C. NO. 1(3)FED/2007, DATED 25TH JULY, 2009

ISSUE REGARDING LEVIABILITY OF 1% SED ON HOTELS AND RESTAURANTS F.B.R's LETTER C. NO. 1(3)FED/2007, DATED 25TH JULY, 2009 SUBJECT:- ISSUE REGARDING LEVIABILITY OF 1% SED ON HOTELS AND RESTAURANTS. I am directed to refer to the subject cited above and enclose a copy of Law Justice Division's advice on the above referred subject for further necessary action. Enel: as above. NO. 530/2009-LAW-I GOVERNMENT OF PAKISTAN LAW AND JUSTICE DIVISION (LAW-I SECTION) Reference:--- Federal Board of Revenue, O.M. C.No.l(3)FED/07/38623-R, dated 20th June, 2009 Subject:- ISSUE REGARDING LEVIABILITY OF 1% SED ON HOTELS AND RESTAURANTS. Pages. l-9/Cor(PUC). Dy.Sol.(IV)/D.M.II., 23-6-2009. Under the Heading No. 9801.1000 and 9801.2000 of Chapter 98 of the 1st schedule of the Customs Act 1969, 15% federal excise duty is levied on the charges of services provided or rendered by Hotels, Restaurants. 2. Section 3A of the Federal Excise Act, 2005 provides that the Federal Government may, by notification in the official Gazette, levy and collect, subject to such conditions, limitations or restrictions as it may deem fit to impose, special excise duty on any,- (a) goods produced or manufactured in Pakistan; and (b) goods imported into Pakistan; at the rate of one percent of the value of such goods. 3. As the business of Hotels and Restaurants is classified as "services" under the aforesaid Chapter and the SED is required to be levied on goods produced, manufactured or imported into Pakistan. Hence the services provided by the Hotels and Restaurants do not come in the definition of goods produced, manufactured, as such the SED is not liable to be levied of the Services provided by the Hotels and Restaurants. (Sd) FARRUKH ALI MUGHAL, Deputy Solicitor, 26-6-2009, D.M.-II 4. I agree. The point in issue in this case is as to whether Special Excise Duty is leviable on services or not. Section 3A of the Federal Excise Act 2005, deals with levy and collection of Special Excise Duty. Sub-section (1) of section 3A…