AGP office showed slackness in GIDC cases

Did not file challenge to 369 SHC decrees against levy imposed to generate funds for mega projects

ISLAMABAD: The federal legal department showed slackness in pursing the Gas Infrastructure Development Cess (GIDC) cases and did not challenge the Sindh High Court's (SHC) orders against the levy introduced in 2011 to generate funds for mega gas infrastructure projects.

Senior lawyer Makhdoom Ali Khan, representing CNG stations, on Tuesday told a three-judge special bench that the SHC decided 370 suits against government in the GIDC case and later these suits were 'decreed'.

"Except in one case the federation did not file appeals against these 370 decrees. The statute of limitation for filing appeals has run out. All appeals if filed now will be time barred.

He said the transactions have become past and closed. The successful decree holders have acquired rights which cannot now be called into question by in the Supreme Court.

"So, whatever the outcome of this case, the decrees passed in Sindh would remain intact," he told the bench led by Justice Mushir Alam and comprising Justice Fasial Arab and Justice Syed Mansoor Ali Shah.

Justice Arab noted that they may principally agree with these contentions but the court would like to hear the federal government's stance on this point.

Interestingly, Attorney General for Pakistan (AGP) Anwar Mansoor Khan was not present in the courtroom. Earlier, the AGP made a special application to the Chief Justice of Pakistan (CJP) Asif Saeed Khosa for an urgent hearing of this case. On his request a special bench was constituted.

On the last date of hearing, he came from the US to attend the first hearing and the court adjourned the hearing for three weeks on his request. Despite his availability in Islamabad, the AGP did not attend hearing on Tuesday. However, Deputy Attorney General Sohail Mahmood was present in the courtroom.

Meanwhile, the special bench summoned record of cases related to the GIDC from all high courts. All high courts registrars have been directed to submit list of pending cases related to the GIDC. All counsels have also been asked to submit their concise statement in the apex court.

During the hearing, Khyber Pakhtunkhwa (K-P) Additional Advocate General Muhammad Qasim said a large number of petitions and suits – challenging the same GIDC Act 2015 –are pending in all the high courts of the country. He requested the bench to summon record of all those cases and decide them.

However, Makhdoom Ali Khan objected that the apex court could not do this constitutionally. He said Article 186A of the Constitution authorises the SC to transfer a case from one high court to another.

"General Pervez Musharraf amended this Article to authorise the SC as well to transfer a case from a high court to itself. This amendment was, however, struck down by this court as unconstitutional.

"There is no validly enacted constitutional provision which authorises such transfer. This court has no constitutional authority to transfer a case from a high court to itself and decide it," he added.

The counsel also said the Constitution lists in its Fourth Schedule the subjects on which the federation can legislate.  He said entries 43 to 53 of the Fourth Schedule specify the taxes which can be levied by the federation.

"A tax which is not covered by these ten entries is unconstitutional irrespective of whether it is passed by one or both houses of parliament.

"It may have been passed after following the absolutely correct constitutional procedure. But that would not cure the substantive defect of it being outside the powers of the parliament to legislate."

He said even if the GIDC is levied as a fee then the federation would have to show that its subject is covered by one of the entries in the Fourth Schedule. The Constitution has two validity criteria. A statute must meet both to survive invalidity.

"First, it must have been passed after following the correct procedure. If it is not then it would be procedurally ultra vires the Constitution and invalid.

"Second, it must be covered by one of the entries in the Fourth Schedule. If it is outside the scope of those entries it would be substantively ultra vires the Constitution."

He said a statute is valid only when it is neither procedurally not substantively against the Constitution.  "The GIDC Act 2015 may survive the procedural test but it does not meet the substantive constitutional criteria," he added.

Background

The GIDC was levied in 2011 by the then federal government by enacting the GIDC Act 2011.

Its objective was to gather fund for different energy projects, including the Iran-Pakistan (IP) Gas Pipelines Project, Turkmenistan-Afghanistan-Pakistan-India (Tapi) Pipelines Project, LNG Import Project and LPG Supply Enhancement Project.

The GIDC was declared unconstitutional by the Peshawar High Court (PHC) on June 13, 2013, and the judgment was also upheld by the Supreme Court on Aug 22, 2014.

Later on, the Pakistan Muslim League-Nawaz (PML-N)-led government introduced a new legislation on the issue in 2015. It was also challenged in the PHC and the Sindh High Court (SHC).

In 2016, the SHC, while exercising civil suit jurisdiction declared the GIDC as ultra vires of the Constitution but in May 2017, the PHC held that GIDC was legal. Meanwhile, the aggrieved companies approached the Supreme Court against the PHC order.

In August, 2017, the SC granted leave to appeal against the PHC verdict.

The government had approached the SC over the GIDC a day after it withdrew – amid harsh criticism by various circles – a presidential ordinance introduced in the last days of August to waive over Rs300 billion outstanding against a handful of industries and businesses.

While, withdrawing the ordinance, the prime minister had directed the AGP to move an application for an urgent hearing of the case in the Supreme Court of Pakistan, "so that the matter could be decided at the earliest in accordance with the law and the Constitution".

A statement of the PM Office had said the ordinance was issued with a view to recover 50% of the stuck revenue by way of an out-of-court settlement after consultation with the industry.

"However, in view of the recent controversy, the prime minister, in the interest of transparency and good governance, has decided to withdraw the ordinance," it said.