KARACHI: The Sindh High Court on Wednesday directed the Karachi Metropolitan Corporation to file comments in one of the three petitions filed against collection of the Municipal Utility Charges and Taxes (MUCT) through the electricity bills.

A two-judge bench headed by Justice Nadeem Akhtar further extended the earlier interim restraining order for K-Electric from collecting MUCT till Dec 13.

Former attorney general Khalid Jawed Khan, one of the amicus curiae to assist the court on the subject issue, pointed out that the impugned notification issued on April 12, about imposition of tax rate, toll or fee on the subjects enumerated in part II of schedule V of the Sindh Local Government Act, 2013.

However, the word “income” defined in Rule 2(1)(e) of KMC (Collection of Municipal Utility Charges and Taxes) Rules 2002, pertains to the items mentioned in part I of schedule V of the said act, he added.

Restraining order extended against MUCT collection via electricity bills

The lawyer for KMC sought time to examine this aspect and to seek instruction. He also undertook to file comments in one of the petitions before next hearing with advance copies to all concerned.

Meanwhile, the KMC filed comments in one of these petitions and contended that MUCT was not an introduction of new tax as it was an old levy, being merger fire and conservancy taxes, and the same took its legal effect through a council resolution passed in 2008 by the then local body.

It further stated that KMC had never collected MUCT by itself as by the way of a contract it was collected through a private contractor since 2008. However, it said that the practice was not very much effective.

The KMC argued that KE had robust and transparent system of generation, distribution and collection of bills with additional facilities and thus power utility was mandated to collect the levy in question.

It further maintained that the MUCT charged in the year 2008 was much higher than the rates proposed and supposed to be charged through KE.

The KMC contended that previous rates were based on the area of piece of land stretched in four major categories residential, commercial, industrial and amenity plots with different specified rates ranging from Rs100 to Rs5,000, but now the mode of collection and rates were modified based on consumption of electricity units ranging from Rs29 to Rs449.

The SHC was petitioned against provincial government’s move to outsource the MUCT to the KE and on Sept 26, the bench through an interim order had restrained the power utility from collecting MUCT through electricity bills.

Initially, Advocate Syed Najeebuddin Ahmed had moved the SHC in April while Jamaat-i-Islami Karachi chief Hafiz Naeem ur Rehman and other party leaders petitioned the SHC in September and third identical petition was filed last month by Mujahid Ali Khan, an employee of Pakistan International Airlines, impugning the collection of MUCT through the power bills.

Citing the ministry of energy (power division), Sindh chief secretary, local government secretary, city administrator, KE as respondents, the petitioners submitted that linking MUCT with consumption of electricity was against the law.

They maintained that KE was a private company and had a limited licence for generation, transmission and distribution of power only and the agreement between ministry of energy and KE had nothing about collection of different charges and it could not be indulged in collection of taxes on behalf of the KMC.

Published in Dawn, December 8th, 2022