KARACHI: The government revenues would be short of Rs145 billion as the Sindh High Court (SHC) has struck down Gas Infrastructure Development Cess (GIDC) Act 2015 for being unconstitutional.
In a decision dated October 26, 2016, SHC noted that GIDC Act 2015 ultra vires the Constitution. The Court also held GIDC Act 2011 and GIDC Ordinance 2014 to be unconstitutional.
“Since the amount has already been collected in pursuance of Act 2015, the amount is liable to be refunded or adjusted,” the Court noted.
All verdicts and judgments in the ongoing litigation against the imposition of GIDC that began soon after the PPP-led coalition government passed the GIDC Act 2011 have been against the levy.
Different petitions were filed in different courts on the issue of levy of GIDC.
On August 16, 2012 the Sindh High Court refrained Sui Southern Gas Company Ltd (SSGCL) and Oil and Gas Regulatory Authority (Ogra) from imposing or collecting GIDC beyond Rs13/mmbtu on industrial capacity.
In its decision on June 13, 2014, Peshawar High Court (LHC) declared the levy, imposition and recovery of the cess unconstitutional, with the direction to refund the cess so far collected within a reasonable time.
Later, the Supreme Court of Pakistan in its decision in August 2014 upheld the judgment of the Peshawar High Court (PHC) declaring the levy of GIDC as unconstitutional and illegal. But soon the federal government promulgated a new ordinance namely Gas Infrastructure Development Cess Ordinance, 2014 (Cess Ordinance).
The GIDC Ordinance 2014 was challenged in different courts and the LHC suspended the levy and collection of GIDC. However, the federal government was able to enact new GIDC Act 2015 after its approval by the parliament.
The GIDC was being collected from the consumers of various categories, except residential ones, for more than five years with the sole objective of arranging funds for gas pipeline infrastructure to facilitate utilisation of imported gas, including LNG and that proposed to be imported from Turkmenistan and Iran. The government had given undertakings to Parliament that GIDC would be used to spread gas pipeline network.