Sindh High Court allows import of LNG without infrastructure cess

KARACHI: The Sindh High Court (SHC) on Tuesday restrained the provincial tax authorities from taking any coercive action against the state-run Pakistan LNG Limited (PLL) and allowed it to clear the LNG consignment without demanding infrastructure cess.

However, the two-judge bench led by Justice Syed Hasan Azhar Rizvi directed the PLL to furnish a bank guarantee equivalent to the differential amount to the nazir of SHC.

The bench also issued notices to Sindh’s secretary of excise and taxation department, director general and other officials of the department in Sindh as well as the advocate general for Sindh for the next hearing.

Sindh excise department barred from action against PLL; petitioner seeks return of over Rs8bn

The PLL had through its counsel petitioned the SHC and submitted that the petitioner was a state-owned entity dealing, inter alia, in the import of liquefied natural gas (LNG) and onward sale of re-gasified LNG (RLNG).

The lawyer for petitioner contended that the respondents were unlawfully levying cess in violation of Section 3 of the Sindh Development and Maintenance of Infrastructure Cess Act, 2017 and their inaction to forward returning the same has materially affected the fundamental rights of the petitioner to conduct lawful trade and business in violation of Article 18 of the Constitution.

He argued that the petitioner was importing LNG into Pakistan at Port Qasim and thereafter the same was directly transferred from the LNG cargo to a floating storage and re-gasification unit, berthed alongside the jetty located within the premises of the port, for conversion into RLNG.

Thereafter, the RLNG was delivered and sold to the Sui Northern Gas Pipelines Limited (SNGPL) at the delivery point situated within the port. The RLNG was transported to the SNGPL from the port through the pipeline by the Sui Southern Gas Company Limited (SSGCL).

The counsel further asserted that since the supply of RLNG was made through pipelines, no road infrastructure of the province of Sindh was used for it and hence, the petitioner was not liable to pay infrastructure cess in terms of Section 3 of the act on import of LNG or its conversion into RLNG.

He contended that the transporting of RLNG outside the port was being handled by the SSGCL and SNGPL under their relevant transportation agreement and the petitioner has nothing to do with it.

While referring to an earlier order of the SHC, the lawyer argued that the cess in term of Section 3 of the act was only payable when road infrastructure of the province was used for transportation of goods.

The petitioner pleaded to exempt it from any infrastructure cess and return of over Rs8 billion so far collected by the respondents under Section 3 of the relevant law as well as seeking a restraining order for respondents not to take any adverse/coercive action against it.