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Petitioner: MASTER TEXTILE MILLS and 275 others VS Respondent: FEDERATION OF PAKISTAN and JUDGMENT
Court Name: Islamabad High Court Judge(s): Shaukat Aziz Siddiqui Title:MASTER TEXTILE MILLS and 275 others vs FEDERATION OF PAKISTAN and
JUDGMENT
Reported As: PLD 2014 Islamabad 83 Result: Petitions allowed Judgment JUDGMENT SHAUKAT AZIZ SIDDIQUI; J.--The duty of the court becomes more delicate, exceedingly onerous and deeply intricate, when a law passed by the legislative organ of the State is brought before it for its judicial review. Such is the case in the instant matter, when a bulk of Constitution Petitions, filed by hundreds of Industrial Units of the Country, challenging the vires of the Gas Infrastructure Development Cess Act, 2011, hereinafter referred to as the Act, came for adjudication before this court. This court allowed the Writ Petitions, by means of a single short order dated 31-1-2013, which is reproduced here in below for ready reference:- "For the reasons to be recorded later on, all above captions writ petitions are allowed through instant single order. 2. Gas Infrastructure Development Cess Act, 2011 is declared Ultra Vires to the Constitution, void, an infringement to the fundamental rights, offensive to principles of fair play, equality, transparency, social, justice, good governance and tantamount to exploitation. GIDC enactment is also besides the dictums laid down by the superior Courts of the country. It is further declared that levy and collection of GIDC is illegal.
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3. Respondents are restrained from making demand of GIDC, and the amount already received on this account has to be adjusted in the future bills of the petitioners." 2. The reasons for the above reproduced short order are as follows:- In all the writ petitions captioned above, the petitioners, who are consumers of natural gas in the industrial sector of the country, have attacked the legality of the levy and demand of Gas Infrastructure Development Cess through the impugned Legislation i.e. The Gas Infrastructure Development Cess Act, 2011. Brief facts of the case are that The Gas Infrastructure Development Cess Act, 2011 was passed by the National Assembly on 25-11-2011 as a Money Bill. It received the assent of the President on 13-12-2011 and was published in the Gazette of Pakistan, Extraordinary, Part-1 on 15-12-2011 as Act No.XXI of 2011. It is pertinent to mention here that vide letter No.F- 4(34)/CF.V/2009 dated 18-10-2011, the bill was Certified as a Revenue, Economic Affairs, Statistics and Planning and Development. After promulgation of the Act the respondent No.1 vide notification dated 30-12-2011, notified the rates of cess. As per Sr.No.3 of Column No.1, the industrial Sector was levied with a cess of Rs.13 per MMBTU, in accordance with the rates specified in the Second Schedule of the Act. It is case of the petitioners before this court that under section 7 of the Act, the Federal Government is only empowered to amend First Schedule of the Act and no power to amend Second Schedule specifying the rates of cess has been given to the Federal Government. Subsequently, vide notification dated 29-6-2012, the respondent No.1 raised the rate of cess from Rs.13/ MMBTU to Rs.100/ MMBTU for Industrial Sector. However vide another notification dated 7-9- 2012 the rate of cess was reduced from Rs.100/ MMBTU to Rs.50/ MMBTU. Apart from the vires of the Act, the petitioners have also assailed the notifications dated 13-12-2011 and 29-6-2012 on the ground that Federal Government cannot amend the Second Schedule to the Act. The learned counsel for the respondents have appraised the court that no amendment has been made by the Federal Government, rather the Second Schedule has been amended through section 19 of the Finance Act, 2012 published in the Gazette of Pakistan, Extraordinary, on 27-6-2012, therefore, the amendment was made by the legislature itself. 3. Learned Counsel appearing on behalf of the petitioners argued the case at great length about the fundamental rights at stake in the matter; the power, scope and, jurisdiction of the superior courts to review the legislative enactments; and issues pertaining to rule of law, democratic norms, good governance and equal treatment in context of the lis in hand. The crux of their arguments is given in the following passages. While referring to a number of celebrated judgments of the court of apex as well as from Indian Jurisdiction, the learned counsel maintained that whenever a policy is framed, with reference to uplifting the socio-economic conditions of the citizens, 'object should be to ensure enforcement of their fundamental rights. Relied upon 2012 SCMR 773; PLD 2010 SC 1109; PLD 2010 SC 759; PLD 2011 SC 619; PLD 1994 SC 693 Judicial review is designed to prevent the cases of abuse of power and the superior courts of the country under the constitutional jurisdiction are conferred with wide powers to reach injustice where ever it is found. In this regard reference made to PLD 2012 SC 292; PLD 2011 SC 963; PLD 2011 SC 997; 2012 SCMR 6; PLD 2011 SC 407, PLD 1967 SC 569; 2010 INDLAW DEL 928. The superior court's power of judicial review of legislative enactments is squarely, adequately and widely available on the grounds of conflict with any of the provision of the Constitution including fundamental rights. While referring to Articles 18, 15, 24 of the Constitution submitted that in fact the impugned enactment and consequent levy of cess tantamount to prohibit and prevent the business and trade in the country. Reasonable restriction does not, at all mean deprivation of citizens from fundamental rights. Impugned enactment as well as levy and demand of Gas Infrastructure Development Cess do not stand the test of due process as well as fundamental rights as envisaged under Arts.4, 9, 14 and 25.
