SC tells govt to explain why sales tax is increased on petrol despite falling global prices

ISLAMABAD: The Supreme Court observed on Wednesday that the government resorts to increasing the general sales tax (GST) on petroleum products by as much as 25 per cent even as crude oil prices slump in the international market.

Hearing a suo motu case on the matter, the court ordered the government to submit a report within a week detailing the various taxes imposed on petroleum products, and their comparison with global and regional standards.

“Whenever prices fall in the global [oil] market, sales tax is imposed [in Pakistan],” Chief Justice Mian Saqib Nisar remarked during the hearing. He added that the government tends to levy taxes on petroleum products when it should be providing relief to the public.

“You jack up the sales tax when prices of crude oil fall,” the CJP said, addressing Additional Attorney General (AAG) Nassar. He observed that GST has been raised in the past to as much as 25pc.

Justice Nisar chided the AAG when he contended that petrol prices in Pakistan were the lowest in the region, including India.

“Don’t compare the prices with India. Do we have any comparison with India in the field of IT?” the CJP asked rhetorically, and sought details about the various taxes levied in Pakistan.

The AAG informed the court that three types of taxes are collected on petroleum products: customs duty, petroleum levy and sales tax. In response to the CJP’s question, he revealed that 11.4pc GST was currently being charged.

Two profit margins, including that of oil marketing companies (OMCs) and petrol pump dealers, are gained through the sale of petrol and diesel, he said.

Justice Ijazul Ahsan asked AAG Nassar why petrol prices are not reduced in Pakistan even when crude oil prices fall from $100 a barrel to $50. “We don’t decide the prices based on crude oil,” the AAG responded.

CJP Nisar remarked that the court will order a complete audit of petrol pricing in the country.

Before adjourning the hearing for a week, the bench ordered relevant ministries and department to file written replies explaining the imposition of various taxes on petroleum products.