Petroleum price hike: Supreme Court seeks explanation from FBR

Chief Justice asks how prices can be raised without Parliament’s approval.

ISLAMABAD:

The Supreme Court observed on Friday that petroleum prices had been increased without the approval of the parliament and sought an explanation from the Federal Bureau of Revenue (FBR) in this regard.

“How can petroleum prices increase after the hike in general sales tax (GST), from 16% to 17%, was only proposed?” asked Chief Justice Iftikhar Muhammad Chaudhry.

On late Thursday night, the chief justice took suo motu notice of increased petroleum prices, on a note put up by the Supreme Court registrar.

During Friday’s proceedings, Attorney General Munir A Malik justified the move. He said the collection of increased GST was initiated under the Provisional Collection Taxes Act 1931 in a bid to handle hoarding by suppliers.

Malik, however, could not convince the three-member bench.

“Hoarding itself is a crime,” the chief justice remarked. “Both the federal and provincial governments have failed to control the malpractice.”

Earlier during the hearing, the attorney general said he did not have any notification from the federal government which allowed for an increase in petroleum prices. However, FBR chairman Ansar Javaid said the new prices were implemented following a declaration issued by the finance ministry.

Explaining the FBR chairman’s argument, Malik contended that the 1931 act allowed the government to collect increased GST. Initially, the act was applicable to customs duty, however, later it was amended for the inclusion of GST collection, the attorney general maintained.

“Soon after the finance minister’s speech proposing an increase in GST, gas stations sold fuel at higher prices without waiting for the parliament’s approval,” the chief justice said.

To this, Malik said the government should have waited for the approval of the proposal from the parliament but followed the traditions practiced by previous governments.

Responding to a query, FBR chairman admitted that he did not receive a notification showing implementation of increased GST.

Legal counsel for Oil and Gas Regulation Authority (OGRA) Salman Akbar Raja said the increase in petroleum prices was implemented after a declaration from the finance ministry.

The bench hinted at the possibility of recovering extra money collected from consumers as it was taken without parliamentary approval. It, however, stopped short of holding off the collection of the increased GST on petroleum products, saying it would decide the matter after hearing the federal government’s stance in the next hearing scheduled on June 18. The apex court bench directed the attorney general to get fresh instructions from the federal government and asked the FBR chairman to submit his reply.

 

Published in The Express Tribune, June 15^th, 2013.