ISLAMABAD - The Senate Standing Committee on Finance and Revenue on Wednesday disapproved the ‘Sales Tax (Amendment) Bill, 2014’ with majority of votes terming it violation of the Supreme Court decision in Iqbal Zafar Jhagra case.

The Senators of opposition parties including PPP, ANP and MQM have strongly opposed the Bill saying that its approval would be against the apex court judgment. However, sole Senator of ruling party PML-N Nuzhat Sadiq has favourd the Bill. Therefore, the committee disapproved the Bill with majority of votes and did not give its recommendations.

The Senate Standing Committee on Finance and Revenue, which met Senator Nasrin Jalil in chair, was discussing the’ Sales Tax (Amendment) Bill, 2014’, which was tabled in Upper House of the parliament of April 14 2014. Earlier, President of Pakistan has issued the ‘Sales Tax (Amendment) Ordinance, 2014’ on March 23, 2014 to give legal cover to the immediate loss of revenue worth of Rs 28 billion generated through additional nine percent GST on CNG in last six years and also to compel the gas filling stations to pay due taxes.

The Senate is bound to move its recommendations to the National Assembly in fifteen days after the laying of ‘Money Bill’ in the house. However, it is not compulsory for the National Assembly to consider the recommendations of the upper house of the parliament. Therefore, the disapproval of the ‘Sales Tax (Amendment) Bill, 2014’ from the Senate would not become hurdle in its passage from the National Assembly.

Chairman FBR Tariq Bajwa said that CNG prices have not increased with the ST ord. He explained that there is no new change in the law, as govt only wants to clarify the constitutional ambiguity. He also clarified that only 17pc general sales tax has been imposed on CNG.

He said, “There is need to brining amendments in the ST Act following the judgment of the SC. Therefore, the government has brought the Sales Tax (Amend) Bill, 2014. However, Senators did not agree with the Chairman’s stance and termed it against the decision of Supreme Court. Chairperson of the Committee Senator Nasreen Jalil in her remarks said that we cannot go against the apex court decision, which provides benefit to the common people. Similarly, Senator Haji Adeel of ANP also termed it against the Supreme Court decision. However, PPP Senators Salim Mandviwalla and Sughra Imam remain abstained on it.

The Supreme Court of Pakistan on the constitutional petition of Zafar Iqbal Jhagra has declared the levy of sales tax of 26 percent on supply of CNG as ultra vires on June 21 2013. The SC asked the FBR to withdraw additional nine percent GST on CNG supply. Similarly, the apex court has directed the FBR to despite extra sales tax collected at the rate of nine percent in lieu of value addition on supply of CNG with effect from 01-07-2007 to 10-12-2013 with the registrar of the Court. Quantum of such sales tax was worked out by the FBR at Rs 28 billion.

Therefore, the government wants to give legal cover for Rs 28 billion through Sales Tax (Amendment) Bill, 2014’.