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Petitioner: SANOFI AVENTIS PAKISTAN LIMITED and others VS Respondent: PROVINCE OF SINDH JUDGMENT
Court Name: Sindh High Court Judge(s): Qaiser Iqbal, Khalid Ali Z. Qazi Title:SANOFI AVENTIS PAKISTAN LIMITED and others vs PROVINCE OF SINDH
JUDGMENT
Reported As: PLD 2009 Karachi 69 Result: Appeals party allowed Judgment JUDGMENT KHALID ALI Z. QAZI, J.---Through the listed set of appeals, the appellants have called into question the common judgment passed by a learned Single Judge i.e, Mushir Alam J, dismissing a number of suits whereby the infrastructure fee/cess had been assailed. As the points of facts and law in all the present appeals are common, the same are being disposed of through this consolidated order. 2. The brief facts giving rise to the present appeals are that Provincial Assembly of Sindh vide the Sindh Finance Act, 1994 (hereafter: "1994 Act") provided for the imposition of an infrastructure fee through section 9 of the said 1994 Act, which reads as follows:-- "9. There shall be levied and collected a fee for services rendered in respect of development and maintenance of infrastructure on the goods entering or leaving the Province, from or for outside the country, through air or sea at the rates and in the manner as may be prescribed." 3. Furthermore, the said 1994 Act, through section 10 thereof, provided for making of rules for the purposes of the assessm ent and collection of the above infrastructure fee. The said section 10 reads as follows: -- "10. Government may make rules for carrying into effect the purpose of this Act and such rules may among other matters, prescribe the procedure for the assessment, collection and payment of and exemption from the taxes and cesses levied under this Act." [NB. At places in this judgment the levy as introduced through the 1994 Act is also referred to as the "first version"]. 4. In pursuance of the above sections 9 and 10 of the1994 Act the Government of Sindh vide notification dated 22-8-1994 prescribed the Sindh Development and Maintenance of Infrastructure
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fee Rules, 1994. While the rules provide for a mechanism for the rate, quantification, assessment, appeal and revision of the infrastructure fee, the relevant rule prescribing for the rate of fee is rule No,3 which is reproduced as follows: -- "3. Rate of Fee.---(1) The fee for the services in respect of development and maintenance of infrastructure shall be assessed and collected by the Excise and Taxation Officer of the District at the following rates:-- (a) On goods entering the Province from out side the country:-- (i) Where the customs duty 0.1% on duty is paid in the Province paid value. (ii) Where the customs duty is 0.2% on C and F to be paid outside the Province value (2) The fee on the goods mentioned in clause (b) shall not be charged during the year 1994-95." 5. Thereafter through section 5 of the Sindh Finance Act, 1996 (hereafter: "1996 Act") section 9 of the 1994 Act was substituted to read as follows:-- "5. In the Sindh Finance Act, 1994 (1) For section 9, the following shall be substituted:--- "9 Infrastructure fee on goods.--There shall be levied and collected Infrastructure fee on the movement of goods entering or leaving the Province from or for outside the Country, through air or sea, at the rates and in the manner as may be prescribed. Explanation.---For the purpose of this section, the word "Infrastructure" includes roads, streets, bridges, culverts, lights on passages, plantation on passages, benches, by passes, air centers road side rest houses, safety and protection on rail roads and construction of connected roads to railway stations, regulation and control of traffic for smooth flow and movement of goods, public order, police force, patrol for safety of goods, stands for loading and unloading of goods, markets and development, improvement, maintenance and protection of such matters. 9-A. Validation.---Anything done, action taken, assessment made and collected, order passed, or purported to have been done, taken, made, assessed, collected or passed on or before the coming into force of this section or on or after the enforcement of the Sindh Development and Maintenance of Infrastructure Fee Rules, 1994, by the Authority specified in the said rules shall be deemed to have been validly done, taken, made assessed, collected of passed and shall have and shall have and shall be deemed always to have effect accordingly." [NB: At places in this judgment the amendment through the 1996 Act is also referred to as the "second version"1. 