• Bench reserves verdict on pleas against controversial tax collection deal
• Petitioners say agreement ‘favours’ the power utility

KARACHI: Mayor Murtaza Wahab on Wednesday informed the Sindh High Court that the Karachi Metropolitan Corporation was ready to review an agreement with the K-Electric about collection of the controversial Municipal Utility Charges and Taxes (MUCT) through electricity bills.

He also submitted that a special committee of council members would be constituted to deliberate on the subject issue and the same would be place before the City Council for approval.

The mayor in his statement placed before the SHC further stated that some relief would be given to citizens receiving power bill of Rs10,000 or less per month.

In 2022, the then Karachi chief of Jamaat-i-Islami Hafiz Naeemur Rehman and others had filed separate petitions against the provincial government’s move to outsource the MUCT collection to the KE.

On Wednesday, a two-judge bench of the SHC headed by Justice Salahuddin Panhwar reserved its verdict on all identical petitions after hearing arguments from the parties concerned and taking the proposals of the mayor and other documents on record.

The lawyers for petitioners Usman Farooq, Tariq Mansoor and others argued that the KMC was not benefiting from the impugned agreement, but the same was in the favour of the power utility since the KMC had acknowledged a total of Rs1.562 billion on account of outstanding electricity dues and the same would be deducted by the KE along with service charges as well as current power dues of KMC.

They also contended that in case of any dispute or default, the KMC would be powerless under the impugned agreement to act against any person whereas the KE would exercise such authority against the citizens/consumers.

A provincial law officer asserted that the impugned agreement had not violated any provision of the Sindh Local Government Act while nominal amount of Rs50 to Rs200 was to be charged in respect of MUCT from consumers.

The bench questioned the authority of the administrator of KMC about approval of such agreement and said that the city council must be made strong enough to take major decisions.

The judges also said that as to why the commercial and residential consumers/citizens were being treated in a similar manner as commercial ones may be charged as per their earnings.

When the bench asked the lawyer for the KE whether the power utility was giving assurance not to cut power immediately over non-payment of the MUCT. The counsel replied that they could not give any guarantee since the KE was bound to follow the instructions issued by the regulatory body National Electric Power Regulatory Authority.

During the proceedings, mayor Murtaza Wahab informed the bench that the matter would be placed before the city council for approval.

A written statement was also submitted on the behalf of mayor of Karachi which said that the KMC would review the agreement with the KE to ensure that service charges were directly deductible by the power utility and no other deduction must be made directly.

“Moreover, the mayor will constitute a special committee of council members to deliberate on the issue and the same will be presented in the counsel for approval. Further, deliberations will also be made to maximise the tax collection for Karachi, however, some relief/exemption will be given to citizens receiving K-Electric bill of PKR 10,000 or less per month”, it concluded.

Earlier, a copy of the impugned agreement was placed before the SHC by the KMC which reflected that the power utility was authorised to deduct a major chunk of the tax collection in the heads of its service fee, current month of KMC electricity bills and dues already outstanding against the corporation.

In Sept 2022, the SHC through an interim order had restrained the power utility from collecting MUCT through electricity bills.

Senior lawyer Munir A. Malik, who had been appointed an amicus curiae, had also informed the SHC last year that the government was required to follow the contract rules and could not nominate the KE to collect MUCT for the KMC through the electricity bills.

Published in Dawn, May 30th, 2024