ISLAMABAD: The Supreme Court has asked the Punjab government to explain under which law the notification was issued for the levy of electricity duty on companies which are neither suppliers nor consumers.

A three-judge bench headed by Justice Ijazul Ahsan and comprising Justice Munib Akhtar and Justice Shahid Waheed heard an appeal of the Punjab government against the judgment of the Lahore High Court (LHC) regarding levy of electricity duty on the generation of electric power from generators.

A division bench of the LHC, on 13-01-2011, held the operation of the Punjab government’s notification dated 25-8-2001 in abeyance. It declared; “levying of tax on production of energy by private generators is not sustainable in the eye of law and instead, the government should encourage and give incentives to the appellants/petitioners as well as others who are participating or intend to participate in the production of energy till the time WAPDA produces energy enough to meet satisfactorily the domestic and industrial needs of the country in the present conditions …”

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The Punjab government, on August 25, 2001, through No.S.O.(Power)15-1/85 had imposed electricity duty on every person generating the electric power from a generator having the capacity of more than 500 KWH with effect from 01-07-2001.

During the proceeding, Justice Munib questioned under which law, the notification was issued.

The additional advocate general Punjab said that it was issued under Section 13(1) of the West Pakistan Finance Act, 1964.

However, the bench noted that the respondents are neither suppliers nor consumers, therefore, this section does not apply to them.

The AAG also submitted that under Article 157 of the constitution, the government has all the authority to levy tax on the generation of energy. He, however, sought time to respond to the court’s queries. According to advocate Mian Mahmood Rasheed, who is representing majority of the respondents, are engaged in the business of the manufacturing and selling of textile products. They have set up their own mechanism for power generation for more than 500 KWH in their mills. In such capacity, they are neither a licensee nor a generation company as defined under the Punjab Finance Act, 1964, and the Regulations of Generation, Transmission and Distribution of Electric Power Act, 1997.

The Punjab government, in its petition, contended that the High Court’s judgment has intervened in the policy matter, whereas, the prerogative of the State to levy tax/duty has been unduly interfered with, without jurisdiction.

Copyright Business Recorder, 2023