GST imposition prior to approval: Supreme Court asks government to explain position

The Supreme Court on Friday directed the Attorney General for Pakistan (AGP) to explain how the government could impose proposed increment in General Sales Tax from 16 to 17 percent prior to its approval from the Parliament through Finance Bill 2013. The Supreme Court had taken a suo motu notice pertaining to the implementation of GST increase a day after Finance Minister Ishaq Dar presented Budget 2013-14, and introduced Finance Bill for approval to be enforced from July 1, 2013.
Hearing the suo motu notice on increase in petroleum price as a consequence of the proposed 17 percent GST, a 3-judge bench, led by Chief Justice Iftikhar Muhammad Chaudhry and comprising Justice Ejaz Ahmed Chaudhry and Justice Gulzar Ahmed, remarked that the Parliament had not yet approved the Finance Bill, 2013, therefore, it was not possible to implement tax on petroleum products. Appearing on notice, AGP Munir A. Malik submitted that nothing could be done without the approval of the Parliament, adding that the imposition of GST could not be made without the approval of Parliament.
He also read out the Provisional Collection Taxes Act, 1931 and contended that the recent increase in the GST was made under the said Act, adding that it was meant to discourage hoarding. The Chief Justice Chaudhry said that hoarding itself was a crime, saying both the federal and provincial governments had failed to control that problem.
Malik submitted that previous governments had received the increased amount of GST soon after budget proposals were only on table; to which, the Chief Justice observed that it was an illegal practice and remarked that the concerned authorities should recover the amount so far collected through such practices. "Why are you sucking people's blood; it seems that Federal Board of Revenue (FBR) is not aware of the Parliamentary system," the Chief Justice observed. He noted that due to "illegal implementation" of 17 percent GST, prices of essential commodities surged immediately across the country.
During the course of hearing, Salman Akram Raja, the counsel for Oil and Gas Regulatory Authority (Ogra), produced a declaration and a notification pertaining to the recent hike in petroleum prices while a copy of the Finance Bill 2013 was also presented. The Chief Justice observed that tax could be collected only in accordance with law, adding that without law no tax could be imposed.
"Prima facie, whatever was done, was totally illegal and nothing could be made without a proper legislation," the Chief Justice remarked. He further said that by doing so, an extra burden was placed on the shoulders of the masses. Justice Ejaz Ahmed Chaudhry observed that it was difficult to reduce prices once they had recorded a rise. Raja contended that his client had issued a notification regarding increase in CNG and kerosene oil and imposed GST on CNG. The hearing of case was adjourned till June 18.