ISLAMABAD: Jamaat-i-Islami (JI) emir Hafiz Naeemur Rehman on Monday approached the Federal Constitutional Court (FCC) against the petroleum levy, arguing that the government had effectively granted itself unrestricted power to tax citizens through executive notifications without parliamentary oversight.
The government had announced a petroleum and carbon levy on June 14, 2025, under an iron-clad commitment with the International Monetary Fund (IMF). Last month, the government had cut the levy by Rs80 amid the global oil crisis triggered by the Middle East crisis.
However, following the IMF’s condition of restoring an average Rs80 per litre petroleum levy on petrol and high-speed diesel last week, the government passed on a slight reduction in global oil prices to domestic consumers. The petroleum levy on petrol currently stands at Rs117.41 per litre, while the levy on HSD is Rs42.60 per litre.
In a petition moved through senior counsel Imran Shafeeq, Rehman sought a declaration from the FCC that the present petroleum levy regime operating under the Petroleum Products (Petroleum Levy and Climate Support Levy) Ordinance, 1961 — by way of impugned amendments introduced through section 3 of the Finance Act, 2025 — was ultra vires, unconstitutional and violative of Articles 4 (right of individuals to be dealt with in accordance with law, etc), 9 (security of person), 14 (inviolability of dignity of man, etc), 18 (freedom of trade, business or profession), 25 (equality of citizens), 77 (tax to be levied by law only), 90 (the federal government), and 160 (National Finance Commission) of the Constitution.
The petition also sought the suspension, restraining, or appropriate limitation of the further enhancement of the petroleum levy and climate support levy through executive notification mechanisms, unless and until constitutionally compliant legislative safeguards and statutory limits were enacted by Parliament.
The petition was filed against the backdrop of JI’s recent nationwide protest against heavy petroleum levies, rising inflation, and excessive electricity costs.
In the petition, the JI emir requested the FCC to order — if deemed appropriate — the constitution of an independent expert-assisted mechanism or commission to examine the constitutional, fiscal, economic, and federal implications of the present petroleum levy structure. The same would also recommend a constitutionally compliant statutory framework that remains consistent with parliamentary supremacy and fiscal accountability.
The petition highlighted that while general sales tax on petroleum products entered the divisible pool shared with provinces under Article 160, the petroleum levy remained exclusively with the federal government. This constituted “colourable legislation” — using the label ‘levy’ to bypass constitutional fiscal distribution mechanisms.
Moreover, the flat per-litre levy fell uniformly on all consumers regardless of income, the petition said, adding that this produced a “radically unequal” burden.
For the affluent, it constituted a manageable increase in expenditure. However, it directly affected subsistence, mobility, food access, and economic survival to the working class, transport-dependent labourers, lower-income households, and small traders, it said.
The petition argued that the omission of the Fifth Schedule through section 3(5) of the Finance Act, 2025, was ultra vires, violative of the principle of separation of powers, and a breach of the fundamental rights of citizens, and therefore should be struck down.
The plea also requested the FCC to declare that the petroleum levy, given its present structure and operation, possessed the constitutional character of taxation — as opposed to a levy — and therefore was subject to the constitutional limitations, safeguards, and principles governing taxation under the Constitution.
The petition pleaded that the present framework, which permitted the continuing executive alteration of major public fiscal burdens through notifications and Statutory Regulatory Orders (SROs) without meaningful parliamentary supervision, was inconsistent with the constitutional principles of “parliamentary financial control, democratic accountability, and collective governance affirmed by the courts”.
It further stated that under the impugned amendment, “insofar as it operated without identifiable statutory accountability mechanisms, earmarking requirements, climate-governance safeguards, or enforceable environmental obligations governing the utilisation of collected proceeds”, the Climate Support Levy was constitutionally infirm and liable to appropriate judicial limitation.
The petition pleaded before the FCC to read down section 3 of the Petroleum Products (Petroleum Levy and Climate Support Levy) Ordinance, so as to require “constitutionally enforceable legislative limits, intelligible standards, parliamentary supervision, and structured safeguards governing the executive exercise of levy-related powers”.
The plea also asked the court to order the federal government and relevant authorities to place before it complete records of the collection, allocation, transfer, accounting, utilisation, and end-use of amounts realised under both levies as well as related petroleum and energy-sector recoveries.
The report should also include whether these recoveries were utilised for the “statutory, regulatory, environmental, developmental, or publicly asserted purposes underlying the impugned levy structure”, in order to enable effective constitutional and judicial scrutiny regarding the “true nature, purpose, proportionality, accountability, and legal character of the impugned exactions”, the petition said.
It also sought a direction to place before Parliament an appropriate statutory framework prescribing clear ceilings for a maximum levy, transparent pricing methodology, mechanisms for accountability, and periodic parliamentary oversight governing the determinations for both levies.
The petition pleaded that the FCC order the petroleum levy regime subject to constitutional limitation and scrutiny, as it facilitated the concentration of “substantial” petroleum-derived revenues outside the ordinary constitutional structure of federalism and distributive accountability under Article 160.
“Retrospective validation provisions contained in section 9 of the Ordinance cannot constitutionally foreclose judicial review or remedial scrutiny relating to public exactions alleged to violate constitutional limitations governing taxation and delegated fiscal authority,” the petition argued.
Rehman has repeatedly criticised the government for its major hikes in petroleum prices — following the closure of the Hormuz Strait — and termed them a burden on the common citizen.
Earlier this month, the party’s Khyber Pakhtunkhwa branch staged protest demonstrations in different parts of the province against the continuous increase in petroleum products, electricity prices, prolonged power outages and closure of CNG stations.
