KARACHI: The Sindh High Court (SHC) has ruled that the retrospective collection of a levy on gas supply to industrial captive power plants (CPPs) is unlawful, declaring such action ultra vires the relevant law.
A two-member bench comprising Justice Adnan Iqbal Chaudhry and Justice Muhammad Jaffer Raza held that the levy could not take effect immediately upon the promulgation of the Off-Grid (Captive Power Plants) Levy Ordinance, 2025, as the ordinance itself did not determine the rate of the levy.
The bench observed that under the Off-Grid Power Plants Levy Act, 2025, the levy was to be calculated in accordance with the mechanism provided under Section 4 and could only become operative after the rate had been calculated and formally notified. The court made these observations while disposing of 30 identical petitions filed by various industrial units challenging bills issued by Sui Southern Gas Company (SSGC) for recovery of the levy for periods prior to the notification of the applicable rate.
The petitioners argued that although the levy rate was first notified on March 7, 2025, and later revised through another notification issued on July 23, 2025, the authorities had issued bills in May and, in some cases, August seeking recovery for February and March under the subsequently notified rates.
In its judgment, the court held that statutory notifications could not be applied retrospectively in the absence of explicit legislative authorisation, except where such application was beneficial or procedural. It noted that neither the notifications nor Sections 3 and 4 of the law envisaged retrospective imposition of the levy.
The bench also highlighted internal uncertainty within the Ministry of Energy regarding retrospective recovery, referring to conflicting directives issued to gas companies in April 2025 on whether to collect the levy for February and March.
Rejecting the respondents’ contention that liability arose immediately upon promulgation of the ordinance, the court ruled that such an argument was misconceived, as the levy rate had not been determined at that time.
Consequently, the SHC declared the impugned bills issued by SSGC for recovery of the levy for periods prior to March 7, 2025, to be without lawful authority and unenforceable.
Story by Ishaq Tanoli
