Law:

Section:

Income Tax Ordinance (XLIX of 2001)- -S. 235-Electricity consumption-Collection of advance tax on the amount of electricity bill-Scope-Federal Board of Revenue issued clarification that advance tax had to be collected on the gross amount of electricity bill-Contention of petitioner was that advance tax must be collected on the electricity consumed and not on the total electricity bill-Validity-Advance tax was to be charged on the electricity consumed and not on the total billed amount which would include sales tax, income tax and in some cases further tax and extra tax-Advance income tax could not be levied on sales tax-Impugned clarification of Federal Board of Revenue was set aside-Constitutional petition was allowed in circumstances. Deputy Collector of Customs, Railway Station, Lahore v. Messrs Abdul Ghaffar Abdul Rehman and others 2005 PTD 194 and 1994 PTD 848 rel. ORDER AYESHA A. MALIK, J.-The Petitioner seeks a clarification with respect to the charging of advance tax under Section 235 of the Income Tax Ordinance, 2001 ("Ordinance") on the electricity bill. 2. Learned counsel for the Petitioner submits that Respondent FBR issued a clarification on 08.06.2013 in terms of which income tax under Section 235 of the Ordinance was to be charged and collected on the electricity bill which includes the amount of sales tax paid on the said bill. Learned counsel states that this clarification issued by the FBR is contrary to Section 235 of the Ordinance and the respondents have served a notice to the Petitioner dated 08.05.2014 seeking an explanation with respect to the collection of advance tax under Section 235 of the Ordinance. Learned counsel argued that advance income tax cannot be charged on the sales tax that has been paid. Reliance has been placed upon the case titled Deputy Collector of Customs, Railway Station, Lahore v. Messrs Abdul Ghaffar Abdul Rehman and others (2005 PTD 194). He further stated that Section 235 of the Ordinance itself is clear that tax must be collected on the electricity consumed and not on the total electricity bill, which include sales tax, income tax and in some cases further tax and extra tax. 3. Report and parawise comments…

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