SC has taken on the executive and parliament and overruled them on a matter of taxation.

The taxes imposed on petroleum products in Pakistan are unjust and unfair, and in these columns we have roundly criticised the federal government for putting the squeeze on the poor in these already difficult times.

But is the carbon surcharge/tax proposed by the federal government and unanimously approved by the National Assembly as part of the Finance Act, 2009 after 10 days of debate unwarranted? Prima facie a bench of the Supreme Court of Pakistan led by Chief Justice Iftikhar Chaudhry appears to think so, for it has directed the Oil and Gas Regulatory Authority to issue a notification suspending the imposition of the carbon surcharge on petroleum products.

It is important to understand the events leading up to the Supreme Court’s direction. Days after being restored as the chief justice in March, Chief Justice Chaudhry began to look into the government’s controversial policy of imposing a petroleum development levy to harvest money for the federal kitty. That investigation led the Supreme Court to direct the federal government to reduce the prices of petroleum products to ‘reasonable’ levels in May, as a result of which the government reduced prices by a token amount. Perhaps worried that the legal cover for the petroleum development levy was not strong enough to withstand the Supreme Court’s apparent dislike for it, the government sought to address the matter by legally imposing a new tax — a carbon surcharge on petrol, diesel and kerosene of between Rs6 to Rs10.

The surcharge, and this is critical from a legal point of view, has been approved by the National Assembly. Following the unanimous vote approving the Finance Bill, 2009, Sheikh Aftab Ahmed, chief whip of the PML-N, and Riaz Hussain Pirzada, chief whip of the PML-Q, spoke appreciatively of the government’s handling of the budget process and extended their parties’ support for the budget. So, in a very direct way, the Supreme Court has taken on both the executive and parliament and overruled them on a matter of taxation. This is dangerous ground and goes to the heart of the separation of powers and the concept of checks and balances. Stripped to the basics, policymaking is the executive’s domain, legislation is parliament’s and determining legality is the judiciary’s.

In the present case, the arguments made before the court for reducing the price of petroleum products appear to have been largely normative — the poor will suffer, the productive sector will be hit, etc — and not technical/legalistic. While the former are worthy of sympathy and must rightly be supported, the judiciary is not the forum in which they ought to be resolved.

link: http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/news/business/16-sc-and-taxation-hs-02