Govt appeals against PHC gas verdict

Under GIDC, the govt was collecting levy from all industrial units and commercial users of K-P

ISLAMABAD:

The federal government has filed a review petition in the Supreme Court (SC) against an August 2014 ruling upholding the Peshawar High Court (PHC) verdict declaring as “unlawful” the Gas Infrastructure Development Cess (GIDC) Act 2011.

Under the Act, the government was collecting levy from all industrial units and commercial users of Khyber-Pakhtunkhwa (K-P).

In view of the PHC order, the federal government will have to refund Rs94 billion to consumers. The GIDC Act 2011 was introduced as a “Money Bill” under Article 73 of the Constitution for the purpose of collecting the cess for pipeline construction. The purpose was to import natural gas and equalise gas prices with other imported fuels such as LNG from all gas consumers, except the domestic consumer and certain other exempted sectors (as provided in the Second Schedule to the GIDC Act).

In June 2013, the Peshawar court declared that the levy, imposition and recovery of the “cess” is unconstitutional with the direction to refund the cess so far collected from the respondents within a reasonable time, either in lump sum, or to be adjusted in monthly gas consumption bills of the respondents.

The top court, while upholding the PHC’s judgment on August 22, declared the GIDCas a fee and not a tax. “The cess could not have been introduced through a money bill under Article 73   of the Constitution. The same was, therefore, not validly levied in accordance with the Constitution,” says the apex court in its ruling.

In view of the SC’s order, Additional Attorney General Muhammad Waqar Rana has submitted a review petition in the apex court, stating that the top court’s final verdict on the subject levy of Cess as a ‘tax’ or a ‘fee’ will have binding affect on the taxation power of the federal government/state.

The review petition states that the top court has not noticed that the cess was levied on the consumers of natural gas which include users of CNG and the users of other products like fertiliser.

Published in The Express Tribune, March 29^th, 2015.