2023 C L C 1965
[Balochistan]
Before Muhammad Hashim Khan Kakar and Shoukat Ali Rakhshani, JJ
Messrs SALAM INTERNATIONAL and others ----Petitioners
Versus
SECRETARY MINISTRY OF LAW AND PARLIAMENTARY AFFAIRS,
GOVERNMENT OF BALOCHISTAN, CIVIL SECRETARIAT, QUETTA and others --
--Respondents
Constitution Petitions Nos.847, 890, 984, 986, 1058, 1064, 1707, 1717, 1792 of 2021, 31, 213, 905, 1812 of 2022, 793 and 794 of 2023, decided on 21st June, 2023.
Balochistan Development and Maintenance of Infrastructure Cess Act (IX of 2021) ---
----Ss.3, 8, 9, 15, 16 & 18---Constitution of Pakistan, Art.142(b) ---Constitutional petition---
Cess, imposing of ---Vires ---Petitioners were aggrieved of Balochistan Development and
Maintenance of Infrastructure Cess Act, 2021 and had sought its annulment ---Plea raised by
petitioners was that Provincial Legislature had transgressed Legislative dominion of Majlis -
e-Shoora (Parliament) by enacting law for levy and Cess which squared within Federal
Legislative List and no Provincial Assembly could do legislation except making laws in
respect of criminal law, criminal procedure and law of evidence so enshrined under Art.142(b) of the Constitution--- Petitioners also contended that structure and mechanism
provided for collection of Cess was an additional customs duty on import of goods which squared out the power and mandate of Provincial Assembly to legislate ---Respondent
authorities contended that levy of Cess related to fee charged for the purpose of providing different services to importers and exporters by establishing infrastructure, therefore, Provincial Assembly had mandate to do legislation with regard to levy and collection of Cess for maintenance and development of infrastructure in order to provide facility to people of the Province ---High Court found the contention of authorities worth consideration---High
Court directed the authorities to levy and collect 50 % of the Cess in view of the services provided by Government of Balochistan so envisaged under Balochistan Development and Maintenance of Infrastructure Cess Act, 2021, subject to final decision of the Supreme Court in petitions wherein provisions/law similar to the Balochistan Development and Maintenance of Infrastructure Cess Act, 2021 was challenged ---Constitutional petition was disposed of
accordingly.
W.P. No.2293- P of 2016; C.P. No.2498 of 2019 and Messrs United Ghee Industries
(Pvt.) Ltd. v. The Province of Khyber Pakhtunkhwa and others W.P. No.4029- P of 2019 rel.
C.P. No.4288 of 2021 fol.
Ms. Sofia Saeed Shah for Petitioner (in Constitution Petition No.847 of 2021).
Shaihaq Baloch, Additional Advocate General and Muhammad Rashid, Assistant
Advocate General for Official Respondents (in Constitution Petition No.847 of 2021).
Jam Saka Dashti for BRA (in Constitution Petition No.847 of 2021).
Ms. Sofia Saeed Shah for Petitioner (in Constitution Petition No.984 of 2021).
Shaihaq Baloch, Additional Advocate General and Muhammad Rashid, Assistant
Advocate General for Official Respondents (in Constitution Petition No.984 of 2021).
Jam Saka Dashti for BRA (in Constitution Petition No.984 of 2021).
Ms. Sofia Saeed Shah for Petitioner (in Constitution Petition No.1707 of 2021).
Shaihaq Baloch, Additional Advocate General and Muhammad Rashid, Assistant
Advocate General for Official Respondents (in Constitution Petition No.1707 of 2021).
Jam Saka Dashti for BRA (in Constitution Petition No.1707 of 2021).
Ms. Sofia Saeed Shah for Petitioner (in Constitution Petition No.1792 of 2021).
Shaihaq Baloch, Additional Advocate General and Muhammad Rashid, Assistant
Advocate General for Official Respondents (in Constitution Petition No.1792 of 2021).
Jam Saka Dashti for BRA (in Constitution Petition No.1792 of 2021).
Ms. Sofia Saeed Shah for Petitioner (in Constitution Petition No.31 of 2022).
Shaihaq Baloch, Additional Advocate General and Muhammad Rashid, Assistant
Advocate General for Official Respondents (in Constitution Petition No.31 of 2022).
Jam Saka Dashti for BRA (in Constitution Petition No.31 of 2022).
Ms. Sofia Saeed Shah for Petitioner (in Constitution Petition No.213 of 2022).
Shaihaq Baloch, Additional Advocate General and Muhammad Rashid, Assistant
Advocate General for Official Respondents (in Constitution Petition No.213 of 2022).