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The respondent's acts are also against the very concepts of good governance, rule of law, which are recipe for exploitation besides being illegal, ultra vires to the constitutional commands and discriminatory as well. Fundamental rights in the Constitution are to be read and interpreted by the superior courts in expansive, dynamic and flexible manner. Articles of 'Universal Declaration of Human Rights have also been taken in consideration by the superior courts of the country while interpreting the fundamental rights as guaranteed in our own Constitution. Reliance placed on PLD 2011 SC 407; 2012 SCMR 6, PLD 2012 SC 292; PLD 1993 SC 341; PLD 2011 Lahore 120; 1999 SCMR 1379. All the gas supply companies, acting under the blessings of the government, operate in a monopolistic manner, whereas the petitioners are the commercial entrepreneurs who are acting in competitive commercial markets. The manner, the authority is being exercised; the consumers must have to suffer the loss in each and every circumstance. The impugned enactment is punitive, arbitrary expropriatory, confiscatory, vague, overboard unreasonable and violative of the fundamental rights to carry on business or to hold properties. It invites uncertainty, and a colorable piece of legislation, which not only invites discrimination between the consumers in general but also a direct and personal burden on the industrial consumers of gas. The impugned levy is not a tax as the same cannot form part of Constitution as the purpose of levy is not to cater for general expenditure, therefore, the same could not have been introduced as money bill. The impugned levy is not a tax, rather a fee, therefore, for all legal purposes it has to have a quid pro quo, which element is missing in the impugned levy. The consumer is fully discharging its liabilities regarding the provision and consumption of gas provided to him, therefore, no further levy, that too, for future procurement of any facility, can be imposed. As per entry 51 of the Forth Schedule of the Constitution, the federal legislature is only empowered to levy the tax on mineral oil, natural gas for use in generation of nuclear energy. Admittedly the natural gas used by petitioner is not for generation of nuclear energy; therefore, the Federal legislature has no authority to impose the same. Entry No. 2 of the Part-II of Fourth Schedule, inter alia, is in relation to natural gas, but the same does not permit the levy of any tax/cess in respect of same. Under Article 154 of the Constitution, only the Council of Common Interests has the power to formulate and regulate policies in relation to natural gas. 'This important bill was neither prepared or formulated, nor approved by CCI, hence the same is violative of the express provisions of the Constitution. The intended projects for the infrastructure development of which the cess is to be utilized is not within sight so far. No cost of such projects is determined and approved. Even no time lines could be determined at present for the start of these projects, therefore, the impugned enactment is a colourable legislation, which is for uncertain reasons and without any criteria. The mandate of Article 73 was not followed in letter and spirit. The bill was passed in unholy haste. The copy of the bill was not simultaneously transmitted to Senate as required under Article 73 of the Constitution, which was done after the session of the National Assembly has prorogued. If the bill be considered as Money Bill, then the same ought to have been routed through Cabinet in terms of Rule 16 read with Rule 27 of the Rules of Business, 1973, but no approval from Cabinet was obtained and the bill was directly placed before NA. The important legislation is hit by the principle of legitimate expectancy, doctrine of propriety and promissory estoppels. Even otherwise, it is consistently followed law that what is directly forbidden cannot be achieved indirectly and also that when a thing is to be done in a particular manner it must be done in that
