ISLAMABAD - The opposition benches in the Upper House of the Parliament Thursday demanded withdrawal of five percent additional GST on petroleum products terming a ‘black levy’ after the Finance Minister briefed the house about the inevitability of imposition of this tax.

The lawmakers also argued that the imposition of taxes was the only domain of the Parliament and it was an illegal and unconstitutional step of the incumbent government to impose five percent GST on petroleum products through an administrative decision.

Later, the joint opposition in the Senate including PPP, ANP, PML-Q, BNP-Awami as well as independent opposition - MQM - staged a protest walkout from the house against this GST imposition and demanded that it should be withdrawn immediately. The lawmakers showed their reservations sating that the government would not decrease the GST in the same manner when petroleum prices would go higher and the masses would have to bear this additional burden. The Finance Minister assured the House that additional imposition of GST on petroleum products would be withdrawn when oil prices would increase in the international market. “We are staging protest walkout against this unreasonable and black levy,” Mian Raza Rabbani of PPP said before staging the protest walkout.

The house will discuss the legal points in detail on Monday that whether the government could impose GST through an administrative order or it was the sole domain of the Parliament. Interestingly, not a single member was present in the house when Chairman Senate assumed his seat to take up the business of the house that drew criticism from the chair.

Responding on a call attention notice moved by five senators including Raza Rabbani about imposition of five percent additional GST, Finance Minister Ishaq Dar said there was a massive negative impact on revenue due to decreasing oil prices in international market. “From September 1 to December 31, 2014, the government had decreased total Rs 29.69 of petrol price, Rs 42.50 of high octane, Rs 25.13 of kerosene oil, Rs 23.11 of high Speed diesel and Rs 25.77 of light speed diesel,” Senator Ishaq Dar said explaining that the government had passed on the impact of the decrease in international oil prices to the masses. “Total Rs 400 billion of benefit would be passed on to the masses as a result of this decrease while there was a total shortfall of revenue of Rs 68 billion due to the fall of prices,” Dar said.

He said that this relief is in additional to the recently announced Rs 2.32 per unit decrease in power tariff. He warned the lawmakers that the government would have to cut development budget, had additional sales tax not been imposed on petroleum products. “The only option is to cut the development budget as neither defence budget nor salaries budget could be decreased,” he said.

The Finance Minister informed that the government had to bear Rs 30 billion additional expenditures as a result of the ongoing Zarb-e-Azb Operation, Rs 15 billion each for expenditures of armed forces and for one million temporary displaced persons (TDPs). “One billion dollars are needed for the rehabilitation of IDPs,” he informed. He said that the government needed more money as nine battalions of rapid response force were being raised and 16 new wings of civil armed forces were being raised.

Giving legal points, Dar said that under Sales Tax Act, 1990, the government could impose taxes including GST. He gave example of neighbouring country India and said that it had protected its revenue shortfall as a result of decrease in oil prices and they would have to do so to decrease the shortfall in revenue target.

“One option was imposition of regulatory duty but the imposition of GST option is probably feasible,” he said. He said that the government had given Rs 22 billion subsidy to the consumers for eight months when oil prices were increasing in international market. He also argued that last PPP regime had been imposing taxes through administrative measures.

However, Raza Rabbani was not looking convinced and he said that PML-N was violating its own manifesto by imposing indirect taxes. He asked who would guarantee that additional five percent GST would be decreased in the same manner when oil prices would increase internationally.

“The crux is Article 77 and it is very clear in the two judgements of Supreme Court who discussing Sales Tax Act have said that it is not the role of the executive to levy any tax. This is unconstitutional,” he said.  Senators Kamal Ali Agha, Saeedul Hassan Mandokhel, Kalsoom Perveen and Nasren Jalil also gave their opinion on the issue and opposed the imposition of additional GST.

Earlier, Senators Taj Haider, Zahid Khan Khalid Perveen and Dr Saeeda Iqbal made their speeches on the Presidential address made to the joint sitting of the Parliament on June 2, 2014. Zahid Khan argued that the federal government was not focussing on the construction of hydel power projects like Munda Dam. Khalida Perveen demanded establishment of new province in the south of Punjab. Dr Saeeda said that the education and health sectors were in miserable condition in the federal capita area after the devolution.