Govt tried to pass off gas cess as fee, Supreme Court told

Updated February 12, 2020


Supreme Court takes up the federal gov­ernment’s application regarding the Gas Development Infrastructure.  — AFP/File
Supreme Court takes up the federal gov­ernment’s application regarding the Gas Development Infrastructure. — AFP/File

ISLAMABAD: The Supreme Court was told on Tuesday that the government had tried before the court to cover the GIDC up by describing it as a fee contrary to the position it took in the annual budget statements submitted each year before the parliament from 2015 till date.

Senior lawyer Makhdoom Ali Khan, who represented a number of LNG stations before a three-judge bench headed by Justice Mushir Alam, arg­ued that in each one of these constitutional documents (budget statements), the amount collected under the GIDC Act had been described as tax.

The Supreme Court had taken up the federal gov­ernment’s application regarding the Gas Dev­elopment Infrastructure Cess (GIDC) Act, 2015.

The amount collected through the GIDC was not kept in a separate fund but was deposited in the federal consolidated fund, the counsel argued and recalled how the Supreme Court had stated clearly in different cases that the criteria which an exaction must meet to qualify as a fee should be that it must be meant for a service rendered to the payer directly. Moreover the charge must be for the service provided and should be in present instead of a mere promise to provide a service in future, Mr Khan emphasised.

He highlighted that taxes were always a compulsory payment exacted by the state and did not confer in return of any direct individual entitlement to specific services. Though a fee could generate public revenue but it had to be collected in return for the service to those from whom the fee was received, the lawyer explained.

He argued that GIDC was a tax since it was a compulsory payment in return for which, during the last nine years, the government had provided no service and there appeared no hope of any service being provided in the foreseeable future.

A tax could be levied under Entries 43 to 53 of the Fourth Schedule to the Constitution but the GIDC was outside the entries, the counsel argued, adding its levy would, therefore, be unconstitutional.

Justice Mansoor Ali Shah, a member of the bench, asked when sugar cess was collected for development of roads, how could the promise to provide infrastructure in return for the GIDC could be different from the promise related to sugar cess.

The court will resume the hearing on Wednesday.

Published in Dawn, February 12th, 2020