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way and not otherwise, but the impugned enactment and subsequent notifications are violative of these golden principles of law. The learned counsel relied upon 2010 SCMR 1437, PLD 1971 SC 61, 2005 PLC 634, AIR 1975 SC 2299. In support of their arguments. learned counsel also placed reliance on 2012 SCMR 6; 2001 CLC 848; AIR 1967 MP 268; AIR 1961 SC 552; PLD 1993 SC 176; 2004 PTD 2267;PLD 2005 SC 193; PLD 1957 SC 9; PLD 2005 SC 873; PLD 2011 Lah. 120; 2009 SCMR 187; PLD 2011 SC 44; 2011 PLC (C.S) 7; 1991 CLC 13; 2002 SCMR 312; 1998 SCMR 2268; 2007 SCMR 1835; PLD 1966 SC 628; 1997 SCMR 503; 1988 SCMR 715; 1993 SCMR 1905; PLD 2011 SC 997; 2009 CLC 1343. 4. On the other hand, while vehemently refuting the arguments advanced from petitionersside, learned counsel for respondents contested the petition and took the stance of non- maintainabilityof writ petition by raising preliminary objections, which are as follows:- No Board Resolutions conferring authority upon the petitioners have been attached with the petitions. Alternate remedies were available to petitioners under the law. The impugned enactment is in field since 2011. The cess has been paid by consumers. No objections were raised. The petitioners are now estopped from impugning the same. Reliance placed on PLD 2004 Lahore 404. The questions in the petitions involve determination of facts and call for detailed factual inquiry which is beyond the scope of the constitutional jurisdiction of this Court. The notifications were issued in consequence of the amendments made by the legislature. This fact has been concealed by the petitioners. No vested right accrued in favour of the petitioners. All actions are transparent, and open to the public. Hence, there is no discrimination or exploitation, and due process of law has been followed. National Assembly has the power-to pass legislation for matters related to natural gas. Therefore, the Act and the powers granted thereunder are valid law. The country is facing a back breaking energy crisis. Immense suffering and irreparable loss is likely to occur on the national scale if urgent steps are not taken in this regard, therefore, the policy of government to import gas from other States is fully consistent with public interest and a step towards cultivation of greater ground for enjoyment of fundamental rights by the citizens; hence, the petitions are misconceived. The petitions seek interference in the policy matters, which is not permissible under the law and against the established practice of this court. The stance adopted by the petitioners is self serving, which is contrary to national and public interest, hence petitions are liable to be rejected. The petitions are hit by the principle of estoppel, hence not maintainable. That the impugned levy is a tax, which has rightly been introduced as Money bill. The bill was passed by the National Assembly, which was assented to by the President; hence it is a valid law. The bill falls within the legislative competence of the National Assembly. The amendment in the 2nd Schedule of the Act was made through Finance Act 2012, and not on the basis of any press release therefore the petitioners are guilty of non-disclosers of true facts to the court. No element of quid pro quo is attracted in the peculiar circumstances. Reliance has been placed on PLD 2011 SC 44, PLD 2011 Lah 120, AIR 1960 Madras 160, PLD 2005 Karachi 55, PLD 2009 Karachi 69, PLD 1997 SC 582, 2003 CLC 649, 1998 CLC 1912, 1998 CLC 1924, 1999 MLD 721, 1999 MLD 731, PLD 1995 SC 281, PLD 1986 Lahore 237, PLD 1986 Lahore 242, PLD 1960 Dacca 502, 1998 SCMR 2492, 1998 SCMR 2502, 2011 PTD 2643, 1999 SCMR 1402, 1999 SCMR.1418, 2010 PLC 306, PLD 2011 Lahore 120, PLD 2011 Lahore On the basis of the above mentioned arguments learned counsel for respondents prayed for the dismissal of the writ petitions.
