ISLAMABAD: The Federal Board of Revenue (FBR) has clarified that the exemption of sales tax previously available on import and supply of solar panels and accessories was withdrawn and subsequently restored to the extent of photovoltaic cells only.
According to a legal clarification issued by the FBR Policy Wing, the exemption of sales tax on import and supply of solar panels and accessories was available till 15th January, 2022. However, through changes introduced vide Finance (Supplementary) Act, 2022 by the legislature empowered under Article 77 of the Constitution and as part of GST reforms undertaken under 6th review of IMF’s Extended Fund Facility (EFF) program above-mentioned exemption was withdrawn.
The FBR has issued a policy statement on the applicability of sales tax on the import of solar panels.
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Resultantly, solar panels and its accessories became chargeable to sales tax at standard rate. The said imposition was made across the board without any discriminatory treatment.
Furthermore, through Finance Act, 2022, exemption of sales tax on import and supply of photovoltaic cells whether or not assembled in modules or made up into panels was restored through insertion of S. No. 164 of Table-1 of the Sixth Schedule to the Sales Tax Act, 1990 while all other accessories/ related items of solar panels remained taxable at standard rate.
Thus, there is no chargeability of sales tax on photovoltaic cells whether produced locally or imported. Therefore, the contention of the petitioner regarding violation of Article 25 of the Constitution is not correct as there is no discriminatory treatment within the same class of goods.
The FBR further clarified that the exemption of sales tax on above-said goods had been restored as a facilitation measure which does not bar any one to carry out any type of lawful business activity. Therefore, question of violation of article 9 and 18 of the Constitution does not arise nor the legislative measure taken by the legislature is illegal or unlawful.
The exemption of sales tax previously available on import and supply of solar panels and accessories was withdrawn and subsequently restored to the extent of photovoltaic cells only by the legislature which is in duly empowered by Article 77 read with Entry No. 49 of Part-1 of Federal Legislative List of the Constitution of Pakistan to levy taxes on import, production or consumption of goods. It is; therefore, clarified that no fundamental rights have been violated, FBR added.