LAHORE, Sept 28: The Central Board of Revenue on Tuesday decided to levy 15 per cent sales tax on late payment surcharges of Wapda and KESC. A CBR notification directed both the utilities to start charging the increase in bills Oct 1, 2004.
A Wapda spokesman criticized the CBR move and said that the authority had long been maintaining that the late payment surcharge was neither part of bills nor of a taxable nature, adding that for the past many years, Wapda and CBR had been locked in a legal argument about its exact nature.
He said that the CBR had taken the easy route of issuing a notification instead of waiting for a legal interpretation of its stand. The spokesman said that Wapda had been resisting being used as a tax collection agency, and the latest CBR move would only worsen the situation.
It would hike the bill without any benefit to Wapda and the authority would have to bear the brunt; poor customers would blame Wapda for increasing the bill without realising exact nature of the hike, he said.
Commenting on the notification, Abdullah Yusuf, chief of the CBR, said that all cash transactions come under the tax net and late payment surcharge "is naturally a part of the process".
He said that tax had been imposed after a "thorough consultation" with Wapda and its consent. The notification, he said, had been "vetted" by the ministry of law, which meant that it was legally sound.
"The government and the CBR have always been looking for an easy route for money collection," says an ex-member (finance) of Wapda. "Utility bills are "perfect" for the government and the CBR as no one can escape the payment and CBR gets extra money without any effort at all and it has done it again," he said.
Consumers complained that they would be made to pay for the failure of Wapda's customers' service department. "One of the main reasons for late payment is late delivery of bills," says an irritated consumer. "People get bills only a day before the due date. Now, people will be made to pay more because of Wapda's inefficiency," he said.