Restraining order: PHC issues stay against GST collection over 17%

Extends last date for payment of bills by another three days.

PESHAWAR: The Peshawar High Court (PHC) on Monday temporarily restrained Sui Northern Gas Pipelines Limited (SNGPL) from collecting General Sales Tax (GST) of more than 17% from CNG stations in Khyber-Pakhtunkhwa.

The order was issued by a division bench of Chief Justice Mazhar Alam Miankhel and Justice Muhammad Ghazanfar Khan. The petition was filed by the K-P chapter of All Pakistan CNG Association through their counsels Shumail Ahmad Butt and Muhammad Yasir Khattak.

The court also extended the last date for the payment of bills by another three days. Moreover, it issued notices to secretary petroleum and natural resources and the Oil and Gas Regulatory Authority (OGRA) chairman to submit their comments.



Nearly 450 CNG stations have been listed as appellants in the case. The secretary petroleum and natural resources, OGRA chairman, Federal Board of Revenue chairman, SNGPL managing director, SNGPL Peshawar general manager and its GM in Abbottabad are respondents in the case.

Yasir Khattak told the court that in 2013, the Supreme Court had declared GST at over 17% as both illegal and unconstitutional. And yet, the government in its October monthly bill had increased GST to 32%.

According to the petition, the sales taxes for natural gas and CNG have been fixed at 17% under Section 3 of Sales Tax Act 1990.

“CNG filling stations would be liable to pay sales tax at the rate of 17% on the value of natural gas it purchases and collect 17% sales tax on the value of CNG it supplies,” the petition says.



It added that the government had included an additional sales tax of nine per cent to the GST through Section 3(8) of the Sales Tax Act 1990. The top court took notice of the increase. On December 10, 2013, it ordered that the extra tax cannot be charged.

However, the government flouted the restraining order issued on June 18 and the other two judgments by the apex court. It accomplished improper and inequitable amendments in the Sales Tax 1990 through Section 4 of the recently-enacted Finance Act 2014 to justify the increase, the petition says.

“Section 4 of the legislation reintroduces the provisions of the Sales Tax (Amendment) Ordinance 2014 and causes illegal and unconstitutional increase in the sales tax liability of the petitioner from 17% to 32%,” the petition reads.

According to the petition, Section 4 of Finance Act has been enacted against orders issued by the apex court on December 10, 2013.

“The government has, in a manipulative manner, increased the rate of sales tax for the petitioner by unfairly and unlawfully tampering with the formula to calculate maximum sale price of CNG sold to the public,” the petition said.

Published in The Express Tribune, November 20^th, 2014.