D.G. KHAN CEMENT COMPANY LTD. VS PROVINCE OF PUNJAB through Chief Secretary, 2014 PTD-LAHORE-HIGH-COURT-LAHORE 478 (2013)

Excise Duty on Minerals (Labour Welfare) Act (VIII of 1967)---

----Ss.3 & 10---Notifications S.R.O. 1168(X)/68, dated 10-7-1968, issuedbyFederal Government and SO(T) M&MD8-21/2011,dated 30-4-2013, issued by Punjab Government---Constitution of Pakistan, Arts. 143 & 199---Constitutional petition---Delegation of power---"Cess" and "tax"---Distinction---Petitioner assailed Notification SO(T) M&MD 8-21/2011, dated 30-4-2013, issued by Punjab Government, whereby an amendment was made in Schedule available in Excise Duty on Minerals (Labour Welfare) Act, 1967---Plea raised by petitioner was that central excise duty in the form of cess or tax rested within the exclusive domain of Federal Government---Validity---Cess was a tax confined to local area for specific object or particular purpose---Imposition of cess was co-related to the object for which it was to be used---Tax was compulsory exaction of money by public authority for public purposes enforceable by law---Tax realized, formed part of general revenue of the State, whereas cess imposed for specific object and purpose was not part of general revenue---Cess must be utilized for attainment of the purpose and object of imposition---Object of levy in question was welfare of labour employed in mining industry and the declared object fell within the purview of larger pubic interest---Petitioner failed to establish that notification in question did not advance public interest i.e. welfare of labour employed in mining industry or caused any harm to petitioner's fundamental right of freedom of trade or business---Both the notifications were neither ulra Constitutional nor illegal---Petition was dismissed in circumstances.

Shaheryar Kasuri for Petitioners.

Imtiaz Ahmed Kaifi, Additional Advocate General for Respondents.

Date of hearing: 19th November, 2013.

JUDGMENT

ABDUS SATTAR ASGHAR, J.---Petitioner company engaged in manufacturing and supply of cement has invoked the constitutional jurisdiction of this Court under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 to challenge the legality of the amendment in the Schedule and imposition and recovery of Excise Duty under the Excise Duty on Minerals (Labour Welfare) Act 1967 (to be called hereinafter the Act of 1967) through Notifications bearing No.SO(T)M and MD8-21/2011 dated 30-4-2013 (to be called hereinafter the impugned Notifications) issued by respondent No.2.

2.It is argued by learned counsel for the petitioner that impugned Notifications and recovery of Excise Duty without framing of Rules under the Act of 1967 is against law and facts; that as per constitutional scheme, Central Excise Duty in the form of cess or tax rests within the exclusive legislative domain of the Federation notwithstanding the Eighteenth Amendment and it continues to survive in terms of Article 70 read with Articles 141, 142, 268 and 279 of the Constitution of Islamic Republic of Pakistan, 1973; that the Fund created under the Act of 1967 continue to vest with Federation and the Provinces have no jurisdiction in relation thereto; that the matter does not fall within the purview of Article 270AA of the Constitution to form part of devolution as conceived by the Provinces; that the impugned Notifications are against freedom of trade and business, confiscatory, without due process of law, illegal, void ab-intio and liable to set aside.

3.Respondents have resisted the petition by filing para wise comments. Learned Law Officer on behalf of the respondents contends that petitioner has deliberately concealed and misrepresented the true facts; that Central Government vide S.R.O. (K)/68 dated 10th July 1968 entrusted the functions of the Central Government under the Act of 1967 to the Provinces and thereafter the Province of Punjab framed Rules namely Excise Duty on Minerals (Labour Welfare) (Punjab) Rules, 1971 under the Act of 1967; that petitioner and other mining firms in the Punjab are depositing Excise Duty under the Act of 1967 without any objection therefore impugned Notifications issued under section 10 and subsection (1) of section 3 of the Act of 1967 read with Notification S.R.O. (K)/68 dated 10th July 1968 are in accordance with law and do not offend any fundamental right of the petitioner or any other provision of Constitution of Islamic Republic of Pakistan, 1973.

4.Arguments heard. Record perused.