6. Subsequently, vide notification dated 30-6-1996 the Government of Sindh made certain changes in the rates of the fee. 7. A number of Constitutional Petitions were filed in the Court challenging the vires of the infrastructure fee levied through the 1994 and 1996 Acts, discussed above. While such petitions were pending suit 764/99 titled H.A. Rahim (Pvt) Ltd. v. Government of Sindh and another was also filed on the original side of this Court, challenging the vires of the infrastructure fee levied through the 1994 and 1996 Acts. 8. Suit 764/99 was decided on 27-5-2000 by a learned Single Judge i.e, Attaur Rehman J., as he then was, and such judgment is reported as H.A Rahim (Pvt) Ltd. v. Government of Sindh and another 2003 CLC 649. In this judgment the learned Single Judge was pleased to declare that the infrastructure fee was unconstitutional and ultra vires, while annulling the same. It seems that a belated High Court Appeal (HCA) No,33/2001 was filed so as to challenge the judgment of the Single Judge in the case of H.A. Rahim (Pvt) Ltd. v. Government of Sindh and another. While this appeal was filed on 14-2-2001 the Governor of Sindh was pleased to promulgate the Sindh Finance (Amendment) Ordinance, 2001 being Sindh Ordinance No, XII of 2001 dated 24-2-2001. Through this Ordinance an attempt was made, inter alia, to change the nomenclature of the levy of
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"infrastructure fee" to "infrastructure chess", while at the same time making an attempt to invalidate the judgment of the learned Single Judge i.e, Atta ur Rehman J. In the case of H.A. Rahim. 9. On 26-2-2001 i.e, just 2 days after the promulgation of the Sindh Finance (Amendment) Ordinance, 2001 on 24-2-2001, a learned Division Bench comprising Sabihuddin Ahmed and Zahid Kurban Alvi JJ, while hearing the bunch of the Constitutional Petitions whereby the infrastructure fee levied through the 1994 and 1996 Acts had been assailed, dismissed the said petitions as infructuous in view of promulgation of Sindh Finance (Amendment) Ordinance, 2001, leaving the petitioners to challenge the validity of the same by filing fresh petitions/case . 10. The next day i.e, 27-2-2001 (of the passing of the above order dated 26-2-2001) a learned Division Bench of this Court comprising Sabihuddin Ahmed and S. Ali Aslam Jafri JJ. Heard HCA 33/2001 through which the judgment in H.A. Rahim's case in Suit No,764 of 1999 had been challenged. It was clearly observed in the order dated 27-2-2001 that the said appeal was "prima facie hopelessly barred by limitation". However, Mr. Raja Qureshi, the then Advocate-General, was given time to file further affidavit and explain the delay. 11. Thereafter HCA 33/2001 came up before another learned Division Bench of this Court comprising Muhammad Roshan Essani, Acting C.J. And Ali Aslam Jafri J. On 14-3-2001. On the latter date the learned Division Bench was pleased to condone the delay in the filing of the appeal. However, a statement was made by the then learned Advocate-General Mr. Raja Qureshi to the effect that in view of the promulgation of the Sindh Finance (Amendment) Ordinance, 2001, the appeal filed by him i.e, HCA 33/2001 had become infructuous and he no longer wished to press the appeal. On such statement the appeal was disposed of. 12. It was in the backdrop that a number of suits were filed before original side of this Court challenging the vires of the Sindh Finance, (Amendment) Ordinance 2001. The 2001 Ordinance, through sections 2, 3 and 4 provided for levy of the infrastructure cess, invalidation of the judgment in the H.A. Rahim case and barred the jurisdiction of the Courts to question the said Ordinance. The said sections 2,3 and 4 of the latter Ordinance read as follows:-- 13. "2. Amendment of the Sindh Finance Act, No, XIII of 1994.- In the Sindh Finance Act, 1994, for section 9 including the Explanation and section 9-A, the following shall be substituted:-- 9. Levy of cess for special maintenance and development of Infrastructure.