LAHORE - The Lahore High Court yesterday directed the federal government to justify the recent cut in petroleum prices in line with the decline in oil prices in international market.

Justice Mamoon Rashid heard the case and adjourned further hearing until February 24.

The federal government, few days back, decreased POL prices, however a few lawyers challenged the government’s decision before the Lahore High Court through different petitions. The petitioners challenged levy of up to 55 per cent sales tax on petroleum products and the standard mechanism for setting prices of the products in international market.

Advocate Azhar Siddique appeared before the court on behalf of Pakistan Justice Party and argued that according to existing prices, after adding the income tax along with allied taxes, the rate of the oil should not be increased from Rs30 per litre with any stretch of imagination. However, he said, in the instant case the government functionaries were adamant to sell the oil to the public at Rs71.25 per litre.

The counsel said the federal government had no authority and jurisdiction to fix the petroleum prices in view of the provisions of Ogra Ordinance, 2002 and any policy which was taking away such power was violation of the Constitution.

He accused the government of playing fraud with the nation by fixing petroleum prices and that too at exorbitant rates in contradiction with the international prices. The lawyer pleaded that the government should be directed to charge the prices of the oil according to the existing international market rate in the large interest of public welfare and to meet the ends of justice.

After hearing initial arguments, the judge issued notice to the federal government and directed it to justify the prices of petroleum products with the oil prices in international markets on next hearing, Feb 24.

Meanwhile, the LHC issued notices to government, Ogra and FBR and sought reply on a petition filed by Punjab opposition leader Mian Mahmoodur Rasheed. Representing the petitioner, Advocate Sheraz Zaka contended that section 3(2) & (6) of Sales Tax Act 1990 was repugnant to the Constitution.

He also challenged the latest notification through which fixed amount of sales tax had been imposed on the petroleum products inflating the prices for the common citizen. The counsel pointed out that the impugned notification was issued without getting approval from the parliament. He said the government by imposing a fixed sales tax on petroleum products deprived the citizens of the actual benefit of the international reduction in petroleum prices. “The purpose behind this unlawful taxation is to extort maximum tax from the consumers,” he added.

The counsel prayed to the court to set aside the impugned section of the Sales Tax and the notification of increased prices of petroleum products.

Justice Waheed adjourned hearing till March 15 and directed the respondents to submit their replies.