ISLAMABAD: The Supreme Court suspended on Tuesday parliament’s decision to levy carbon surcharge on petroleum products through budgetary action, accepting for hearing a petition by an opposition politician and ordering the Oil and Gas Regulatory Authority (Ogra) to withdraw the tax by Wednesday, pending the final decision.

The petition was filed by Pakistan Muslim League-N secretary general Iqbal Zafar Jhagra.

The surcharge was levied in the budget to collect an estimated Rs122 billion in the current financial year by replacing the petroleum development levy (PDL). The budget was passed by the National Assembly with no vote against it. 

The order was issued by a three-judge bench headed by Chief Justice Iftikhar Mohammed Chaudhry, despite repeated pleas by Attorney General Sardar Latif Khan Khosa that the levy was part of the finance bill approved by parliament while adopting the budget for 2009-10 and earlier endorsed by the cabinet. 

‘Such increases are done to run the affairs of the government since public sector development projects have to be funded and allocations for subsidies on wheat and electricity made although the budget is in deficit,’ the attorney general said.

The chief justice observed that the court was only suspending the June 30 notification by Ogra of imposing the surcharge.

The court summoned the environment secretary on Thursday with a summary indicating what proposals his ministry had sent to the government for initiating measures to provide clean atmosphere free of emissions.

‘Prime facie we are of the opinion that there is no immediate necessity for imposing carbon surcharge, the levy of which is subject to certain benefits like provision of an atmosphere free of lead, sulphur and carbon dioxide emissions,’ the chief justice observed.

The court made it clear that the suspension order was temporary and a final decision would be taken after going through a 100-page report submitted by a judicial commission headed by Justice (retd) Rana Bhagwandas. 

On a court query, Advocate Raja Saeeduzzaman Zafar, representing Ogra, presented the break-up of all components that comprise the price of different petroleum products. 

He said the price of petrol on June 30 was Rs56.21 that included an ex-refinery price of Rs31.91, PDL Rs10.54, sales tax Rs7.75, oil marketing companies margin (OMCM) Rs1.39, dealer’s commission Rs1.74 and inland freight charges of Rs2.88.

On July 1, the price was increased to Rs62.13 comprising ex-refinery price of Rs36.59, carbon surcharge of Rs10, freight charges of Rs3.37, sales tax Rs8.57, OMCM Rs1.6 and dealer’s commission of Rs2.

The price of diesel on June 30 was Rs55.71 comprising ex-refinery price of Rs34.78, PDL Rs8.53, sales tax Rs7.68, dealer’s margin Rs1.5, OMCM Rs1.35 and freight Rs2.22.

On July 1, the price was increased to Rs62.65 with ex-refinery price of Rs40.94, OMCM Rs1.35, carbon surcharge Rs8, dealer’s margin Rs1.5, sales tax Rs8.64 and freight Rs2.22.

The court asked senior counsel Akram Sheikh to present a brief synopsis of the judicial commission’s report on oil price mechanism. 

Advocate Mohammad Ikram Chaudhry represented Mr Jhagra and PPP’s Rukhsana Zuberi appeared in person.

The interim order sent the government into a tailspin and sources said it might consider approaching the apex court for a review.

It drew instant appreciation from different quarters with many believing that the withdrawal of the surcharge would translate into reduction in the prices of petrol (up to Rs10 per litre), diesel (Rs8) and kerosene (over Rs6).

After withdrawing the surcharge, the sales tax would also have to be reduced from existing Rs8.57, Rs8 and Rs8.19 on the three products.

Meanwhile, former chief justice Saeeduzzaman Siddiqui, when contacted, rejected a perception that the order amounted to interference in the affairs of parliament. He said the Supreme Court was only seeking to probe whether relevant laws had been adhered to.

‘We should not forget that it is just an interim order and if the court concludes that the laws were followed, it will take its hands back.’

Justice (retd) Wajeehuddin Ahmed said it was the duty of the Supreme Court, being the guardian of the Constitution, to maintain equilibrium between the powers of the government and welfare of people.