SCP declares imposition of additional GST on petroleum products illegal

This article was last updated on April 16, 2022

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The Supreme Court of Pakistan (SCP) has intervened in the federal budget proposals and directed the government to deviate from imposing additional General Sales Tax (GST) on petroleum prices.

SCP on Friday declared the additional GST collection on petroleum products illegal in effect from June 13. The apex court also declared an obsolete act of 1931 null and void, claiming that the act contradicts with Article 77 of the Constitution.

“Section 4 of the Act, 1931 as a whole is declared unconstitutional being contrary to Article 70 of the Constitution, which lays down the procedure for legislation. The Government is not authorized to impose or increase Sales Tax from 16% to 17% on the value of taxable supplies, i.e. by inserting in the Finance Bill (Money Bill) 2013- 14 a declaration under section 3 of the Provisional Collection of Taxes Act, 1931.

“Nine per cent additional sales tax imposed or recovered from the consumers on CNG is unconstitutional and contrary to Articles 3, 9, 24 and 77 of the Constitution as well as section 3 of the Sales Tax Act.

“The excess amount of the Sales Tax recovered on the petroleum products/CNG 13.06.2013 onwards, is refundable to consumers and concerned authorities accordingly are directed to deposit it with the Registrar of this Court subject to passing of the Finance Bill.

“If the Sales Tax is imposed by the Parliament to be recovered with retrospective effect, same shall be paid to the Government, otherwise appropriate orders will be passed for its disbursement,” the ruling said.