SC Stops Govt To Receive FED From Internet Companies

ISLAMABAD, (UrduPoint / Pakistan Point News - 8th Feb, 2020 ) :The Supreme Court has stopped the government to receive Federal Excise Duty (FED) from the internet companies and stated that voice communications through the internet did not come under FED.

A five-page judgment authored by Justice Maqbool Baqar stated that internet services and facilities were wholly exempted from FED and nothing extraneous can be read into the relevant entry to qualify or restrict such exemption.

It is a settled point in law that a fiscal provision of a statute has to be construed literally in favour of the taxpayer since any charge or levy of tax can be imposed in unambiguous and categorical terms only and not by presuming any intendment, said the judgement.

The judgment stated that WhatsApp, Skype and other services did not fall into the category of telecommunications.

WhatsApp and other companies did not charge the customers, it added.

The verdict stated that it was up to a internet user that he wanted it for browsing or making audio video calls.

The order stated that telecommunication service tax could not be levied on internet calls as companies only charge service charges not WhatsApp and other call charges.

The verdict came on an appeal moved by Islamabad's commissioner of inland revenue (legal) against a May 21, 2018, order of the Islamabad High Court.

The dispute revolved around the question that since internet services were exempted from payment of FED under the Federal Excise Act (FEA) 2005, would the transmission of 'voice content' through internet attract levy of the duty or not. The Supreme Court, however, dismissed the appeal.

Messers Wi-Tribe Pakistan, which holds a wireless local loop licence, was issued a show cause notice by the tax department for non-payment of FED on account of services falling under the definition of "telecommunication services" rendered from January 2011 to December 2012.

The issue was then taken up by a tribunal which held that since internet services were exempted from FED, voice content transmitted through internet also enjoyed such exemption.