The Sindh High Court (SHC) has declared that gas utility bills issued by the Sui Southern Gas Company (SSGC) to captive power plants (CPPs) under the Off the Grid (Captive Power Plants) Levy Ordinance/Act prior to the issuance of the levy notification are ultra vires of the law.
The declaration came on a petition of CPPs that challenged the bills issued by the SSGC for collecting the levy for a period prior to the notification on March 7, 2025, whereby the rate of the levy was first notified.
The petitioners said the notification was first issued under Section 3 of the ordinance, whereafter the CPPs were first billed in May 2025 for gas consumed in February.
They said that pursuant to the second notification on July 23, 2025, under the act, the CPPs were also billed for gas consumed from March to July.
The petitioners’ counsel said the bills issued in May, and in some cases in August, imposed the levy for February and March respectively, under the rate notified in the notifications that are retrospective according to the law.
The counsel said sections 3 and 4 of the ordinance/act do not envisage any retrospective imposition of the levy, as the same can only be imposed prospectively, subject to the outcome of the petitions challenging the vires of the ordinance/act.
The additional attorney general said the imposition of the levy cannot be classified as retrospective, as the same was imposed after the passing of the respective ordinance/act and under the notifications issued thereunder.
He said the notifications only notify the rate on which the levy is to be calculated and by themselves do not impose the same, and sought the dismissal of the petition.
An SHC division bench comprising Justice Adnan Iqbal Chaudhry and Justice Muhammad Jaffer Raza said that it is apparent from the perusal of the notifications that the same do not encompass a retrospective application and are silent in terms of the period for which the rate has been notified.
The court said that sections 3 and 4 do not envisage retrospective imposition of the levy, leading to the inevitable conclusion that the notifications were intended to be applied prospectively and not to gas consumed prior to March 7, 2025.
The bench said the arguments advanced by the respondents that the liability of CPPs to pay the levy came into effect immediately after the promulgation of the ordinance is misconceived for the reason that the ordinance by itself never determined the rate of the noted levy.
The court said the levy was to be calculated in accordance with the mechanism envisioned under Section 4, and same only became operational after the calculation was made under Section 4 and the said calculation was notified under Section 3.
The bench said that the date from which the levy could have been legally imposed was the date after the rate was notified under Section 3 of the Act.
The court declared that the bills issued to CPPs by the SSGC for collecting the levy retrospectively for the period prior to March 7, 2025, are ultra vires sections 3 and 4 of the ordinance/act.
The SHC said if the SSGC has collected such amount from any CPP, it should credit the same in the next bill, adding that if any petitioner has deposited or secured the said amount with the court’s Nazir, the same would be returned to the petitioner.