Jam Saka Dashti for BRA (in Constitution Petition No.213 of 2022).
Ms. Sofia Saeed Shah for Petitioner (in Constitution Petition No.905 of 2022).
Shaihaq Baloch, Additional Advocate General and Muhammad Rashid, Assistant
Advocate General for Official Respondents (in Constitution Petition No.905 of 2022).
Jam Saka Dashti for BRA (in Constitution Petition No.905 of 2022).
Syed Tanveer for Petitioner (in Constitution Petition No.890 of 2021).
Shaihaq Baloch, Additional Advocate General for Official Respondents (in
Constitution Petition No.890 of 2021).
Jam Saka Dashti for BRA (in Constitution Petition No.890 of 2021).
Barrister Zahoor Hassan Jamote for Official Respondents (in Constitution Petition
No.1812 of 2022).
Shaihaq Baloch, Additional Advocate General for Official Respondents (in
Constitution Petition No. 1812 of 2022).
Jam Saka Dashti for BRA (in Constitution Petition No. 1812 of 2022).
Mujeeb Ahmed Hashmi for Petitioner (in Constitution Petition No.986 of 2021).
Shaihaq Baloch, Additional Advocate General for Official Respondents (in
Constitution Petition No. 986 of 2021).
Jam Saka Dashti for BRA (in Constitution Petition No. 986 of 2021).
Mujeeb Ahmed Hashmi for Petitioner (in Constitution Petition No.1058 of 2021).
Shaihaq Baloch, Additional Advocate General for Official Respondents (in
Constitution Petition No. 1058 of 2021).
Jam Saka Dashti for BRA (in Constitution Petition No. 1058 of 2021).
Mujeeb Ahmed Hashmi for Petitioner (in Constitution Petition No.1064 of 2021).
Shaihaq Baloch, Additional Advocate General for Official Respondents (in
Constitution Petition No. 1064 of 2021).
Jam Saka Dashti for BRA (in Constitution Petition No. 1064 of 2021).
Mujeeb Ahmed Hashmi for Petitioner (in Constitution Petition No.1717 of 2021).
Shaihaq Baloch, Additional Advocate General for Official Respondents (in
Constitution Petition No. 1717 of 2021).
Jam Saka Dashti for BRA (in Constitution Petition No. 1717 of 2021).
Asad Ayaz for Petitioner (in Constitution Petition No. 793 of 2023).
Asad Ayaz for Petitioner (in Constitution Petition No. 794 of 2023).
Date of hearing: 12th June, 2023.
JUDGMENT
SHAUKAT ALI RAKHSHANI, J. ----The petitioners have brought the captioned
petitions under Article 199 of the Constitution ("Constitution"), seeking annulment of the
Balochistan Development and Maintenance of Infrastructure Cess Act, 2021 ("BDMIC Act of 2021") for being void ab- initio and unconstitutional with restraining order against the
respondents jointly and severally from collecting any amount under section 3 of the BDMIC Act of 2021 and Rules frames thereunder.
As the captioned constitutional petitions are knitted with the similar thread of lis,
involving identical questions of law and facts, therefore, the same are being decided through this common judgment.
2. The petitioners in C.Ps. Nos.847, 890, 1707, 1058, 984, 1792, 986, 1064 and 1717 of
2021 and C.Ps. Nos.31, 213, 905 and 1812 of 2022 are members of ship breakers Association, engaged in the business of import of vessels, who statedly have been regularly paying the taxes under the Income Tax Ordinance, 2001, and the Sales Tax Act 1990, and they have never made any default, whereas petitioners in C.Ps. Nos.793 and 794 of 2023 are Private Limited Company, manufacturing unit of spinning, weaving, and finishing textile/preparation of textile fibers, who are regularly importing their raw material across the country through ports of Karachi and land routes and are paying duty and taxes accordingly.
According to the petitioners, previously the Balochistan Infrastructure Development
Cess Act, 2019 ("Act of 2019") was promulgated on 18.02.2019, the vires whereof were challenged before this Court and after hearing, this Court vide judgment dated 31.12.2020 allowed the petitions and consequently declared the law ibid void and ultra vires to the Constitution with the direction to the Government to make proper legislation, which judgment attained finality as it was not challenged before the Hon'ble Supreme Court of Pakistan. Thereafter, a new enactment BDMIC Act of 2021 impugned herein was introduced, which carries almost similar provisions, causing prejudice to the petitioners as was caused by the Act of 2019, hence these petitions.
