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SC orders govt to withdraw additional GST levy on POL products

21 June, 2013

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ISLAMABAD: The Supreme Court on Friday delivered its short ruling in a case pertaining to imposition of GST on petroleum prices without Parliament's approval.

The court has ordered government to withdraw additional General Sales Tax (GST) on petroleum products, declaring the tax collection from June 13 illegal.

In its verdict, the court declared null and void an obsolete act of 1931, under which the government collected the levy, saying that the act is against Article 77 of the Constitution.

"Section 4 of the Act, 1931 as a whole is declared unconstitutional being contrary to Article 70 of the Constitution, which lays down the procedure for legislation."

"The Government is not authorized to impose or increase Sales Tax from 16% to 17% on the value of taxable supplies, i.e. by inserting in the Finance Bill (Money Bill) 2013- 14 a declaration under section 3 of the Provisional Collection of Taxes Act, 1931," the ruling said.

It said that nine per cent additional tax on CNG is also illegal under Article 77 of the Constitution.

"Nine per cent additional sales tax imposed or recovered from the consumers on CNG is unconstitutional and contrary to Articles 3, 9, 24 and 77 of the Constitution as well as section 3 of the Sales Tax Act," the ruling said.

The apex court said that the collected money is returnable and the government should device a mechanism to reimburse it to the consumers and besides submitting the amount to the national exchequer.

The court said: "The excess amount of the Sales Tax recovered on the petroleum products/CNG 13.06.2013 onwards, is refundable to consumers and concerned authorities accordingly are directed to deposit it with the Registrar of this Court subject to passing of the Finance Bill."

"If the Sales Tax is imposed by the Parliament to be recovered with retrospective effect, same shall be paid to the Government, otherwise appropriate orders will be passed for its disbursement."

The brief verdict reserved on Thursday was announced by Chief Justice Iftikhar Muhammad Chaudhry who led a three-member bench hearing the case wherein Attorney General of Pakistan and chiefs of FBR and OGRA had submitted their replies. A detailed verdict and reasons would be issued later.

Complying with the Supreme Court order, The Oil and Gas Regulatory Authority has withdrawn recent hike in petroleum prices, our sources reported.

The regulatory said that the recent hike on account of GST had been withdrawn following the Supreme Court order. The prices of petroleum products now stand at the position of June 1, 2013.


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