2/2017 Spl:Sales Tax Ref: A. IMS Health Pakistan (Pvt) Ltd. (Applicant) V/S Commissioner-II SRB (Respondent)
Sindh High Court
Bench: Hon'ble Chief Justice Mr. Justice Muhammad Shafi Siddiqui(Author), Hon'ble Mr. Justice Mahmood A. Khan
Order Date: 29-NOV-21
It is the consideration in money including federal and provincial duties and taxes which constitute value of taxable services which the person provides against the consideration but it excludes the amount of sales tax under the ibid Act. The Tribunal was of the view that the invoices generated on the amount includes the expenses/expenditures plus 10-% service charges and is to be taken as one revenue component for services rendered. The Tribunal is also of the view that in certain cases there is specific rule in Sindh Sales Tax on Services Act, 2011 providing for valuation of a particular service and providing a certain minimum threshold and also any exemption and exception. However, Tribunal considered that since no rule is available for the category of Business Support Services full value of generated invoices shall be taken as the value of services rendered or provided in terms of provisions of Section 5 ibid. --Primarily value of service charges for the purposes of Act 2011 is governed by the value of service agreed upon between the provider and the recipient as the market itself is so competitive that nothing could defeat the actual amount being declared to be taxed. However, in case such understanding of value of service is doubtful as it does not disclose correct value of service, it was open for the department to have considered the open market price of such service as required to be determined under section 6 of Sindh Sales Tax on Services Act, 2011 which is not the case here. Two provisos to Section 5 deals the situation of value of service. In a situation where the consideration of value of service is in kind or is partly in kind and partly in money, value of service shall mean open market price2 excluding the amount of sales tax under Act 2011. Similarly in case where service is provided by provider to a recipient who is an associated person and the value is not the actual value of service, then the value of service which is being provided by a provider to a non-associated person shall be counted and in case no consideration is claimed or value is lower than it is being provided by other persons, the value of service shall be of open market. In principle the department has not disputed the value of services rather the department is of the view that reimbursed amount or the amount of maintenance/expenses incurred should be made part of the value of the service.Full judgment text for this case is not yet available on Pakistan Law Reports. Check the official Sindh High Court case law portal for the complete order.
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