---(1) Substitution of sections 9 and 9-A of Sindh Act, XIII of 1994). There shall be levied and collected a cess for special maintenance and development of infrastructure for smooth and safer movement of goods, entering or leaving the Province from or for outside the country, through air or sea at the rates and in the manner as may the prescribed. Explanation.---For the purpose of this section, the word "Infrastructure" includes, roads, streets, bridges, culverts, lights on passages, plantation on passages, beaches, public parks, place of public recreation and convenience, eating places, landscape, forests, fisheries delta conservation, lakes, breeding places of aquatic life, wild life and its sanctuaries, public schools, vocational and technical training centers and projects, libraries museums and similar institutions controlled and financed by the Private control of traffic for smooth flow and safer movement of goods, public order, police force, patrol for safety of goods, stands for loading and unloading of goods, parking places, markets water supply, hospital and dispensaries and development, improvements, maintenance and protection of such matters. (2) The proceeds of the cess shall be utilized for special maintenance and development of Infrastructure and other activities ancillary thereto in such manner as may be prescribed. 3. Validation.---Notwithstanding anything contained in any law, rules or judgments, order of decree of any Court--- (i) the Infrastructure fee levied, assessed, charged and collected in pursuance of the Sindh Finance Act, 1994 before the coming into force of this Ordinance shall be deemed to have been validly
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levied, assessed, charged, or collected as cess, and (ii) anything done, action taken assessment and collection made, order passed or purported to have been done taken under section 9 of the Sindh Finance Act, 1994 and the Sindh Development and Maintenance of Infrastructure Fee Rules, 1994 in relation to Infrastructure fees before the coming into force of this Ordinance shall be deemed to have been validly done, taken, made, or passed in relation to cess and shall have and shall be deemed always to have effect accordingly. 4. Jurisdiction barred.---No provision of this Ordinance or any order made thereunder shall be called in question by or before any Court." [NB: At places in this judgment the amendment through the Sindh Finance (Amendment) Ordinance 2001 is referred to as the "third version"]. 13. During the pendency of the suits the fourth version of law was introduced through the Sindh Finance (Second Amendment) Ordinance, 2001, being Sindh Ordinance No, XVI of 2001 on 15-5- 2001, which was retroactively made effective from 24-2-2001. The said fourth version of law brought about certain amendments in section 2 thereof as follows:-- "2. Amendment of the Sindh Finance Act No, XIII of 1994.--- the Sindh Finance Act, 1994, in section 9 for subsection (1) excluding the Explanation the following shall be substituted; There shall be levied and collected a cess of maintenance and development of infrastructure of goods at the rate of 0.5 per cent of their value of 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 air or sea, in the manner as may be prescribed. "; (ii) the existing Explanation shall be re-numbered as Explanation "I" and after the Explanation so re- numbered, the following new Explanation shall be added; Explanation II.--For the purposes of this section the value means C & F price of goods to the owner upon their entering in and using the infrastructure of the province; and for other goods the price disclosed in the shipping documents. "; (iii) After subsection (2), the following new subsection shall be added; (3) No refund of the cess claimed to have been paid or over-paid through inadvertence error or misconstruction shall be allowed, unless such claim is made within three months of the date of payment of such cess." [NB: At places in this judgment the amendment through the Sindh Finance (Second Amendment) Ordinance, 2001 is referred to as the "fourth version"]. 14. A learned Single Judge (i.e, Mushir Alain J.) took cognizance up to the fourth version of law and dismissed all the suits vide a very elaborate judgment dated 28-10-2003 running into 79 pages. The appellants through the present appeals have not only called into question all the versions of the impugned legislation but also the judgment of the learned Single Judge dated 28-10-2003. 