Law: Sales Tax Rules, 2006

Section: 24,25,25(1),25(3)

Law: Sales Tax Special Procedure Rules, 2007

Section: 13(3)

Law: Customs Act, 1969

Section: 25

Law: Sales Tax Act, 1990

Section: 2(33),2(41),2(39),2(46),7,8(1),8(2),8(3) ,47(5)

SALES TAX ACT, 1990 (VII OF 1990) Sections: 7, 8(1) & 8(2) - Sales Tax Rules, 2006, Rule 13(3), 24, 25, 25(1) - Tax credit not allowed - Determination of tax liability - The petitioner has entered into power purchase Agreement with WAPDA - The said agreement rests on two major components i.e. capacity purchase price and energy purchase price - Energy purchase price is against supply of electricity by petitioner to WAPDA, whereas capacity purchase price is consideration received by petitioner for maintaining power plant, but no separate supply is being made against said consideration. The following questions of law arise out of the order of the learned Appellate Tribunal Inland Revenue (ATIR): Whether the learned ATIR after admitting that the applicant was engaged in only one taxable supply, was justified in holding that Rule 25(3) of the Sales Tax Rules, 2006 shall apply to the case of the applicant, ignoring Rule 13(3) of the Sales Tax Special Procedures Rules, 2007 and Rule 25(1) of the Sales Tax Rules, 2006? Whether the learned ATIR, has miserably failed to consider that the apportionment visualized under sub-section (2) of section 8 of the Sales Tax Act, 1990 read with rule 24 and 25 of the Sales Tax Rules, 2006 shall come into play when a registered person is engaged in taxable and exempt supplies simultaneously? It has been argued that section 8(2) of Act envisages two sets of supplies i.e., taxable supply and non- taxable supply, hence there must exist two separate sets of supplies to attract section 8(2) of Act. It is submitted that respondent department by relying on rule, 13(3) of Sales Tax Special Procedure Rules, 2007 has assumed that as consideration received by petitioner under capacity purchase price (CPP) has not been included in calculating the value of supply of electricity supplied to WAPDA and as result excluded from tax, this exclusion automatically transforms consideration received against CPP into non-taxable supply. He contends that rule, 13(3) of Rules envisages one supply and simply limits and defines scope of value of said supply. The assumption that such exclusion produces non taxable supply under Agreement is wholly misconceived…

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