3. Learned counsel for the petitioners inter alia contended that the legislation of BDMIC
Act of 2021 squares within the Federal Legislative List which is entirely beyond the legislative competence of Provincial Assembly of Balochistan and that while enacting the law ibid particularly section of 3 of the BDMIC Act of 2021, the Province has encroached upon and purported to have exercised powers that are vested exclusively within the dominion of Federation of Pakistan and thus Majlis -e-Shoora (Parliament) can do legislation alone.
Learned counsel for the petitioners, while arguing the matter referred to the various provisions of the BDMIC Act of 2021, particularly sections 3, 8, 9, 15, 16 and 18 and compared the same with the earlier provisions of the Act of 2019 and urged that nothing in particular has been changed and altered, as such, the provisions of the impugned BDMIC Act
of 2021 are ultra vires to the Constitution which requires to be strike down. Added further
that the promulgation of BDMIC Act of 2021 is an another attempt of illegal tax collection, which in pith and substance is duty of customs and, as such is beyond the competence of Provincial Legislature. Learned counsel for the petitioners while augmenting their contentions stated that almost on similar points, the Sindh High Court and Peshawar High
Courts have rendered their judgments which were partly allowed, but the same were assailed
before the apex Court which were entertained and leave was granted with an interim relief of
directing the officials concerned to charge 50 % of the levy of Cess only whereas, in the case of Sindh High Court, the impugned tax collection was suspended at all.
Mr. Muhammad Rashid, Assistant Attorney General, Mr. Shaihaq Additional
Advocate General and Mr. Jam Saka Dashti Advocate for Balochistan Revenue Authority ("BRA"), while controverting the arguments advanced by learned counsel for the petitioners submitted that the BDMIC Act of 2021 is within the competence of Provisional mandate, which has been promulgated within the canvas of the Constitution, which is not in derogation and violation of the judgment passed by this Court on 31.12.2020. It was strenuously argued that provisions of the sections 3, 8, 9, 15, 16 & 18 of the BDMIC Act of 2021 are regarding Cess, collected for maintenance and development of infrastructure of the Province of the
Balochistan, whereas the custom duty is a Federal levy which neither overrides the latter nor
is in addition to, but an independent Cess for the benefit of the people of the Balochistan, which exclusively falls within the powers and mandate of the Provincial Legislation, thus, the petitions being bereft of merits require to be dismissed.
4. Heard. Record pondered upon with the able assistance of learned counsel for the
adversarial parties. The backdrop of the lis in hand is that the Provincial Assembly
previously promulgated the Act of 2019, the vires whereof were assailed before this Court in CP No.580/2019 and numerous connected petitions, which were parted with through a consolidated judgment dated 31.12.2020, whereby the Act of 2019 was held ultra vires to the Constitution and thus declared void with the observation that the Government may make proper legislation. The relevant excerpt whereof is reproduced as under;
"6. Besides, the Act is identical with the Sindh Finance Act 1994, as amended through the Sindh Finance Act of 1996. The vires of the Act was challenged before the Hon'ble Sindh High Court, which declared the same to be unconstitutional, ultra vires, unlawful, void ab initio, having no legal effect, hence was struck down. The judgment was passed in the case of M/s. HA Raheem and Sons (Pvt.) Ltd v. Province of Sindh and others, reported in (2003 CLC 649). Relevant portion whereof is reproduced hereinbelow:
"In the present case, as already pointed out that there is no nexus on correlation between the fee (i.e. infrastructure fee on services rendered) and its rate or yardstick (i.e. customs duty and valuation of goods). In this manner no levy can be imposed or collected."
In view of what has been held by the Superior Courts in the above referred judgments, though the Provincial Assemblies have to authority to levy cess on special services through an enactment, but the Act of 2019 does not fulfills the criteria necessary for the purpose of levy of cess, which is ultra vires the Constitution, hence is void. The
judgments relied upon by the learned AG and the learned counsel for the respondents,
do not support their contention.
Thus, in view of above, the petitions are allowed. However, the Government may make proper legislation"
5. The Provincial Assembly in view of the judgment dated 31.12.2020 legislated the
impugned BDMIC Act of 2021, whereof section 3 of the BDMIC Act of 2021 has mainly been banked upon to be ultra vires to the Constitution. For ease of reference section 3 of the BDMIC Act of 2021 is facsimile hereunder;
"Levy of cess 3. There shall be levied and collected a cess for maintenance and
development of infrastructure, provided by the Government as service, on goods at the rate determined on the basis of their value, net weight and distance in accordance with the Schedule, for carriage by road and smooth and safer movement in the Province upon entering or before leaving the Province from or for outside the country, through rail or road or air or sea: Provided that cess on gold shall be charged at the rate of 0.125% of the value of gold."
