FED not applicable on internet services, SC rules

ISLAMABAD: The Supreme Court (SC) has ruled that internet services are exempted from the federal excise duty (FED) as it dismissed an appeal filed by the Federal Board of Revenue (FBR) against a high court decision in this regard.

Justice Maqbool Baqar of the apex court ruled that Whatsapp, Skype and other voice communication through internet does not attract FED.

The bench issued the verdict on an appeal moved by Islamabad’s commissioner of inland revenue against an order of the Islamabad High Court (IHC).

An internet company was issued a show-cause notice by the FBR for non-payment of FED on account of services falling within the ambit of “telecommunication services”, and the issue was brought before a tribunal which held that since internet services were exempted from FED, voice content transmitted through internet also enjoyed such exemption.

The tribunal decision was also upheld by the IHC.

The apex court in its decision over the appeal declared that although telecommunication services attract levy of FED, internet service has been exempted from payment of excise duties.

The decision said the internet company was an internet service provider (ISP) and it charges for such service only. Although a customer may utilise internet facility for different purposes, such as browsing and downloading, the company has no concern with such facilities nor does it provide or control the same or charge any fee or amount.

The fee or amount that an ISP collects from its customers is for internet connectivity only, the verdict interpreted.

Since there is a zero charge in respect of internet service as neither any amount is paid nor any prescribed, no duty can, therefore, be charged, the verdict said.