Blocking the tax man: Federal govt barred from collecting gas cess

The additional levy had been challenged by industrial units and CNG pumps.

PESHAWAR:

The federal government has been prohibited from collecting Gas Infrastructure Development Cess (GIDC) from industrial units and CNG pumps by the Peshawar High Court.

A division bench comprising Chief Justice Mazhar Alam Miankhel and Justice Malik Manzoor Hussain issued the directives on Wednesday and sought reports from the government. The bench was hearing a petition filed on October 13 by around 45 industrial units and CNG pumps against the collection of an additional levy from commercial consumers of gas.

At Wednesday’s hearing, Shumail Ahmad Butt, the counsel for the petitioners, told the bench that through a money bill, the Federal Ministry of Petroleum and Natural Resources imposed GIDC on all industrial units and CNG pumps which are using natural gas.

Butt further said the cess was challenged in the PHC on June 2013 and was declared illegal. The court had ordered the cess collected so far be returned to consumers in lump sum or be adjusted in monthly bills. The PHC order was endorsed by the Supreme Court in August 2014, added Butt.

“The Gas Infrastructure Development Cess Ordinance 2014 was imposed by the government even though no meeting of the Senate or National Assembly was held on the matter,” said Butt. He added this was done to ensure the collected amount did not have to be repaid.



The court was told that the government plans to collect cess and use the money for various gas projects which is against the law. “The government can impose a tax when gas is being used to produce nuclear energy but that is not the situation for the petitioners,” said Butt.

The counsel further said the main purpose of the GIDC ordinance was to find a way to not follow the court’s orders. “When the cess has already been declared illegal, how can it be re-imposed on consumers?” questioned Butt, requesting the court to prohibit the government from implementing the ordinance.

He added the Sui Northern Gas Pipeline Limited (SNGPL) should also be stopped from disconnecting gas meters. Subsequently, the court issued orders barring the federal government from collecting GIDC and SNGPL from disconnecting meters.

The petition was filed on October 13 by Swat Ceramics Company Private Limited on behalf of 15 industrial units and 30 CNG pumps through Butt. The secretary of the petroleum ministry, chief executive of SNGPL, general manager of SNGPL Khyber-Pakhtunkhwa and director general of Oil and Gas Regularity Authority were named respondents.

According to the petitioner, industrial units were already paying various taxes but under the GIDC Act 2011, the federal government imposed yet another cess at the rate of Rs13 per Million Metric British Thermal Unit (MMBTU) which was raised to Rs100 per MMBTU the next year.

However, on September 7, 2012, through a notification the respondents reduced the cess from Rs100 to Rs50 per MMBTU for industrial units that produce captive power and fertilizer fuel stock.

The petitioner added in 2013 the PHC declared the collection of cess constitutionally illegitimate and ordered the collected money be returned. But through the Finance Act 2014, GIDC rates have been increased again for industrial units, fertilizer, fuel stock, CNG and captive power producers. GIDC Ordinance 2014 was also promulgated for the purpose, according to the petition.

Published in The Express Tribune, October 16^th, 2014.

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