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5. I have heard the learned counsel for the parties and through their able assistance gone through the statutory and precedent law. For better understanding of the controversy raised in these petitions, it would be quite relevant and advantageous to reproduce the impugned Act herein "No. F.22(20)/2011-Legis.--The following Act of Majlis-e Shoora (Parliament) received the assent of the President on 13th December, 2011, and is hereby published for general information:-- Act No.XXI of 2011 An Act for imposition and collection of gas infrastructure development cess WHEREAS it is expedient to provide for imposition and collection of infrastructure development cess on natural gas and for matters connected therewith; It is hereby enacted as follows:-- 1. Short title, extent and commencement.---(1) This Act may be called the Gas Infrastructure Development Cess Act, 2011. (2) It extends to the whole of Pakistan. (3) It shall come into force at once. 2. Definitions.---In this Act, unless there is anything repugnant in the subject or context,-- (a)'cessm eans the gas infrastructure development cess chargeable from gas consumer, other than the domestic sector consumers, of the company over and above the fixed sale price and payable under section 3; (b)"company" means a company specified in the First Schedule; (c)"fixed sale price" in relation to a company or a consumer and in respect of any period means the sale price as in force on such day, whether before or after the commencement of this Act, as the Federal Government may, by notification in the official Gazette, specify in this behalf; (d)"House" means the National Assembly; hydrocarbons and other gases which at sixty degrees Fahrenheit and atmospheric pressure are in the gaseous state (including gas from gas wells, gas produced with crude oil and residue gas and products resulting from the processing of gas) consisting primarily of methane, together with any other substance produced with such hydrocarbons; (f) "prescribed" mean prescribed by the rules; and (g) "rules" means rules made under this Act. 3. Levy of cess.---(1) The Company shall collect and pay cess at the rates specified in the Second Schedule and in such manner as the Federal Government may prescribe. (2) A mark up at the rate of four percent above three months KIBOR prescribed by the Federal government shall be payable on any amount due under subsection (1), if the said amount is not paid within the prescribed time. 4. Utilization of cess.---(1) The cess shall be utilized for or in connection with infrastructure development of Iran Pakistan Pipeline Project, Turkmenistan Afghanistan Pakistan India (TAPI) Pipeline Project, LNG or other projects or for price equalization of other imported alternative fuels including LPG. (2) An annual Report in respect of the utilization of the cess shall be laid before the House after three months of the end of the each fiscal year. 5. Allowance to be made for cess for purposes of income tax.---The cess paid by a company shall be an expenditure for which allowance is to be made under the Income Tax Ordinance, 2001 (XLIX of 2001) in computing the profits or gains of that company. 6. Power to make rules.---(1) The Federal Government may, by notification in the official Gazette, make rules for carrying out the purposes of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for,
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(a) the manner and time of payment of cess; (b) the manner of collection and recovery of arrears of cess; and (c) any other matter, not inconsistent with the provisions of this Government, necessary for carrying out the purposes of this Act. 7. Power to amend the First Schedule.-- The Federal Government may, by notification in the official Gazette, make such amendments in the First Schedule as it deems fit. THE FIRST SCHEDULE [see section 2(b)] 1. Sui Northern Gas Pipelines Limited; 2. Sui Southern Gas Company Limited; 3. Mari Gas Company Limited; 4. Pakistan Petroleum Limited; and 5. Tullow Pakistan Development Limited; THE SECOND SCHEDULE [see section 3(1)] S.No. Sector Cess (Rs.MMNTU) (1) (2) (3) 1. Fertilizer-Feed Stock (Except for fertilizer plants having fixed prices contracts)197 2. Compressed Natural Gas (CNG) (a) Region-1 KPK, Balochistan and Potohar Region (Rawalpindi, (Islamabad and Gujar Khan)141 (b) Region-II Sindh and Punjab (Excluding Potohar Region)79 3. Industrial 13 4. WAPDA/KESC 27 5. Independent Power Plants (IPPs) 70 6. Commercial - 7. Domestic - 8. Cement - 9. Liberty Power Plant - An amendment was made in the Second Schedule of the Act through the Finance Act, 2012 and the Second Schedule was substituted by following: "19. Amendment of Act XXI of 2011.-- In the Gas Infrastructure Development Cess Act, 2011 (XXI of 2011), for the second schedule, the following shall be substituted, namely:- The SECOND SCHEDULE" [See Section 3(1)] S.No. Sector Maximum Rate of Cess (Rs.MMBTU) (1) (2) (3) 1. Fertilizer-Feed Stock (Except for fertilizer plants having fixed prices contracts300 2. Compressed Natural Gas (CNG) 300
