ISLAMABAD: The Supreme Court Monday, with a majority of two to one, dismissed the petitions seeking review of the judgment to levy Gas Infrastructure Development Cess (GIDC), but allowed 60 months to industry, and the commercial entities for recovery of the remaining Rs416 billion.
A three-judge bench, headed by Justice Mushir Alam, and comprising Justice Faisal Arab and Justice Mansoor Ali Shah, heard the review petitions of various textile mills, cotton mills, sugar mills, ceramics companies, chemicals, the CNG filling stations, match factories, cement companies, and aluminum industries regarding the GIDC levy.
All the parties' lawyers pleaded the court to reconsider the 24 months period for recovery of cess from the industries and the commercial sectors.
"Instead of 24 months, the recovery period should be extended up to 48 months," they said.
The Supreme Court in August 13, 2020, judgment had directed, "All industrial and commercial entities which consume gas for their business activities pass on the burden to their customers/clients therefore all arrears of 'Cess' that have become due up to 31.07.2020 and have not been recovered so far shall be recovered by the Companies responsible under the GIDC Act, 2015 to recover from their consumers." It, however, said that the same be recovered in twenty-four equal monthly installments starting from 01.08.2020 without the component of late payment surcharge."
"From the date of this judgment (13th August), we restrain the Federal Government from charging Cess which power of the Federal Government shall remain suspended until the Cess-revenue collected and that which is accrued so far but not yet collected is expended on the projects listed in Section 4 of the GIDC Act, 2015."
The judgment had noted; "Rs295 billion have already been collected towards Cess-revenue and together with the outstanding amount the total sum by the end of this month (August) would be in the vicinity of seven hundred billion rupees, which is more than what is the estimated cost of the projects mentioned in Section 4 of the GIDC Act, 2015, therefore directed."
According to Section 4 of the Gas Infrastructure Development Cess Act, 2015, the cess shall be utilised for Iran-Pakistan Pipeline Project, Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline project, the LNG or other ancillary projects.
Makhdoom Ali Khan, representing commercial and industrial entities, argued that Rs295 billion had already been collected; therefore, there was no need to recover more amount from the industries.
He contended if the industries or the commercial entities had not passed on the burden, but the government said the industries had done it; then it needed to be determined.
He said that the government said that due to international sanction on Iran, the Iran-Pakistan gas pipeline project could not started, while the TAPI could not be launched as the geo-political situation was not favourable.
He said the figure (Rs400 billion remaining amount) does not connect with the law laid down by the court. Makhdoom further contended that there was discrimination on rate within the commercial entities.
There are different rates for shopping malls, marriage halls, hotels and restaurants and the fertiliser and CNG sectors. Naeem Bukhari said: "I represent 10 textile mills located in Khyber-Pakhtunkhwa (KP)," adding, two already closed, and if the court upheld the GIDC then another six would close.
He argued that gas in KP, Sindh and Balochistan was in excess and only the Punjab was deficient. He said nothing happened on those projects for that cess was levied.
"These are imaginary projects," he added.
He said cess should not be levied on yarn producers, as due to increase in yarn price our mills would not be able to compete internationally as the Sri Lanka, Bangladesh and India yarn is cheaper in the international market.
The recovery of past cess from the commercial entities when they had not charged the cess in the past would be unconstitutional; adding protecting the Punjab would be unfair. Naeem Bukhari argued that the law (GIDC Act, 2015) was passed without the approval of the Council of Common Interest.
This is confiscatory in terms of Elahi Cotton Mills judgment. Salman Akram Raja, appearing on behalf of fertiliser companies, argued that Rs295 billion was a big amount. The government should first utilise this amount on the projects mentioned in the Act and if it requires more, then the industries could be ask to pay the cess.
He, however, at the end of his arguments pleaded that the number of installments be increased from 24 months to 48 months. He contended that there has to be a relation between recovery of amount and the expenditure. He said the fertilizer plants which did not have decrees in their favour would face serious implications, and if they were subject to recovery then many would wind up their business.
Copyright Business Recorder, 2020