SUI NORTHERN GAS PIPE LINES LIMITED vs COMMISSIONER INLAND REVENUE, LTO, LAHORE S

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SUI NORTHERN GAS PIPE LINES LIMITED VS COMMISSIONER INLAND REVENUE, LTO, LAHORE S.8---Input tax adjustment---Disallowance---Input tax claimed by Gas Company in respect of UFG (Un-Accounted For Gas)---Scope---Registered person (Sui Northern Gas Pipe Lines Ltd /SNGPL) filed appeal before the Appellate Tribunal Inland Revenue against order passed by Commissioner Inland Revenue (Appeals) whereby he upheld the disallowance of input tax claimed in respect of UFG (Un- accounted for Gas) over and above the permissible limit as determined by the OGRA and input tax claimed under S. 8 of Sales Tax Act, 1990---Held, that during the process of transmission and distribution, significant volume of natural gas remains unaccounted for due to leakage, pilferage, measurement errors or malfunctioning of gas meters which are termed as Unaccounted For Gas (UFG)---While determining the appellant's revenue, final tariff on the basis of guaranteed return OGRA allowed adjustment of UFG to the extent of certain percentage of gas available for sales as against the actual loss incurred on this account---In that background, the appellant was aggrieved by the disallowance of input tax of Rs.1,789,711,550/- as allegedly the same was in excess of percentage approval by OGRA---Previously, there were some conflicting judgments of the Appellate Tribunal Inland Revenue ('the Tribunal') on the issue-in-hand, hence during the course of hearing of company's appeal STA No.833/LB/2016, a miscellaneous application was given for the constitution of Larger Bench to resolve the controversy---Larger Bench of the Tribunal was constituted on the request of the taxpayer and matter was decided in favour of company---Input tax is admissible in respect of gas blown due to ruptures even if gas is not actually supplied as the intention of the appellant at the time of receiving gas was to make taxable supplies, which principle is squarely applicable in the present case---Appellate Tribunal, following the ratio decendi settled by the Larger Bench of the Tribunal in STA No.833/LB/2016, held that the Appellant (SNGPL) was entitled to input tax adjustment/claim incurred in respect of Un-accounted For Gas (UFG)---Commissioner Inland Revenue (Appeals) erred in law while upholding the disallowance of input tax on that account after completely ignoring the decision of the Larger Bench of the Tribunal which was against the lawful rights of the appellant---Tribunal set-aside the impugned order passed by Commissioner Inland Revenue (Appeals)---Appeal filed by registered person (SNGPL) was allowed, in circumstances.

SUI NORTHERN GAS PIPE LINES LIMITED vs COMMISSIONER INLAND REVENUE, LTO, LAHORE S — 2024 PTD 1432 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN

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