SHC asks govt to refund Rs100bln in cess

GIDC Act 2015

KARACHI: The Sindh High Court (SHC) ordered the government to refund Rs100 billion collected under the gas infrastructure development cess (GIDC) as the court declared the GIDC Act 2015 against the constitution.

“Since the amount has already been collected in pursuance of (GIDC) Act 2015 the amount is liable to be refunded or adjusted,” read a copy of the SHC’s decision, dated October 26, available with The News.

The SHC stated that GIDC Act 2015 is ultra vires to the constitution. The court has already held GIDC Act 2011 and GIDC Ordinance 2014 as unconstitutional. Officials said the government may run short of an estimated Rs145 billion to be collected as gas infrastructure development cess during the current fiscal year, as a result of the decision. 

All verdicts and judgments that began soon after the Pakistan Peoples Party-led coalition government passed the GIDC Act 2011 were found against the gas infrastructure development cess.

The GIDC is being collected from the consumers of various categories, except residential ones, for more than five years with a sole objective of arranging funds for gas pipeline infrastructure developments to facilitate utilisation of imported gas, including liquefied natural gas and from Turkmenistan and Iran. 

A score of petitions against the levy has been filed in various courts across the country. In 2012, the SHC had refrained Sui Southern Gas Company Ltd and Oil and Gas Regulatory Authority from imposing or collecting GIDC beyond Rs13/million metric British thermal unit on industrial capacity.

The Peshawar High Court (PHC), in its decision in 2014, declared the levy, imposition and recovery of the cess unconstitutional, with a direction to the provincial government to refund the cess so far collected within ‘a reasonable time’.

Later in 2014, the Supreme Court of Pakistan upheld the PHC’s judgment of declaring the GIDC as unconstitutional and illegal. But, the federal government promulgated an ordinance, namely Gas Infrastructure Development Cess Ordinance, 2014 (Cess Ordinance) following the apex court’s decision.

The GIDC Ordinance 2014 was challenged in different courts and the PHC suspended the levy and collection of gas infrastructure development cess. However, the federal government managed to get GIDC Act 2015 approved from the parliament.  The government pledged before the parliament that GIDC would be used to expand the gas pipeline network.