IN THE SUPREME COURT OF PAKISTAN 
(Appellate Jurisdiction) 
 
 
PRESENT: 
MR. JUSTICE MAQBOOL BAQAR 
MR. JUSTICE MUNIB AKHTER 
MR. JUSTICE QAZI MUHAMMAD AMIN AHMED 
 
 
CIVIL PETITION NO.3317 & 3318 OF 2018 
(Against judgment dated 21.5.2018 passed by 
the Islamabad High Court, Islamabad in FERA 
No.11 and 13 of 2015) 
 
Commissioner Inland Revenue, 
(Legal), Islamabad 
  
 
 
 
…Petitioner(s) 
 
 
 
 
 
 
 
 
(In both cases) 
 
 
 
 
 
Versus 
 
M/s Wi-Tribe Pakistan Ltd., Islamabad 
…Respondent(s) 
 
 
 
 
(In both cases) 
 
 
For the Petitioner(s): 
Dr. Farhat Zafar, ASC 
 
Ch. Akhter Ali, AOR. 
 
 
For the Respondent(s): 
Mr. Ayyaz Shaukat, ASC 
Syed Rifaqat Hussain Shah, AOR. 
 
Date of hearing: 
22.1.2020. 
ORDER 
 
 
MAQBOOL BAQAR, J. The question involved in the 
instant petitions is, as to whether despite clear exemption from 
payment of Federal Excise Duty (“FED”), on internet services, as 
granted by the Federal Excise Act, 2005 (the Act) in terms of 
section 3 thereof, through item No.2 of Table-II in the 3rd 
Schedule of the Act, transmission of voice contents through 
internet would attract levy of FED, as is chargeable on 
telecommunication services.  
 
2. 
 
The respondent M/s Wi-Tribe Pakistan Limited, which 
holds a wireless local loop license, was issued a show cause 
CP 3317&13318/18 
 
2
notice for non-payment of FED on account of services falling 
under the scope of “telecommunication services” rendered for the 
period from January 2011 to December 2012. Order in original 
was accordingly passed on 25.2.2014, and the appeal filed by the 
respondent there-against failed, however their appeal before the 
Appellate Tribunal Inland Revenue (the Tribunal) was allowed, 
the Tribunal held that since internet services are exempted from 
FED, the ‘voice content’ transmitted through internet also enjoys 
such exemption. The learned Islamabad High Court upheld the 
Tribunal’s decision through the impugned judgment.  
 
3. 
 
Indeed telecommunication services attract levy of 
FED. Under Section 3 of the Act, the said services are listed at 
S.No.6 of Table-II, bearing heading 98.12, in the First Schedule 
of the Act. However one such service, being the internet service, 
has been exempted from whole of excise duties. Internet service 
has thus been specified at S.No.2 of the Table-II of the Third 
Schedule of the Act, which table enumerates the services which 
are exempted from duty, relevant portion of the said item is, for 
the ease of reference, reproduced hereunder:- 
 
 
“2. 
Telecommunication services 
(i) 
Internet services whether dialup or 
broadband 
including 
email 
services, 
Data 
Communication 
Network 
Services 
(DCNS) 
and 
Value added data services.” 
     
The above signifies two important aspects in the present context. 
Firstly that not all the communication services attract levy of 
FED, secondly, (a) internet service, in the context of the Act, falls 
within the category of communication services, and (b) the same 
CP 3317&13318/18 
 
3
do not attract levy of FED. It may be crucial to note here that 
while granting exemption as above, no exception has been 
created and no categorization effected, as to the nature, usage, 
character or application of the internet facility. Thus it can safely 
be said that all telecommunication facilities availed through 
internet are exempted from FED irrespective of their nature. 
Admittedly the respondent, at least in the present context, are 
internet service provider (ISP), and charges for such service only. 
Though a customer may utilize internet facility for various 
different purposes, such as browsing, downloading and/or 
availing 
various 
applications 
like 
“WhatsApp”, 
“Skype”, 
“Facetime”, “Imo”, for audio, (voice content) and/or visual 
transmission, 
however, 
ISP 
has 
no 
concern 
with 
such 
applications/ facilities, nor does he provides or controls the same 
or charge any fee/amount therefor. The fee/amount that ISP 
charges from his customer is for the internet connectivity only. In 
fact no amount is charged even by the application provider for 
availing the said application, the facility being free of charge, and 
also since it has not even been claimed that any rate of any fee or 
charge has been determined, or prescribed therefor, and whereas 
telecommunication services were otherwise, liable at the relevant 
time to duty @ 17% of the charges, and on this corollary, in 
terms of sub-section (2) of Section 12 of the Act, the internet 
services, which fall within the category of telecommunication 
service also would have, but for the exemption, been liable to 
FED at the rate dependent upon the fee charge therefor, however 
since there is a zero charge in respect of internet service, as 
CP 3317&13318/18 
 
4
neither any amount is paid nor is any prescribed, no duty can 
therefore be charged due to this handicap also. It may also be 
noted here that the fee charged by an ISP is either by way of a 
package (fix charges) or on the actual usage of the internet data 
which is measured in bytes there is however neither any 
mechanism, device or formula to decipher or segregate such 
consumption in terms the various utilities the same is put to 
separately, nor has the petitioner devised any mechanism, 
criteria or formulate, to achieve the same and has also not 
framed any rules, regulations or a policy in that regard and 
rightly so, as the statute itself has not created any segregation 
and distinction amongst the various uses the internet facility can 
be put to, while granting exemption. There are no lawful means 
to determine or charge FED as being sought by the petitioner.  
4. 
 
It hardly need any mention that the charges on the 
subject can only be imposed in unambiguous and categorical 
terms, and not by presuming any intendment. It is now well 
settled that a fiscal provision of a statute has to be construed 
literally in favour of the tax payer.  
5. 
 
As discussed earlier, internet services/facilities are 
wholly exempted from FED. Nothing extraneous can be read into 
the relevant entry to qualify or restrict such exemption. The 
respondent cannot be allowed to be deprived of the statutory 
benefit through misinterpretation and misreading, as attempted 
by the department. Even in case of any ambiguity regarding any 
exemption or concession, the same is to be resolved in a manner 
CP 3317&13318/18 
 
5
beneficial to the tax payer and not in the manner that would lead 
to obliteration of his rights and liabilities. 
6. 
 
In view of the foregoing, we have found the impugned 
judgment, in consonance with the law, the same does not call for 
any interference by this Court. The petitions are accordingly 
dismissed.  
 
Judge 
 
 
Judge 
 
 
 
Judge 
Islamabad the 
22nd January, 2020 
‘NOT APPROVED FOR REPORTING’ 
Aamir Sh, /- 
