Islamabad- The government has withdrawn increase in GST (General Sales Tax) on petroleum products and CNG, after the Supreme Court on Friday ruled that the increase without approval of the parliament is unlawful.

A three-judge bench comprising Chief Justice Iftikhar Muhammad Chaudhry, Justice Ch Ijaz Ahmed and Justice Iqbal Hameed-ur-Rehman, hearing petitions against premature GST increase had reserved its judgement on Thursday.

The short order announced on Friday said that premature recovery of Sales Tax at the increased rate of 17% on the taxable supplies is unconstitutional and that the amount collected on this account since June 13 on POL products and Compressed National Gas (CNG) was refundable.

The court ordered the Ogra (Oil and Gas Regulatory Authority) to issue a revised notification forthwith fixing the prices of petroleum products and CNG on the basis of 16% GST. Moreover, the decision of 9 per cent additional tax on CNG was also declared illegal.

The court declared that Section 3 of the Provisional Collection of Taxes Act, 1931, under which this increase has been made, neither has the status of legislation nor sub-legislation. The court declared Section 4 of this Act as fully unconstitutional and contrary to Article 70 of the constitution, which lays down the procedure for legislation.

“The government is not authorised to impose or increase Sales Tax from 16% to 17% on the value of taxable supplies, by inserting it in the Finance Bill 2013-14 as a declaration under section 3 of the Provisional Collection of Taxes Act, 1931,” said the short order announced on Friday, the reason of it would be recorded later.

The court also ruled that the excess amount equal to 1% of the Sales Tax recovered on the petroleum products and CNG or any other taxable supplies from June 13 was refundable to consumers. It directed the authorities to deposit the excess amount with the SC Registrar. “If the Sales Tax is imposed by the parliament to be recovered with retrospective effect, then same shall be paid to the government, otherwise appropriate orders will be passed for its disbursement (to the consumers),” the order said.

The government was also directed to deposit 9% out of 26% of the Sale Tax on CNG, as per notification issued on 13-6-2013, in the same manner as done in case of 1% increase of GST. “A statement shall also be filed by the government showing the amount of Sales Tax recovered,” the order read.

“As prices of essential commodities mentioned in the Sixth Schedule to the Act-1990 have exorbitantly increased according to the media reports, therefore, federal and provincial governments are directed to take action under sections 6 and 7 of the Price Control and Profiteering and Hoarding Act-1977 to keep the prices consistent as per the Sixth Schedule under section 13(1) of the Act, 1990 (Essential Commodities).”

Latter, complying with the Supreme Court judgment, petroleum and natural resources ministry issued a notification of one per cent decrease in the prices of petroleum products (POL). Thus, the prices of petroleum products now stand at the position of June 1, 2013.

As per the notification, the petrol price has been cut by Rs0.86/litre, high octane blended component (HOBC) price by Rs1.35, high-speed diesel (HSD) by Rs0.90, light diesel oil (LDO) by Rs0.77 and kerosene oil price by Rs0.80/litre. The consumers would now get petrol at Rs99.77/litre, diesel at Rs104.60, LDO at Rs79.13 and kerosene oil at Rs93.79.

The Federal Board of Revenue (FBR) has also slashed GST on the CNG from 25percent to 16 percent in view of the apex court order. Ogra also notified the reduced prices of gas with immediate effect. For Region-I (Potohar, KP, Balochistan) and Region-II (Punjab and Sindh), Rs 1.97/kg and Rs1.28/kg decrease has been made with immediate effect. The new price of the commodity is Rs72.93/kg in Region-I and Rs 64.90/kg in Region-II.

The court decision making the government to cut back the prices has come as a sigh of relief to the already overburdened masses who are bearing heavy brunt of black marketing, overcharging and hoarding.

 The prices of almost all the commodities have surged disproportionately and it is hoped that government would pay heed to the court direction to tame this monster.