the Sindh High Court (SHC) has ruled that the imposition of a gas levy by the federal government on the Sindh province, specifically the Collection for Prior Period (CPP) levy, is unlawful. The court determined that applying the levy retroactively violates essential rights.
The SHC issued this ruling on february 16, 2024, while hearing petitions filed by various industrial and commercial consumers challenging the CPP levy. These petitioners argued the levy was imposed without proper legal authority and was applied to gas consumed in previous months, creating an unfair financial burden.
Justice aaqib Ali Lakho, leading the bench, agreed with the petitioners. The court found that the federal government didn’t follow the required procedures for imposing such a levy. Specifically, the government failed to obtain prior approval from the provincial government, as mandated by the Constitution. Dawn News reports that the court emphasized the importance of adhering to constitutional provisions regarding natural resources.
The CPP levy was introduced in late 2023 to recover funds from gas companies due to discrepancies in the pricing of gas supplied to various sectors. The federal government argued the levy was necesary to address financial shortfalls. However, the SHC’s decision effectively halts the collection of this levy in Sindh.
The court directed the federal government to refrain from collecting the CPP levy from consumers in sindh. It also instructed the government to review its procedures for imposing such levies in the future, ensuring compliance with constitutional requirements and provincial agreements.
This ruling is expected to have meaningful financial implications for the federal government and gas companies. It also sets a precedent for similar challenges to federal levies imposed on provinces without proper consultation and legal basis. Industry representatives have welcomed the decision, stating it will alleviate financial pressure on businesses in Sindh.
The federal government has not yet announced whether it will appeal the SHC’s decision. Further developments will likely unfold as the government assesses its options and considers the broader implications of the ruling.
