The CBR taxes the Pakistani source income of nonresident individuals and foreign corporations with respect to income that arises from a trade or business, however, Pakistan generally asserts jurisdiction only with respect to taxable income which is effectively connected with the conduct of a trade or business within the Pakistan.

Moreover, under income tax treaties which the Pakistan has entered into with other countries, the Pakistan generally asserts its right to tax the Pakistani source trade or business income of foreign individuals and corporations only when such income is attributable to a "permanent establishment" or "fixed base" in the Pakistan. The application of these basic principles of Pakistani income taxation to electronic commerce creates a number of problems. First, the question whether a foreign person engaged in electronic commerce is conducting a trade or business "in Pakistan" is difficult to resolve by reference to the traditional criteria for resolving that issue. The concept of a Pakistani trade or business evolved in the context of conventional commerce, which has typically been conducted through identifiable physical locations. As noted above, however, electronic commerce can be conducted through telecommunications and computer links that have no physical connection to the jurisdiction in which the income-producing activity occurs. Indeed, "from a certain perspective, electronic commerce doesn't seem to occur in any physical location but instead takes place in the nebulous world of 'cyberspace.' "Consequently, even though a foreign person may engage in extensive transactions with Pakistani customers, and thus clearly be engaged in trade or business, it is not at all clear that such person is engaged in a trade or business in Pakistani---at least as that concept has generally been understood.

Second, even if a foreign person engaged in electronic commerce with Pakistan customers is deemed to be engaged in Pakistani trade or business, it may be even more problematic to suggest that such a person has a "permanent establishment" in the Pakistan in the many cases that will be governed by Pakistani tax treaties. A "permanent establishment" is generally defined as "a fixed place of business through which the business of the enterprise is wholly or partly carried on."13 Since electronic commerce can be conducted without a fixed place of business in the Pakistan, income that might have been subject to Pakistani tax were it earned through more traditional commerce may escape Pak taxation when earned through electronic commerce. These jurisdictional issues have significant implications for the neutrality and administrability principles considered above. If income that a foreign corporation earns through electronic commerce will escape taxation either because it is not effectively connected with a trade or business "in Pakistan" or because the corporation lacks a permanent establishment in the Pakistan, it will offend neutrality principles to tax income generated by competing commerce carried on by foreign persons through conventional. Neutrality considerations would counsel in favor of similar jurisdictional rules for both forms of commerce. On the other hand, even if jurisdictional principles could be developed that would treat economically similar forms of commerce the same for income tax purposes regardless of their mode of delivery, it is not at all clear that such a rule would be administrable. To attempt to enforce a tax obligation against a remote service provider whose contacts with Pakistan are limited to electronic impulses passing through satellite links may exceed even the administrative capabilities of the Central Board of Revenue.

ELECTRONIC COMMERCE AND JURISDICTION TO LEGISLATE, ADJUDICATE AND ENFORCE

The e-commerce world, to decide question who own the right to legislate, adjudicate and enforce the taxation is most crucial concern. Legislation is first step to ultimate adjudication of the matter, but question arises who can legislate. The selling e-commerce transaction, the purchaser could be from any jurisdiction across the globe, rather the country who own jurisdiction over the purchaser have the right to construct statutory provision for imposition of taxation. Likewise the seller physical establishment and data encryption place also arise many tricky and crucial questions concerning the imposition of e-commerce taxation which are hard to answer in the light of scientific advancement of e technology.

MULTI DIMENSIONAL TRANSACTION LOCATION

The geographic location of a person vest where that person is a residing, however, physical location becomes almost meaningless when technology exists that enables individuals to carry out almost every facet of life in another jurisdiction while never actually physically leaving their geographic location even for a single day. A person could effectively make thousands of "trips" per year via the information highway to another jurisdiction without ever being subject to a border control mechanism.

The place in which the transaction has been taken place, the seller and buyer jurisdiction and location is primary principal on which the taxes can be imposed, but the location of the transaction is most formidable task.

The location of parties where they are residing, it could in within specific country jurisdiction or it could be any where, the parties are residing that arises the multi-jurisdictional issues.

The issue of jurisdiction has been defined in The clause (a) of subsection (1) of section 3 of Sale Tax Act, 1990, which has considerably has followed the definition of jurisdiction based on the territory and place of transaction as has enunciated in sale tax the