Centre obtains stay against court order that struck down gas infrastructure cess law

The Federal Ministry of Petroleum and Natural Resources has obtained a stay order from the Sindh High Court appellate bench against a single bench ruling that had declared the Gas Infrastructure and Development Cess Act 2015 ultra vires the constitution and directed the government to refund the amount collected from different commercial units.

The interim order came on Thursday during a hearing of an appeal of the ministry that had challenged the single bench order.

Additional Attorney General Salman Talibuddin submitted that the high court’s single bench had declared the Gas Infrastructure and Development Cess Act ultra vires of the constitution without deciding that the cess was a fee, not a tax, imposed by the federal government.

He maintained that it was agreed between the parties during the course of proceedings of 377 cases that the same may be disposed of on the basis of material available and no oral evidence was required. 

Talibuddin said the single bench reviewed newspaper clippings, minutes of the meeting of the economic coordination committee of the cabinet held on January 28, 2016, and the annual budget statement 2016-2017 at the time of final arguments which were not part of the court record, although they were not the parameters of understanding agreed by the parties.

The federal law officer submitted that commercial gas users had already passed on the recovered amount to the end users and customers, and the directive for refunding/adjusting over Rs200 billion to commercial gas users would result in their illegal and unjust enrichment and a cost to the national exchequer. 

He further stated that there were marked contradictions in the single bench order, which, he said, was not in accordance with the law and was liable to be set aside. He requested the court to suspend the single bench order.

A division bench headed by Justice Irfan Saadat Khan, after the preliminary hearing of the arguments of the additional attorney general, issued notices to the Oil and Gas Regulatory Authority, Sui Northern Gas Company and others and called their comments on December 13. It suspended the single bench order till the next date of the hearing.

On October 26 the SHC had declared the act ultra vires the constitution and directed the government to refund or adjust the amount to commercial gas users.