5.It may be expedient for ready reference to reproduce the provisions of sections 3, 10 and 11 of the Act of 1967 which reads below:--

"Section 3.---Imposition and collection of duty.--

(1)There shall be levied and collected as a cess for the purposes of this Act a duty of excise on all minerals specified in the Schedule dispatched from the mines, at such rate not less than one rupee and not more than five rupees per ton as may be fixed by the Federal Government by notification in the official Gazette:

Provided that the Federal Government may, by notification in the official Gazette, exempt from liability to the duty and of such minerals or any class thereof.

(2)The duty levied under subsection (1) shall, subject to and in accordance with rules made in this behalf under this Act, be collected by such agencies (hereinafter referred to as the collecting agencies) and in such manner as may be prescribed.

Section 10:- Power to amend Schedule.--

The Federal Government may, by notification in the official Gazette, make such amendments and modifications in the Schedule as it thinks fit.

Section 11:- Power to make rules.--

(1)The Federal Government may, by notification in the official Gazette, and subject to the condition of previous publication, make rules to carry into effect the purposes of this Act."

6.Record reveals that the Central Government in exercise of powers under Article 143 of the Constitution of the Republic of Pakistan, 1962 vide Notification S.R.O. (K)/68 dated 10th July 1968 entrusted its functions under the Act of 1967 to the Provincial Governments. It may be advantageous to reproduce the provisions of Article 143 of the Constitution of the Republic of Pakistan, 1962 and said Notification which read below:-

"Article 143:---Delegation of powers to Provinces:--

(1)Notwithstanding anything in this Constitution, the President may, with the consent of a Provincial Government, entrust either conditionally or unconditionally to that Government, or to any officer or authority of that Government, functions in relation to any matter to which the executive authority of the Republic extends.

(2)An Act of the Central Legislature may, notwithstanding that it relates to a matter with respect to which a Provincial Legislature has no power to make laws, confer powers and impose duties, or authorize the conferment of powers and the imposition of duties, upon a Provincial Government or officers or authorities of a Provincial Government.

(3)Where, by virtue of this Article, functions have been entrusted to, or powers and duties have been conferred or imposed upon, a Provincial Government or officers or authorities of a Provincial Government, there shall be paid by the Central Government to the Provincial Government such sums as may be agreed (or if there is no agreement, as may be determined by Act of the Central Legislature) in respect of any extra costs incurred by the Provincial Government in connection with the performance of those functions, the exercise of those powers or the discharge of those duties."

MINISTRY OF HEALTH, LABOUR AND SOCIAL

WELFARE

(Labour and Social Welfare Division)

Islamabad, the 10th July 1968

S.R.O. 1168(X)/68:

In exercise of the powers conferred by clause (1) of Article 143 of the Constitution, the President is pleased to entrust to the Provincial Governments, with their consent, the functions of the Central Government under the Excise Duty on Minerals (Labour Welfare) Act, 1967 (VIII of 1967)

[No.LR./(41)/67]

M.A. Burney,

Section Office."

7.It is evident on the record that in view of the afore quoted provisions of the Act, 1967 as well as Notification dated 10-7-1968 issued by Central Government the Province of West Pakistan framed the Rules namely Excise Duty on Minerals (Labour Welfare)(West Pakistan) Rules, 1969 later on amended as Excise Duty on Minerals (Labour Welfare) (Punjab) Rules, 1971 which are still holding the field therefore argument of learned counsel for the petitioner that Government of the Punjab (respondent No.1) was not competent or authorized to issue the impugned Notifications regarding amendment in the Schedule and imposition of Excise Duty in absence of any Rules is misconceived, devoid of any force and thus repelled.

8.At this juncture it may be expedient to reproduce the impugned Notifications dated 30th April 2013 which read below:--

"GOVERNMENT OF THE PUNJAB

MINES AND MINERALS DEPARTMENT

Dated Lahore, 30th April, 2013

NOTIFICATION

No.SO(T)M&MD8-21/2011.---In exercise of the powers conferred under Section 10 of the Excise Duty on Minerals (Labour Welfare) Act, 1967 (VIII of 1967), read with Government of Pakistan, Ministry of Health, Labour and Social Welfare (Labour and Social Welfare Division), Islamabad's Notification No.S.R.O. 1168(K)/68 dated 10th July, 1968, Governor of the Punjab is pleased to direct that in the Schedule of the said Act (VIII of 1967), the following amendment shall be made:

AMENDMENT

In the said Act, in the Schedule, after Sr.No.66 "Red ochre", the following new entries shall be inserted:

"67.Argillaceous Clay

68.Tar Sand

69.Tuff"

SECRETARY

MINES AND MINERALS DEPARTMENT."