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(b) Region-II Sindh and Punjab (Excluding Potohar Region)200 Industrial (including Captive Power) 100 WAPDA/KESC/GENCOs 100 Independent Power Plants (IPPs) 100 Commercial - Domestic - Cement - Liberty Power Plant - 6. Before dilating upon the issues, I deem it appropriate to take up the issue of the maintainability of the writ petitions under Article 199 of the Constitution and power of the superior courts of judicial review of legislative enactments. It is well settled law that in Pakistan the power of Parliament is subject to constraints contemplated by the Constitution in accordance with the procedure provided therein, but so long as it is not amended, the Parliament has to act within its four corners; so a statute or any of its provisions can be struck down on the ground of being ultra vires of the Constitution including fundamental rights. As this proposition has already been exhaustively discussed, comprehensively elaborated and thoroughly settled in a variety of cases. It would be advantageous to reproduce following passages from the judgment of the honorable Supreme Court in case of "Dr. Mubashir Hassan and others v. Federation of Pakistan and others" reported as (PLD 2010 SC 265): "It is also to be noted that while examining the vires of a statute the Court is free to examine the same on the touchstone of different constitutional provisions as it has been held in Muhammad Mubeen-us-Salam v. Federation of Pakistan (PLD 2006 SC 602): "52. In this behalf it may be noted that this Court, in exercise of constitutional jurisdiction conferred upon it under various provisions of the Constitution, including Articles 184, 185, 186, 187(1) and 212(3), enjoys enormous power of judicial review. Besides, it is well-settled by this time that being the apex Court, it has also been vested with inherent Powers to regulate its own authority of judicial review, inasmuch as, that in Zafar Ali Shah v. Pervaiz Musharraf, Chief Executive of Pakistan (PLD 2000 SC 869), it has been held by the full Court that "so long as the superior Courts exist, they shall continue to exercise powers and functions within the domain of their jurisdictionand shall also continue to exercise power of judicial review in respect of any law or provision of law which comes for examination before the superior Courts." Argument by one of the learned counsel that in the absence of violation of any of the fundamental rights, guaranteed by the Constitution, section 2-A of the STA, 1973 can be struck down only if in derogation of Article 8 of the Constitution and there is no other specific provision in the Constitution, authorizing this Court to exercise powers in this behalf is untenable on the face of it. A reference to the case of Mr. Fazlul Qader Chowdhry (ibid) would indicate that "<u>superior Courts have inherent duty, together with the appurtenant power, to ascertain and enforce the provisions of the Constitution in </u> any case coming before them." In the case of A.M. Khan has been emphasized that " <u>in cases of conflict between the supreme law of the Constitution and an enactment it is the duty of the superior Courts as its protectors and defenders to declare the enactment in question as invalid to the extent of its repugnancy with the constitutional provision in the absence of any bar either express or implied. </u>" Similarly, in Messrs Electric Lamp Manufacturers of Pakistan Ltd. v. The Government of Pakistan (1989 PTD 42), it has been held that the Parliament in England is sovereign in the real sense and it is not subject to any constraints as in England there is no written Constitution, whereas <u>in Pakistan the Parliament is subject to constraints contemplated by the Constitution in accordance with the procedure provided therein, but so long as it is not amended the Parliament has to act within its
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four corners; so a statute or any of its provisions can be struck down on the ground of being ultra vires of the Constitution</u>. "Likewise, in the case of Fauji Foundation v. Shamimur Rehman (PLD 1983 SC 457), it is held that " when a Court, which is a creature of the Constitution itself, examines the vires of an Act, its powers are limited to examine the legislative competence or such other limitations as are in the Constitution; and while declaring a legislative instrument as void, "it is not because the judicial power is superior in degree or dignity to the legislative power" but because it enforces the Constitution as a paramount law either where a <u>legislative instrument is in conflict with the constitutional provision so as to give effect to it or where the Legislature fails to keep within its constitutional limits. </u>" In the case of Liaqat Hussain v. Federation of Pakistan (PLD 1999 SC 504), the conclusion was that "<u>Court cannot strike down a statute on the ground of mala fides, but the same can be struck down on the ground that it is violative of a constitutional provision</u>. In Collector of Customs and others v. Sheikh Spinning Mills (1999 SCMR 1402), this Court struck down the imposition of preshipment inspection service charge under the Customs Act, 1969 as unconstitutional, which of course was not based on any fundamental rights. Relevant para reads as under:- "Considering the case from all angles, although the Federal Legislature is competent to legislate for the imposition of fees within the meaning of Entry 54, in the Federal Legislative List, Fourth Schedule to the Constitution, but again as already discussed hereinbefore, one has to see what is the nature of the legislation and whether the same could have been legislated within the ambit of the powers of the Federal Legislature. No the matters in the Federal Legislative List, but definitely not for pre- inspection, the benefit of which has to go to the companies appointed to carry out the inspection and not to the payees of the fees. The imposition of such fee is not in lieu of services to be rendered for the benefit of its payees. For the, foregoing reasons, we are of the view that the imposition of service charge as imposed under section 18-B of the Act…
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