15. Vide orders dated 6-11-2003 and 18-12-2003 notices were issued to the learned Advocate- General of Sindh and the Attorney-General for Pakistan, respectively under Order XXVII-A of the C.P.C. In keeping with the decision of the Supreme Court reported as Federation of Pakistan v. Aftab Ahmed Khan Sherpao PLD 1992 SC 723. 16. The appeals were placed from time to time before different benches, while on 3-3-2005 the said appeals became partly heard before a learned bench comprising Anwar Zaheer Jamali (now the learned CJ.) and Mujeebullah Siddiqui (as he then was) JJ. The judgment for the appellants were further heard by the same learned bench on 8-3-2005, 9-3-2005 , 10-3-2005 and 11-3-2005. Thereafter the learned counsel for the respondents sought time on various dates. On 20-2-2006 Mr. Rasheed Ahmed Akhund, the learned counsel for the respondents, requested for further two months time so that the Government could reconsider an amendment in the impugned Ordinance or otherwise. Time was granted. On 21-8-2006 Mr. Akhund again requested for further adjournment on the pretext that the Government was still processing the issue so as to resolve the controversy
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to the satisfaction of the appellants. He requested the matter to be adjourned to a date in office to be fixed after two months. The request was allowed. On 30-10-2006 Mr. Jawad Memon, Director Excise and Taxation, made a statement in Court that a proposal had been submitted to the Government of Sindh in the month of June, 2006 for finalization of the schedule of infrastructure fee which had not been then finalized. The officer was directed to pursue the matter and put up the same before the concerned Minister on the same date i.e, 30-10-2006 with a further direction to submit a progress report to the Registrar of this Court after every two days. The matter was adjourned to 6-11-2006. Thereafter, it seems that the respondents pursued the matter at their end and submitted a progress report before the Court in the shape of a letter dated 30-10-2006, two letters dated 1-11-2006, letter dated 30-11-2006 and letter dated 4-11-2006, which are being reproduced as follows:-- (a) Letter by the Director, Excise and Taxation, Sindh to the Secretary, Excise and Taxation dated 30- 10-2006:-- "DIRECTORATE OF EXCISE AND TAXATION (TAXES-ii) KARACHI No:353 / DET/TAXES 11/2006/1679 Karachi, the 30th October, 2006 The Secretary to the Govt. Of Sindh, Excise and Taxation, Karachi. Subject: HEARING OF HIGH COURT APPEALS (HCA'S) OF INFRASTRUCTURE CESS CASES IN .HIGH COURT OF SINDH. Reference: 1. Letter No,553/DET(Taxes-II) 2006/ 844 dated 15-8-2006 2. Letter No,553/DET(Taxes-II) 2006/868 dated 11-8-2006 3. Letter No,553/DET(Taxes-II) 2006/919 dated 9-9-2006 4. Letter No,553/DET(Taxes-H) 2006/971 dated 21-9-2006 Respectfully stated that as already intimated by the undersigned the hearing was fixed on 30-10- 2006, Mr. Rashid A. Akhund, Advocate and the undersigned were summoned in the Chamber of the Honourable Justice Anwer Zaheer Jamali and Honourable Justice Mujeebullah Siddiqui. The Honourable bench expressed dissatisfaction on the progress on efforts for rectification of the discrimination in the rate of levy of Infrastructure Cess. The Honourable Court was informed that a proposal regarding the rectification has already been worked out and the same has been submitted to the Minister, Excise & Taxation Department, Government of Sindh. The reasons for delay being the recent reshuffling in the port folios of the Ministers in the Sindh Cabinet were explained to the Honourable Court. The High Court directed to take up the matter personally and get it finalized before the text date of hearing i.e, 6-11-2006. The Honourable Court further directed the undersigned to furnish progress report after every 2 days before the Registrar of the High Court of Sindh. It is therefore requested that matter may kindly be finalized before the next date of hearing i.e, 6-11- 2006 for presenting the same before the Honourable High Court of Sindh in the interest of Government revenue. (Sd.) Director Excise & Taxation (Taxes-II) Karachi C. C. To: 1. The Advocate-General, Sindh 2. The Registrar High Court of Sindh. 3. The Director-General, Excise and Taxation Sindh 4. P.S. To Minister Excise and 'Taxation Department Government of Sindh with request to place it before the Honourable Minister immediately.