--------

"GOVERNMENT OF THE PUNJAB

MINES AND MINERALS DEPARTMENT

Dated Lahore, 30th April, 2013

NOTIFICATION

No.SO(T)M&MD8-21/2011.---In exercise of the powers conferred under subsection (1) of section 3 of the Excise Duty on Minerals (Labour Welfare) Act, 1967 (VIII of 1967), read with Government of Pakistan, Ministry of Health, Labour and Social Welfare (Labour and Social Welfare Division), Islamabad's Notification No.S.R.O.1168(K)/68 dated 10th July, 1968, Governor of the Punjab is pleased to fix the excise duty, on the minerals specified in the Schedule to the aforesaid Act at the rate of five rupees per ton.

SECRETARY

MINES AND MINERALS DEPARTMENT."

9.The Preamble of the Act of 1967 clearly manifests that object of said legislation was to impose a duty of excise on certain minerals for financing measures for promoting the welfare of labour employed in the mining industry and to provide for the administration and utilization of the proceeds of such duty and or matters ancillary thereto. The schedule in terms of sections 3 and 10 attached to the Act 1967 specify the minerals on which duty of excise could be levied and collected as cess for the purpose of said Act. The Government of the Punjab therefore while exercising the powers under sections 10 and 3(1) of the Act of 1967 read with Notification dated 10-7-1968 has amended the schedule to insert new Minerals and has fixed the Excise Duty on the minerals specified in the Schedule at the rate of Rs.5 per ton through the impugned Notifications.

10.Learned counsel for the petitioner argues that impugned Notifications are confiscatory or offensive to his right of trade or business. Article 18 of the Constitution of Islamic Republic of Pakistan, 1973 guarantees the freedom of trade, business and profession. It reads as below:-

"18. Freedom of trade, business or profession.---Subject to suchqualifications,ifany,asmaybeprescribedbylaw,every citizen shall have the right to enter upon any lawful profession or occupation, and to conduct any lawful trade or business:

Provided that nothing in this Articles shall prevent-

(a)the regulation of any trade or profession by a licensing system; or

(b)the regulation of trade, commerce or industry in the interest of free competition therein; or

(c)the carrying on, by the Federal Government or a Provincial, or by a corporation controlled by any such Government, or any trade, business, industry or service, to the exclusion, complete or partial, of other persons."

The expression "subject to such qualifications, if any, as maybe prescribed by law" used in this Article is of great significance. Inthis expression term "law" means the law that caters to larger public interest.

11.Needless to say that concept of larger public interest is of vital importance in an organized democratic society. Section 3 of the Act, 1967 contemplates that duty of excise is to be levied and collected as cess for the purposes of this Act on all minerals specified in the Schedule. The purpose of the Act is clearly manifested in the Preamble of the Act i.e. to impose a duty of excise on certain minerals for financing and promoting the welfare of labour employed in the mining industry. Ordinarily a cess is a tax confined to local area for specific object or particular purpose. The imposition of cess is co-related to the object for which it is to be used. In contrast tax is compulsory exaction of money by public authority for public purposes enforceable by law. The tax realized form part of general revenue of the State whereas cess imposed for specific object and purpose, is not part of the general revenue, but must be utilized for the attainment of the purpose and object of the imposition. The object of the impugned levy is welfare of labour employed in the mining industry. The declared object falls within the purview of larger public interest. There is nothing on the record on behalf of the petitioner to show that the impugned Notifications do not advance the public interest i.e. welfare of labour employed in the mining industry or cause any harm to the petitioner's fundamental right of freedom of trade or business. Both the impugned notifications are neither ultra constitutional nor illegal. Petitioner has no case to invoke the constitutional jurisdiction of this Court.

12.For the above reasons this writ petition having no merit is dismissed.

MH/D-1/LPetition dismissed.