SHC bars KE from collecting municipal tax

The Sindh High Court (SHC) has barred K Electric from collecting the Karachi Metropolitan Corporation's Municipal Utility Charges and Tax (MUCT) from consumers until the next hearing.

During the hearing of a petition challenging Karachi Metropolitan Corporation (KMC) collection of MUCT through KE bills, Administrator Karachi Murtaza Wahab maintained that that no new tax had been imposed by the metropolitan corporation while services of third parties had been taken with regards to collection of municipal taxes in the past as well.

According to the administrator, a contract was entered into with KE after KMC failed to collect municipal taxes in a fair and transparent manner.

As per the written order of Sindh High Court, the provincial government is already collecting property and motor vehicle taxes from the citizens of Karachi and it must be ascertained what is the jurisdiction of KMC with regards to tax collection.

Administrator Karachi sought time for reply on the matter. The written order said that till the next hearing, KE will not collect MUCT from its customers. The court adjourned the hearing for October 10.

Earlier, a two-member bench headed by Justice Syed Hasan Azhar Rizvi held hearing on the plea of Syed Najibuddin Advocate against the collection of municipal tax in electricity bills. Administrator Karachi Murtaza Wahab appeared in the court in personal capacity.

The court inquired whether it is the same tax that KE is supposed to be collecting. The court in its remarks said that the city was not seeing any cleanliness. The court asked why municipal taxes were being imposed in electric bills when KMC had its own recovery cell for tax collection. In case of nonpayment of KMC tax, the KE consumers may face disconnection, Justice Rizvi said in his remarks.

The court asked why only K Electric was left for recovery, to which Wahab said that KMC tried to recover taxes on its own but could not succeed. Justice Syed Hasan Azhar Rizvi inquired further to ascertain the legal status of the tax. Murtaza Wahab presented the details of the 2008 District Council approval and said that it is being wrongly perceived that KMC is making recovery of its taxes through a third party. In 2017 as well, KMC awarded the contract for tax collection to a private party, he said, adding that KMC has passed a resolution to reduce the tax amount from Rs 200 rupees to Rs50.

The petitioner's counse Arif Shaikh Advocate l submitted that though KMC Administrator says the amount is only Rs50, it will increase on a unit-by-unit basis.

The court remarked what services will be provided against funds collected from the tax, to which Wahab said that KMC will maintain roads, parks and footpaths. The court inquired whether the citizens will get these facilities with their own money, as it was provincial government's job to provide basic facilities.

Justice Hasan Azhar Rizvi remarked that the roads of the city are broken while the parks are destroyed. There are no street lights while robberies are on the rise.

Wahab pleaded the court not to put a stay and give him a day's time to respond to the queries. Counsel for the petitioner Arif Shaikh Advocate in an informal conversation said that our request was to quash the notification that KMC charges were being levied by KMC. He said that the court has issued an injunction. He said through the KMC decision, people were to face disconnection of electricity if municipal charges were not paid through the K Electric bills.

Published in The Express Tribune, September 27^th, 2022.