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5. Mr. Rashid a Akhund, Advocate Director Excise & Taxation (Taxes-II) Karachi (b) Letter by the Director, Excise and Taxation, Sindh to the Registrar of this Court dated 1-11-2006:- "DIRECTORATE OF EXCISE AND TAXATION, (TAXES-.II) KARACHI No:353/ DET/TAXES Karachi, the 1st November, 2006 11/2006/1684 The Registrar, Sindh High Court, Karachi. Subject:--HEARING OF HIGH COURT APPEALS (HCA'S) OF INFRASTRUCTURE CESS CASES IN HIGH COURT OF SINDH. In compliance of the directives of the Honourable bench of the High Court, it is stated that the subject-matter is in progress on top priority basis. A meeting in this regard was held in the office of the Honourable Minister, Excise and Taxation Department on 31-10-2006 with the team of Field Officers, another meeting was held in the office of Secretary to the Government of Sindh, Excise and Taxation Department, Karachi on 1-11-2006 at 11-00 a.m. And again a meeting is scheduled in the office of Minister Excise and Taxation at 2-00 p.m. To finalize the issue. (Sd.) Director Excise & Taxation (Taxes-II) Karachi C.0 to:-- 1. The Advocate-General Sindh 2. The Secretary to the Government of Sindh, Excise and Taxation Department, Karachi. 3. The Director-General, Excise & Taxation Sindh. 4. P.S. To the Minister, Excise & Taxation Department, Government of Sindh with request to place it before the Honourable Minister immediately. 5. Mr. Rashid A. Akhund, Advocate" (c) Letter by the Secretary, Excise and Taxation, Sindh to the Secretary, Finance Deptt. Dated 1-11- 2006:-- GOVERNMENT OF SINDH. EXCISE AND TAXATION DEPARTMENT No: So (Taxes)/E&T/1686/2006/ Karachi, the 1st November, 2006 The Secretary, Finance Department Government of Sindh Karachi Subject-RATIONALIZATION OF THE INFRASTRUCTURE CESS During the proceedings of the Constitutional Petitions filed by various importers the Double Bench of Mr. Justice Anwer Zaheer Jamali and Mr. Justice Mujeebullah Siddiqui passed observation that the procedure of levy of Infrastructure Cess is discriminatory because it does not consider the weight of the truck/trailer carrying the goods and also not considering the distance travelled by the goods which needs to be amended and asked Mr. Rashid A. Akhund, Advocate to get the opinion of Government of Sindh whether they are ready to amend the procedure of levy of Infrastructure Cess. The Department through Mr. Rashid A. Akhund, Advocate had been asking for time to complete the exercise, on 30th October, 2006 during the hearing, the Director, Excise and Taxation (Taxes-II),
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Karachi was called in the Chamber by the Honourable Judges who showed their dissatisfaction on the progress of amendment. The Double Bench fixed next date of hearing on 6th December, 2006 with the direction that amendments may be finalized before the date. The D.B. Further directed Director, Excise and Taxation (Taxes-II), Karachi to submit progress report after every 2 days. The Department has worked out the amendment and the same is enclosed herewith for the concurrence of Finance Department. An early action is requested. (Sd.) Secretary to the Govt. Of Sindh Excise and Taxation Department" (d) Letter by the Section Officer to the Secretary , Excise and Taxation, dated 3-11-2006: GOVERNMENT OF SINDH, FINANCE DEPARTMENT No: FD-SO (RES-I) 2(20)/2006 Dated: Karachi, the 3rd November, 2006 To, The Secretary, Government of Sindh, Excise and Taxation Department, Karachi. Subject:--RATIONALIZATION OF THE INFRASTRUCTURE CESS I am directed to refer to your letter dated 1-11-2006, on the subject captioned above whereby it has been intimated that certain observations passed by the Honourable High Court of Sindh regarding the procedure of Infrastructure Cess, which needs to be amended as same