LAHORE/ ISLAMABAD - Pakistanis received good and bad news on Monday, just a few days before Eidul Fitr.

The Supreme Court stopped the Federal Board of Revenue and cellular companies from collecting withholding tax and other exorbitant charges on prepaid phone recharge.

The same day, the caretaker government increased the prices of petroleum products – hiking the price of petrol by Rs4.26per litre.

Hearing a suo motu case at the Supreme Court’s Lahore registry, a three-judge bench led by CJP Mian Saqib Nisar gave the FBR and cellular companies two days to implement the order.

Justice Umar Ata Bandial and Justice Ijazul Ahsan were other members of the bench. FBR Chairman Tariq Pasha and lawyers of cellular companies appeared before the bench.

The FBR chairman failed to answer the question raised by the court that under what law a person not liable to pay tax could be forced to pay tax.

He also confessed that no mechanism was there to differentiate who was liable to pay tax and who was not.

“It is violation of the law if there is no mechanism to collect tax. The court has powers to set it aside,” the CJP observed while addressing the FBR chairman.

 “These companies are fleecing innocent consumers with impunity,” the CJP regretted. The top judge also expressed anger over subsidised night call packages offered by cellular companies to attract the youth.

 “The subsidised night call packages have spoiled our culture,” the CJP said.

Justice Ijazul Ahsan observed that collection of tax from innocent customers of cellular companies was exploitation.

“There should be a system for deduction of tax. Deduction should not be made from those who do not fall in this category,” Justice Ahsan remarked.

Justice Bandial also pointed out that the tax was being collected through private companies as the FBR had outsourced half of its functioning.

However, the FBR chairman and the lawyers representing the cellular companies pleaded for more time to devise a policy and improve the system, but the chief justice dismissed their plea, observing that violation of the law could not be permitted anymore.

“We are abolishing these surcharges right now,” the top judge remarked while rejecting the plea of the companies’ lawyers and the FBR.

“Yes, you may take as much time as you need but we can’t allow violation of law,” he remarked.

Initially, the court ordered the companies to stop deducting the taxes immediately. However, the companies’ lawyers requested the court that due to technical reasons, the order could not be implemented immediately and requested for some time. On this, the court gave them two days for implementation of the order and directed the FBR and cellular companies to stop deduction of taxes, make and plan and submit it to the court.

 

HIKE IN POL PRICES

 

The caretaker government increased up to Rs6.55 per litre the prices of petroleum products for current month. The price of petrol has been increased to Rs4.26 (4.9 per cent) per litre. The new price is Rs91.96 per litre.

The price of HSD has been enhanced by Rs6.55 (6.6 per cent) per litre. The new HSD price would be Rs105.31 per litre. The price of kerosene oil has been raised by Rs4.46 (5.6 per cent) per litre. New price is Rs84.34 per litre. Similarly, the light diesel oil (LDO) price has been increased by Rs6.14 (8.9 per cent) per litre.

On May 31, the former PML-N government deferred the price review until June 7 but the caretakers did not revise the prices last week.

“To provide relief to the common man in the holy month of Ramazan, the caretaker government has decided to pass only a partial impact of increase and the government will absorb 50 per cent of impact of increasing effective from June 12, 2018,” the ministry of finance said in a handout yesterday.

On May 30, the Oil and Gas Regulatory Authority (Ogra) recommended an increase of up to 16.9 per cent in the prices of petroleum products for June.

According to OGRA’s summary moved to the Ministry of Energy (Petroleum Division) and Finance, an increase of Rs12.50 (12.7pc) was recommended in the price of HSD and Rs8.37 per litre (9.5pc) in the price of motor spirit (petrol). Similarly, Rs8.23 per litre (10.3pc) increase was recommended in the prices of kerosene oil and Rs 11.65 (16.9pc) in light diesel oil (LDO) rate. Prices of all petroleum products, except for kerosene, are deregulated and Ogra only monitors their prices.

Following the government’s previous decision of not increasing the prices of petroleum products, the FBR sharply reduced the rate of GST on almost all the petroleum products. Against the earlier GST of 27.5 per cent on high speed diesel the rate was reduced to 17 per cent while against 15 per cent on motor spirit it was reduced to 7 per cent. Similarly, the FBR has also reduced the rate of GST on super kerosene oil from 12 per cent to 7 per cent and from 11.5 per cent on light diesel oil to one per cent.

Sources in FBR informed The Nation that the government will have to suffer approximately Rs20 to Rs25 billion revenue loss on account of sales tax and petroleum levy for maintaining the petroleum price at existing level for a month.

The decision of reducing taxes on petroleum products would also affect the FBR’s tax collection efforts, which is also struggling to achieve the revised tax collection target. The FBR would have to collect mammoth challenge of collecting Rs661 billion in ongoing month (June) to meet the revised tax collection target of Rs3.935 trillion.