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Thursday Aug 13 2020

SC orders companies to pay govt Rs417 billion gas infrastructure cess

Supreme Court of Pakistan. — supremecourt

ISLAMABAD: The Supreme Court on Thursday rejected the appeals of several companies and directed them to pay Rs417 billion Gas Infrastructure Development Cess (GIDC) to the government.

A three-member special bench of the court headed by Justice Mushir Alam and comprising Justice Faisal Arab and Justice Mansoor Ali Shah announced the 78-page verdict on 107 petitions filed by various textile mills, cotton mills, sugar mills, ceramics companies, chemicals, CNG filling stations, match factories, cement companies, and aluminum industries regarding the GIDC levy.

The court had reserved the verdict on February 20. The bench passed the judgment in favour of the federal government with a 2-1 majority, with Justice Shah opposing the judgment.

The judgment, authored by Justice Arab, read: "As a consequence, the amount of GIDC collected over the years should be returned and refunded to the payers in full unless in some cases, it is impractical to so do."

The federal government shall constitute a committee to work out a mechanism for a refund of GIDC so that payers of the tax are fully restituted; be it the gas consumers under the act or the final consumers, it said.

The order suggested that even if the gas consumers have passed on the fee to its customers, technology may be available to credit such  customers so that there is no unjust enrichment on the part of the state.

The amount of the GIDC that cannot be refunded after exploring all other avenues shall remain earmarked and be utilised only for the infrastructure development of the gas sector, it said.

The judgment noted that energy was "vital to industry, transport, infrastructure, information technology, agriculture, household users, and more.

Any nation with a growing economy and improving living standards must secure a robust energy supply, it added.

According to the latest Pakistan Economic Survey, 2019-20, the indigenous natural gas contributes around 38% to the total primary energy supply mix of the country.

"Pakistan produces around four billion cubic feet per day (Bcfd) against an unconstrained demand of six Bcfd. The gas pipeline projects in question are based on bilateral and multilateral international agreements with other countries,” the judgment stated.

A sum of Rs 295 billion has been collected as GIDC for nearly 10 years.

"Keeping these facts in mind, and especially the issue of energy security, in the larger national interest, I allow the federal government six months to initiate appropriate legislation in the light of the principles settled in this judgment, including a clear description of the services being rendered, provision of a reasonable timeline for the delivery of service (supply) of natural gas to the gas consumers, and a statutory mechanism of obligations and consequences that may arise if the service is delayed or is not delivered at all," the order read.

In case the federal government fails to achieve the target during the period, it shall refund the amount of GIDC, in the manner mentioned above.