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SC to decide fate of GST charged from backdate

Updated July 06, 2013
A view of Supreme Court. — File Photo
A view of Supreme Court. — File Photo

ISLAMABAD: The Supreme Court said on Friday it would determine at the next hearing whether general sales tax was recoverable on petroleum products from June 13 this year and on compressed natural gas (CNG) from July 1, 2007.

A three-judge bench, headed by Chief Justice Iftikhar Muhammad Chaudhry, said it would also determine whether the additional nine per cent GST prescribed under section 3 of the General Sales Act 1990 could be levied on CNG and, if so, was it not discriminatory.

The court will also determine whether the gas infrastructure development cess at the rate of 17pc plus nine per cent is recoverable since the payment of the cess is not recovered on taxable activities or taxable supplies.

When court started proceedings on a suo motu notice it was informed by its office that the court’s June 21 order had not been implemented.

In that order the court had held that recovery of 17pc GST from June 13 without approval of the budget by the National Assembly was illegal.

Attorney General Muneer A. Malik informed the court that the Finance Act had levied the increased GST on petroleum products with effect from June 13 this year and that on CNG from July 1, 2007.

“There are no two opinions that the executive has to generate revenue by levying taxes to run the government affairs for the welfare of its citizens and, being a democratic government under the constitution, taxes have to be levied on the basis of rationality and particularly keeping in view that the citizens are suffering from so many miseries.

“Therefore, the government which is for the people, of the people and by the people is equally responsible to extend all possible facilities to its citizens to ensure enforcement of their fundamental rights enshrined in articles 9, 14 and 24 of the constitution,” the court observed.

The court asked the attorney general to submit a comparative study of taxes, duly levied by the Finance Act, to ascertain if the end consumers of petroleum products and CNG have been treated equally with other taxpayers. The AG is also required to inform the court about the collection of GST, as directed in the June 21 order.

The chief justice regretted that because of the additional nine per cent GST the consumers of CNG had to pay 26pc tax, although the maximum rate of GST was 17pc.

The court said every commodity in the market had become expensive only because of an increase in the GST rate, whereas billions of rupees had been siphoned off because of corruption, but no-one was ready to weed out this menace from society.

“Virtually, there is no department or organisation left in the country which is free from corruption,” the court said, adding that the burden should not be put on people if the national kitty was empty because of corruption. The case will be taken up on July 24.

CNG STATIONS: In a separate case, the Supreme Court ordered the Oil and Gas Regulatory Authority (Ogra) to submit a complete record of genuine and licensed CNG stations in the country. The Federal Board of Revenue is required to assist Ogra in compiling the report.

The FIA’s Additional Director (Legal), Mohammad Azam Khan, informed the court that during a recent visit to CNG stations from Lahore to Gujranwala it transpired that there were 16 CNG stations within a radius of 8.5km on the GT Road, whereas the distance between two CNG stations in a city should be three to five kilometres.

Advocate Iftikhar Gillani, representing Ogra, informed the court that the authority had identified at least 349 CNG stations located either near schools, mosques or hospitals. Ogra has already issued notices to these CNG stations.

The court was unconvinced with the performance of Ogra and said such stations should be closed immediately. It said the authority was reluctant to take action against influential people and those involved in gas theft.

But Ogra Chairman Saeed Ahmed Khan explained that the authority had nothing to do with gas theft since the issue related to SNGPL.

The case will be taken up on July 11.