
| Other Citations |
Deputy Collector of Customs, Railway Station, Lahore v. Messrs Abdul Ghaffar Abdul Rehman and others 2005 PTD 194,
1994 PTD 848
|
| Laws Involved |
Income Tax Ordinance (XLIX of 2001)
|
| Sections |
235
|