Petitions against ST Act dismissed: SC tells CNG station owners to approach FBR for refund

Dismissing 30 identical petitions challenging vires of Section 3 (8) of the Sales Tax Act 1990 as incorporated by the Ordinance of 2014, the Supreme Court directed CNG station owners to approach the Federal Board of Revenue (FBR) for refund of input tax, if available to them. A three-member bench led by Justice Azmat Saeed Sheikh, comprising Justice Mushir Alam and Justice Dost Muhammad Khan had reserved the judgement on June 2, 2016 in response to CNG stations' appeals filed against Sindh High Court judgement of October 06, 2015 in the matter.
Appearing before the court on behalf of the FBR, Hafiz Ahsan Ahmed Khokar has contended that levy of sales tax was legally imposed which is sustainable in the law saying after collection of the levy a substantial amount of Rs 375 million would be deposited in the national kitty.
Announcing the verdict on the other day the bench said, "the appellants had invoked the Sindh High Court jurisdiction calling into question the vires of Section 3 (8) if the Act of 1990, as incorporated by the Ordinance of 2014 and re-enacted through the Finance Act 2014 along with the Notification issued there under - The main thrust of the case of the appellants was that the impugned provision of the law was inconsonant with the judge of the apex court".
The appellants also contended that the formula for conversion of Natural Gas into CNG employed by the respondents (Federation of Pakistan through Secretary, Ministry of Petroleum & Natural Resources, and others), for levy of Sales Tax was illegal and not sustainable in law, the imposition of General Sales Tax was void ab initio and that Gas Infrastructure Development Cess was liable to be excluded for purpose of the Sales Tax liability of the appellants.
"All of the above said grounds agitated before the learned High Court were categorically and in no uncertain terms abandoned at the bar by the learned counsel appearing for the appellants - only the peripheral ground of wastage was pressed before us along with the question of alleged non refund and non adjustment of input tax in terms of Section 7 of the Act of 1990 - Thus the lis before this Court stands restricted only to the aforesaid two grounds and the alleged violation of the Fundamental Rights of the appellants," the apex court said in its judgement.
The verdict ruled, "No doubt the possibility of wastage during conversion of natural gas into CNG cannot be ruled out and in absence of such determination the final liability to pay Sales Tax on the value of supply of CNG cannot be established - Unfortunately, the exercise of determining such wastage can only be undertaken by a forum vested with the jurisdiction to adjudicate upon the disputed questions of facts (wastage in the instant case) and neither the learned High court nor this Court in their respective Constitutional jurisdiction can ordinarily undertake this exercise."
"With regard to grievance of the appellants qua the adjustment/refund of input tax, suffice it to say , such plea was not raised before the learned High Court of Sindh, as is apparent from the impugned judgement where the adjudication, in this behalf, is conspicuous by its absence - It is not the case of the appellants that application for refund of input tax was made and declined by the respondents, therefore, in the facts and circumstances of the case, it is for the appellants to approach the Department in accordance with the provisions of the Act of 1990 and seek refund of input tax, if available to them, under the law," the verdict concluded.