FCC takes up petitions against petroleum levy, fuel price increase

ISLAMABAD: The Federal Constitutional Court (FCC) has taken up two constitutional petitions challenging the imposition of a large petroleum levy and the recent increase in petroleum product prices, according to details reported in the petitions accepted by the court registry.

The registrar’s office has assigned numbers to both petitions. One of them was filed by Jamaat-e-Islami chief Hafiz Naeemur Rehman, who asked the court to direct the formation of an independent mechanism or commission supported by experts to examine the constitutional, fiscal, economic and federal dimensions of the current petroleum levy structure.

The government introduced the petroleum and carbon levy under a binding commitment with the International Monetary Fund (IMF). The petroleum levy on petrol currently stands at Rs117.41 per litre, while the levy on high-speed diesel (HSD) is Rs42.60 per litre.

The second petition was filed by advocate Zulfikar Ahmed Bhutta on May 1. In that plea, the petitioner asked the FCC to order the government to roll back the latest increase in petroleum product prices.

Both petitions were filed directly before the FCC under Article 175E of the Constitution. The registrar’s office did not raise objections to either filing, and the court took up the petitions weeks after they had been submitted.

Background of the levy

The FCC was set up by the current government through the 27th Constitutional Amendment. In Pakistan, the petroleum levy is a federal charge imposed on petroleum products including petrol, high-speed diesel, kerosene and light diesel oil.

The levy is among the federal government’s key non-tax revenue streams. It is collected as a fixed amount per litre on fuel sales, unlike sales tax, which is charged as a percentage. The levy is imposed under federal laws including the Petroleum Products (Petroleum Levy) Ordinance, 1961, as well as later finance laws.

Under the existing legal framework, the federal government has the power to revise the levy through finance bills and statutory regulatory orders (SROs).