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Petitioner: FLYING CEMENT CO. LTD. and otherss VS Respondent: GOVERNMENT OF PAKISTAN through JUDGMENT
Court Name: Lahore High Court Judge(s): Shujaat Ali Khan Title:FLYING CEMENT CO. LTD. and otherss vs GOVERNMENT OF PAKISTAN through
JUDGMENT
Reported As: PLD 2015 Lahore 146 Result: Petitions dismissed Judgment JUDGMENT SHUJAAT ALI KHAN, J.---Through this consolidated judgment I intend to decide this petition as well as those mentioned in Schedules-B and C having commonality of facts and law viz. In the petitions mentioned in Schedule-B, the petitioners have challenged the imposition of Surcharge and its subsequent enhancement through Notifications dated 15-3-2011 and 6-5-2011, respectively, whereas in the petitions mentioned in Schedule-C (including the instant petition), the petitioners have assailed the levy of Equalization Surcharge through Notification dated 5-8-2013. 2. Briefly, the facts, forming factual canvass of these petitions, are that the Government of Pakistan, Ministry of Water and Power, through Notification dated 15-3-2011, levied Surcharge on electricity at the rate of 2%. By virtue of Notification dated 6-5-2011 the rate of said Surcharge was enhanced from 2% to 4%. Later on, the Government withdrew the Surcharge in question vide Notification dated 16-5-2012. However, through Notification dated 5-8-2013, the Government again levied Surcharge known as "Equalization Surcharge(EQ Surcharge) but subsequently withdrew the same through Notification dated 11-10-2013. Aggrieved by the imposition/enhancement of Surcharge in dispute, the petitioners have preferred these petitions. 3. During the course of hearing, I have observed that despite repeated calls, in certain cases neither the petitioners nor their learned counsel are in attendance. Further, there is no intimation regarding petitioners or their counsel's engagement elsewhere despite the fact that names of the learned counsel for the parties have duly been reflected in the cause list. In this situation, such petitions can conveniently be dismissed due to non-prosecution, however, as all the petitions have not only been clubbed together but the question of law involved therein is also common, the same
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are being decided through this single judgment. Moreover, the decision of these matters cannot be lingered on for an indefinite period awaiting representation of some of the petitioners especially when learned counsel representing the petitioners, in major number of cases, are present before this Court. 4. The contentions urged by Mian Mehmood Rashid, Advocate for petitioners can be summed up in the words that no levy/surcharge can be imposed without determination by the National Electric Power Regulatory Authority "NEPRA", as envisaged under section 31(4) of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (hereinafter to be referred as the Act, 1997); that those consumers, irrespective of their category, who are not enjoying any kind of subsidy, are not liable to pay anything over and above the tariff determined by NEPRA; that imposition of impugned Surcharge amounts to compulsory extraction of money; that according to Article 157 of the Constitution of Islamic Republic of Pakistan, 1973 (hereinafter to be referred as the Constitution) only the Provincial Government can impose any surcharge etc. On the distribution of the electricity within the Province; that section 31(5) of the Act, 1997 is ultra vires to the provisions of the Constitution; that the matter was not routed through the Council of Common Interest (C C I), as postulated under Article 154 of the Constitution, thus the imposition of impugned Surcharge is illegal; that certain other provisions of the Act, 1997 are also ultra vires to the Constitution; that tax/levy/surcharge cannot be imposed through a Finance Bill rather the matter is to be approved by both the Houses whereas impugned Surcharge has been imposed without such approval; that in National Power Tariff and Subsidy Policy Guidelines, 2014, it has been admitted that EQ Surcharge was imposed to recover the amount due on account of line losses or subsidy given to the consumers of other DISCOs, thus, the same is not justifiable; that discriminatory attitude of the government was overwhelmingly manifested when EQ Surcharge, imposed through Notification dated 5-8-2013, was confined to industrial consumers only and that to fill up the gap between the cost of electricity and the subsidy/line losses of inefficient Distribution Companies (DISCOs), the consumers of the DISCOs, which are performing their affairs in an efficient manner, have been over-burdened. In addition to his oral submissions, learned counsel has relied upon the cases reported as Human Rights Case No,14392 of 2013, (2014 SCMR 220), Engineer Zafar lqbal Jhagra v. Federation of Pakistan and others (2013 PTD 1491), Alleged Corruption in Rental Power Plants and others (2012 SCMR 773), Pearl Continental Hotel and another v. Govt, of N.