6. Bare reading of the preamble and section 3 of the BDMIC Act of 2021 clearly
manifest that there shall be levy and collection of Cess for maintenance and development of infrastructure provided by the Government as service for carriage by road and smooth and safer movement in the Province upon entering or before leaving the Province from or for outside the country via rail, road, air or sea as per rate incorporated in schedule of the BDMIC Act of 2021.
7. The petitioners have questioned the vires of the provisions of section 3 in particular
and sections 8, 9, 15, 16 and 18 of BDMIC Act of 2021 in general on the strength that the Provincial Legislature has transgressed the legislative dominion of the Majlis -e-Shoora
(Parliament) by enacting the BDMIC Act of 2021 for Levy and collection of Cess, which squares within the Federal Legislative List and no Provincial Assembly can do legislation except making laws in respect of criminal law, criminal procedure and law of evidence so enshrined under Article 142(b) of the Constitution. It is also claimed by the petitioners that the structure and mechanism provided for collection of Cess appears to be an additional custom duty on import of goods which squares out the power and mandate of Provincial Assembly to legislate. The plea of the respondents that levy of Cess relates to a fee charged for the purpose of providing different services to the importer and exporters by establishing infrastructure, therefore, the Provincial Assembly has the mandate to do legislation with regard to levy and collection of Cess for maintenance and development of infrastructure in order to provide facility to the people of the Province, is worth consideration, having immense force.
8. Needless to add here that the Khyber Pakhtunkhwa Finance Act, 2013 and Rules of
Khyber Pakhtunkhwa for collection of Cess for Development and maintenance of Infrastructure Rules, 2014 carries almost similar provisions as the BDMIC Act of 2021, particularly relating to levy of Cess, which is obviously distinguishable from tax collection. A number of petitioners impugned the vires of the Cess being levied and collected under the
Khyber Finance Act, 2013 and Rules made thereunder through W.P. No. 2293- P/2016, which
was dismissed by the Peshawar High Court vide judgment dated 28.05.2019, maintaining the
legality of levy of Cess, which matter was taken up to the apex Court by means of Civil Petition No. 2498/2019 and connected petitions, wherein leave to appeal was granted with the following interim relief:
4. As the law is presently framed, it appears, prima facie, that the impugned cess suffers from legal defects and, therefore, we are inclined to grant interim relief in the form that the Provincial Government Authorities shall be at liberty to collect 50% of the rate of the impugned levy as applicable on imported and exported goods for delivery/consumption in the KPK. The petitioners shall provide the appeal stage paper books to the office at an early date for hearing."
9. In a case bearing W.P No.4029- P/2019 titled as "Messrs United Ghee Industries (Pvt.)
Ltd. v. The Province of Khyber Pakhtunkhwa and others", notification dated 06.05.2020 pertaining to enhancement of the rate of the Cess up to 1 % of the value of the goods plus 2 rupees per kilometer of the road usage entering or leaving the Province from or for outside the country was challenged before the Peshawar High Court, which was disposed of vide order dated 07.03.2023 in the following terms;
"5. The learned counsel representing the petitioner as well as one of the learned AAG have stated that the matter is still pending before the Apex Court and have agreed that this petition be disposed in the terms of the interim order of this Court dated 20.09.2021 wherein, it was held that owing to pendency of the matter before the Apex Court, the petitioner would pay 50% of the enhanced cess subject to the outcome of the said petition by the Apex Court.
6. All the petitions are accordingly disposed of in the above terms."
10. In the matters relating to the Province of Sindh similar order was passed by the
Hon'ble Supreme Court of Pakistan in Civil Petition No. 4288 of 2021 and several connected petitions with the following relief, which read as under;
"4. In view of our tentative opinion that the law as presently framed prima facie suffers from Constitutional and legal defects including but not limited to competence of the provincial legislature to legislate on the subject, we are inclined to grant interim relief. It is, therefore directed that till further orders, operation of the impugned judgment of the High Court of Sindh dated 04.06.2021 and recovery of the impugned levy shall remain suspended....."
11. For the foregoing reasons and in view of interim relief granted by the apex Court in
the cases mentioned in para supra, we are also inclined to grant relief to the petitioners and as such direct the respondents to levy and collect 50 % of the Cess in view of the services
provided by the Government of Balochistan so envisaged under the BDMIC Act of 2021, subject to final decision of the Hon'ble Supreme Court of Pakistan in the petitions ibid.
The instant petitions stand disposed of in the above terms.
MH/123/Bal. Order accordingly.This judgment is reproduced from a publicly available source for informational purposes and does not constitute legal advice. If you believe this listing contains an error,
let us know.