has been asked to Advocate of Government of Sindh. The Division Bench fixed the next date of hearing i.e, 6-11-206 with the directions that amendments may be finalized before the date of hearing. Finance Department has no objection for making amendment is sections 9 and 10 of Sindh Finance Act, 1994, subject to fulfilment of the legal procedure. Hence Administrative Department is advised to float a summary of the Chief Minister Sindh to discuss the matter in the next meeting of the Provincial Cabinet, for incorporating required amendments, as prescribed vide Rule 45 of Sindh Rules of Business 1986. (Sd.) Section Officer (Res-I) A copy is forwarded for information to:-- Additional Finance Secretary (Rest). Finance Department, Government of Sindh, Karachi. Section Officer (Res-I)" (e) Letter by the Director, Excise and Taxation, Sindh to the Registrar of this Court dated 4-11-2006: "DIRECTORATE OF EXCISE AND TAXATION (TAXES-II) KARACHI. No:353/DET/TAXES-I1/2006/1703 Karachi, the 4th November, 2006 The Registrar, Sindh High Court Karachi. Subject: HEARING OF HIGH COURT APPEALS (HCA'S) OF INFRASTRUCTURE CESS CASES IN HIGH COURT OF SINDH. In compliance to the directions of the Honourable Division Bench of the High Court the progress is submitted as under:-- 1. In response to Excise and Taxation Department's proposal regarding Rationalization of the Infrastructure Cess in the light of the observations of the Honourable Division Bench, Finance Department has agreed to the proposal and further Advised to float a summary for the Chief Minister, Sindh.
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2 Summary for the Chief Minister, Sindh has been floated and the same has been forwarded to the Finance Department for onward submission to the Chief Minister through the Chief Secretary Sindh. Copies of the correspondence are attached. (Sd.)- Director Excise & Taxation (Taxes-II) Karachi C.C. To:-- 1. The Advocate-General, Sindh 2. The Secretary to the Government of Sindh, Finance Department, Karachi. 3. The Secretary to the Government of Sindh, Excise & Taxation Department Karachi. 4. The Director-General, Excise and Taxation Sindh. 5. P.S. To the Minister, Excise and Taxation Department, Government of Sindh with request to place it before the Honourable Minister immediately. 6. Mr. Rashid A. Akhund, Advocate. Director Excise & Taxation (Taxes-II) Karachi 17. On 6-11-2006 Mr. Muhammad Javed Memon, Director Excise and Taxation appeared in the Court and stated that much progress had been made in the matter -and that a summary had been approved by the Minister of Excise and Taxation and further the Finance Department had also agreed in principle for the approval of the summary. He requested for some more time so that the whole process could be finalized. Two weeks time was allowed and it was directed that on the next date a copy of the finally approved infrastructure fee schedule was to be provided to the counsel for the appellants through Mr. Rasheed Akhund Advocate. 18. On 18-12-2006 the then Advocate-General of Sindh i.e, Mr.Anwar Mansoor Khan placed on record a copy of letter dated 16-12-2006 accompanied with the summary for the Chief Minister and some other documents. He submitted that the summary was approved by the Chief Minister and the relevant notification of the Government of Sindh was likely to be issued within a week's time. The contents of the letter dated 16-12-2006 and the consequent summary are reproduced as follows:-- (a) Letter by the Deputy Secretary to the Secretary, Law dated 16-12-2006:-- No: SO (Taxes)/E & T/ GOVERNMENT OF SINDH EXCISE AND TAXATION DEPARTMENT Karachi, dated the 16th December, 2006. To The Secretary Government of Sindh Law Department Government of Sindh Karachi. Subject:--RATIONALIZATION OF…
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