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The apex court was urged to strike down Gas Infrastructure Development Cess (GIDC) Act, 2015 as it was argued that it was illegal and unconstitutional on grounds that the cess is a tax in nature.

Rashid Anwar, who represented All Pakistan Textile Mills Association (APTMA), argued that the court has to examine whether the GIDC is a tax or fee.

The levy of GIDC is in nature of tax therefore it is unconstitutional and illegal and hence it should be struck down.

Now the government is trying to cover up and saying it is a fee.

The tax is imposed in the garb of fee, Anwar argued.

He said that in Durrani Ceramics case the government's stance was it was a tax, while the parties termed it a fee.

Anwar argued that if the legislators wanted to charge fee then why it was termed it was a tax then.

He said "cess" was ordinarily used as tax, adding cess was for specific purpose, while the fee was for specific service.

A three-member special bench, headed by Justice Mushir Alam, on Monday heard 107 petitions/appeals of various textile mills, cotton mills, sugar mills, ceramics companies, chemicals, CNG filing stations, match factories, cement companies and aluminum industries regarding the GIDC levy.

Makhdoom Ali Khan, representing a number of CNG stations, argued that the amount collected under the GIDC could not be used for any other purposes, except the projects mentioned in the 2015 Act.

Gas Infrastructure Development Cess (GIDC) Act, 2015 was enacted on 21st May, 2015.

The Section 4 of GIDC Act, 2015 provides; "The cess shall be utilized by the federal government for or in connection with infrastructure development of Iran Pakistan (IP) Pipeline Project, Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline, LNG or other ancillary projects."

Khan said the government collected Rs295 billion, but just 487 million had been spent.

He said that there was no relation between the amount collected and the expenditure.

"The collection is far in excess," Khan added.

Out of the GIDC collection, an amount of Rs279,575,000 was released on May 3, 2016, and Rs207,665,001 on April 23, 2019, which was utilised by M/s Inter State Gas System (ISGS) Limited for equity injection in TAPI project implementation company i.e. TAPI Pipelines Company Limited (TPCL).

During the proceeding, Justice Mushir again inquired that what about the bilateral agreements (Iran-Pakistan Gas Pipeline) and said the counterpart had completed project on its side but Pakistan side was still unfinished.

Makhdoom said due to USA sanction the IP project could not be completed.

However, the federal government has persuaded Iran not to go for arbitration.

Pakistan Gas Port Limited (PGPL) and Engro has completed the terminal for transportation of gas and selling it to the Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL).

He said there was no rational that why only nine sectors had been selected for imposition of the GIDC, and others were left.

Khan said in TAPI project Pakistan had fulfilled its commitment and it would be completed by 2023-2024.

Under the agreement the consortium leader of the TPCL will inject 85 percent of equity part in TPCL, while the rest of the TAPI members share five percent each of the equity.

Advocate Anwar Kamal appearing on behalf of the industrial captive power plant said both the GIDC Acts 2011 and 2015 were badly drafted therefore the courts were burdened with the cases.

He asked without imposition, how could the cess be collected.

Makhdoom Ali Khan, Munir A Malik, Rashid Anwar, Anwar Kamal and Abid Zuberi, counsel for K-Electric, have concluded their arguments in the case. The case was adjourned until Wednesday (today).

Copyright Business Recorder, 2020

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