Deposit the money: Government’s bill rejected by Senate panel

Turns down Sales Tax Amendment Ordinance with a thin majority .

ISLAMABAD:

The federal government on Wednesday suffered defeat when a Senate panel rejected a bill after finding it against Supreme Court judgments that had directed federal authorities to return Rs28 billion to CNG consumers, collected through “unconstitutional” means. 

The Senate Standing Committee on Finance and Revenue rejected the Sales Tax Amendment Ordinance 2014 by a thin majority. Two Senators, Senator Nasreen Jalil of MQM and Senator Haji Adil of ANP voted against the Bill while the lone PML-N senator present in the meeting voted in favour.

PPP’s Saleem Mandviwala and ANP’s Ilyas Bilour abstained from voting.

Headed by Jalil, the standing committee also found that the government tried to play smart by bringing the Bill as “Money Bill” – the piece of legislation meant to bring changes in tax laws but in which the Senate does not have voting rights.

On Money Bills, the Senate can only give its recommendations, which are not binding on the National Assembly (NA). Though, the Senate panel has rejected the Bill, in the given shape the government can still ensure its smooth sailing in NA until it brings the Bill as a normal piece of legislation.

The SC in its two judgments, first in June 2013 and second in December, had declared the extra sales tax at the rate of 9% on the supply of gas to CNG stations as “against the Constitution and law”. It had directed the Federal Board of Revenue (FBR) to deposit Rs28 billion collected on account of extra sales tax with SC Registrar and find ways to return to the money to consumers. Against standard 17% GST rate, the government was charging 26% sales tax on sale of gas to CNG stations.

The SC has also directed the government to take the matter to Parliament for a decision on how to move forward. However, instead of introducing normal piece of legislation, the government brought it as Money Bill, as Senate is controlled by the opposition parties.

To give legal cover to government’s actions, which the senators termed against the SC decisions, President Mamnoon Hussain has already promulgated an Ordinance on March 23 last month, denying the rights to consumers that the SC had ordered to extend them.

FBR Chairman Tariq Bajwa admitted that the government has not yet deposited Rs28 billion in the Registrar office. He said that since the government cannot trace out who actually paid the tax, there was no way to return the money. He said with promulgation of the Ordinance and subsequent approval of the Bill from NA the government will not be liable to deposit the money in the Registrar’s office.

“The SC had directed the government to get the legislation passed from the Parliament and the Parliament is comprised of the President, the National Assembly and the Senate,” said Senator Haji Adil while criticising the government’s move to deprive the Senate from its voting right.

Published in The Express Tribune, April 24^th, 2014.

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