The Islamabad High Court (IHC) has upheld the Pakistan Telecommunication Authority’s (PTA) directive ordering Zong, a leading digital and telecom service provider, to refund Rs. 2.028 billion to its customers. The refund pertains to charges collected under the guise of service, maintenance, and operational fees from April 26, 2019, to July 12, 2019.
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Justice Mian Gul Hassan Aurangzeb dismissed Zong’s appeal, deeming it not maintainable. The court observed that cellular operators, including Zong, had been unlawfully deducting Rs. 10 from customers on each Rs. 100 prepaid card recharge for administrative service charges. The judgment referenced a Supreme Court ruling stating such charges were neither valid nor legal.
Refund Details: The PTA has instructed Zong to:
- Provide a detailed breakdown of service/maintenance charges collected since April 24, 2019.
- Refund the Rs. 2.028 billion to affected customers as prepaid balance without any validity restrictions.
Broader Concerns in the Telecom Sector: This ruling comes amid rising concerns from Pakistan’s Telecom Operators Association (PTOA) about the heavy taxation burden on the sector. In a letter to Salim Mandviwala, Chairman of the Standing Committee on Finance, telecom operators warned that excessive taxes could deter foreign investment and force key players to exit the market.
The letter stated that:
- The telecom sector contributed PKR 340 billion in tax revenue last year.
- To date, USD 15 billion has been directly invested in Pakistan’s telecom industry.
- Two major telecom operators are reportedly considering leaving the Pakistani market due to unresolved tax issues.
The PTOA emphasized that unless tax policies are revised, the telecom sector’s sustainability and its ability to attract foreign investment could be jeopardized.
Implications: The IHC’s decision reinforces regulatory oversight in protecting consumers against unfair practices while highlighting the need for a balanced tax regime to ensure the telecom sector’s growth and stability.
