ISLAMABAD: Federal Tax Ombudsman (FTO) M Zafar Hijazi has disposed of a complaint concerning the manner in which sales tax and withholding income tax are charged in net-metering cases, particularly with respect to electricity consumers served by K-Electric (KE).
The complaint was filed by a consumer who alleged that KE was charging taxes on the gross billed amount of electricity supplied, without accounting for the net-metering mechanism, whereas other distribution companies (Discos) operating in different parts of the country were reportedly following a different practice. The complainant maintained that this divergence had resulted in grievances and a perception of unequal treatment among similarly placed consumers.
The matter was reheard following a remand by the president of Pakistan. In compliance with the president’s directions, the Federal Tax Ombudsman ensured that all concerned stakeholders, including the Federal Board of Revenue (FBR), KE and other DISCOs, were given a full opportunity to present their views. Written comments were received from all parties, and the record was thoroughly examined.
During the proceedings, Discos raised preliminary objections regarding jurisdiction under Section 9 of the Federal Tax Ombudsman Ordinance, 2000. They contended that matters involving determination of tax liability, interpretation of fiscal statutes, and regulatory or policy issues under the Nepra net-metering framework fall outside the statutory mandate of the Ombudsman.
The FTO observed that the present proceedings did not warrant a determination of substantive tax liability, nor the issuance of directions that could be construed as interference with Nepra’s regulatory framework governing net metering. The Office noted that the controversy essentially reflected an issue of implementation and uniformity arising from divergent practices across different jurisdictions.
he FTO further observed that the complainant’s plea of discrimination, in the strict legal sense, was not substantiated as a deliberate discriminatory act attributable to the tax administration. Rather, the grievance primarily stemmed from a lack of uniform application and consistent implementation of the FBR’s position across the country.
It was also noted that Discos and K-Electric essentially operate as billing and collecting agents within the statutory framework. Matters requiring national coherence in fiscal treatment cannot remain dependent on fragmented practices in different regions. Such issues require authoritative resolution at the level of the Federal Board of Revenue, in consultation with other concerned government and regulatory bodies, so that a uniform and legally sustainable approach is adopted nationwide.
The Federal Tax Ombudsman emphasised that the record indicated that the FBR had issued clarifications and instructions in the past regarding the tax treatment of net-metering electricity bills. However, these did not appear to have been implemented uniformly by all field formations, resulting in uncertainty and recurring grievances among similarly placed consumers.
Accordingly, while disposing of the complaint, the Federal Tax Ombudsman directed that the FBR should take up the matter at the appropriate policy and administrative level, in consultation with relevant stakeholders, to ensure clarity and uniformity regarding tax treatment in net-metering cases across all jurisdictions.
The Ombudsman further stressed that any clarification or instructions issued by the Board must be effectively communicated and implemented by all concerned field formations so that inconsistent practices do not persist across the country.
The Federal Tax Ombudsman reiterated that the Office is not adjudicating upon tariff or regulatory policy matters under Nepra, nor determining substantive tax liability, but is referring the issue for uniform administrative resolution in the larger interest of consistency, fairness and avoidance of recurring grievances among electricity consumers.