-W.F.P. And others (2010 PTD 2018), Pakistan through Secretary Finance and others v. Messrs Lucky Cement and another (2007 SCMR 1367), Wattan Party through President v. Federation of Pakistan and others (PLD 2006 SC 697), Caltex Oil (Pakistan) Ltd. v. Collector, Central Excise and Sales Tax and others (2005 PTD 480), The Province of Punjab and another v. National Industrial Cooperative Credit Corporation and another (2000 SCMR 567), Collector of Customs and others v. Sheikh Spinning Mills (1999 SCMR 1402), Gatron (Industries) Limited v. Govt. Of Pakistan and others (1999 SCMR 1072), Aftab Shahban Mirani v. President of Pakistan and others (1998 SCMR 1863), Messrs Elahi Cotton Mills Ltd. And others v. Federation of Pakistan (PLD 1997 SC 582), Gadoon Textile Mills and 814 others v. WAPDA and others (1997 SCMR 641), Govt. Of Balochistan v. Azizullah Memon and 16 others (PLD 1993 SC 341), Mian Muhammad Nawaz Sharif v. President of Pakistan and others (PLD 1993 SC 473), Pakistan through Secretary Cabinet Division and others v. Nawabzada Muhammad Umar Khan and others (1992 SCMR 2450), Pakistan Industrial Development Corporation v. Pakistan through Secretary Ministry of Finance (1992 SCMR 891), Haji Abdullah Khan and others v. Nisar Muhammad Khan and others (PLD 1965 SC 690), Abdul Latif v. Govt. Of West Pakistan and others (PLD 1962 SC 384), Messrs Shahbaz Garments (Pvt.) Ltd. And others v. Pakistan through Secretary Ministry of Finance and others (PLD 2013 Sindh 449), Messrs Azgard Nine. Ltd. v. Pakistan through Secretary and others (PLD 2013 Lah. 282), Syed Feroze Shah Ghillani and others v. Federation of Pakistan and others (PLD 2013 Lah. 659), Exide Pakistan Ltd. Cantonment Board Clifton and another (2012 CLC 1124), Sanofi Aventis
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Pakistan Ltd. And others v. Province of Sindh and 2 others (PLD 2009 Karachi 69), ICC Textiles Ltd. And 31 others v. WAPDA and 15 others (2009 CLC 1343), Dawood Hercules v. Collector of Sales Tax (2007 PTD 1161), Rashid ur Rehman v. Mian IOW Hassain (PLD 2005 Lah. 416), Standard Chartered Bank v. Karachi Electric Supply Corporation Ltd. (PLD 2001 Karachi 344), National Industrial Cooperative Credit Corporation Ltd. And another v. Province of Punjab/Government of Punjab through Secretary, Cooperative Department and another (PLD 1992 Lahore 462), Naseem Mehmood v. Principal King Edward Medical College and others [PLD 1965 (W.P.) Lahore 272], Abdul Majid and another v. Province of East Pakistan and others (PLD 1960 Dacca 502), I.T.As Nos.3934/LB/2002 and other allied matters [2007 PTD (Trib.) 181] and I.T.As Nos.5138/LB/2004 and another allied matter [2007 PTD (Trib) 139]. 5. On the constitutional plane, the legal propositions and basic objections, put forwarded by Mr. Azhar Siddique, Advocate for petitioners in some of the petitions, are to the effect that as the source for imposition of impugned surcharge is missing the same cannot be given legal blanket and that as the impugned Notifications were not issued under section 31(5) of the Act, 1997, the same cannot be allowed to hold the field even for a moment. 6. While controverting the submissions made by learned counsel for the petitioners, Sheikh Muhammad Ali, Advocate, representing Ministry of Water and Power, Government of Pakistan, states that as impugned notifications have already been withdrawn by the government, these petitions, as a matter of fact, have become infructuous; that NEPRA is only regulatory authority for determination of rates, charges and tariffs but it has nothing to do with the surcharge which exclusively falls within the domain of the government in terms of section 31(5) of the Act, 1997; that NEPRA being only regulatory authority cannot preempt the powers of the government to levy Surcharge; that under the new scheme, the generation, transmission and distribution of electricity is being governed through distinct licensees, thus, the government, with a view to raise funds for providing subsidy to the consumers has to impose Surcharge at certain, points of time; that as the surcharge cannot be equated with charge, rate and tariff, it has nothing to do with NEPRA; that provisions of Article 157(2) of the Constitution are only enabling and not mandatory in nature; that the Provincial Government can levy a surcharge only when it constructs dams, grid stations etc. Or purchases electricity in bulk from the Federation for its onward distribution to the consumers in the Province; that wrong mentioning of a provision of law or non-mentioning thereof does not make any difference as the same can be cured while following the principle of reading down; that the periodical imposition of EQ Surcharge is proof positive of the fact that the government resorted to such exercise just to cope with financial pandemonium for the time being; that even today the government is providing subsidy to the electricity consumers approximately at the rate of Rs,3/4 per unit; that in the instant case, the Golden Principle of interpretation is to be followed to make up any procedural deficiency on the part of government; that as the government is providing subsidy considering it as obligation, it reserves the right to impose Surcharge to raise funds in the hour of necessity and that after 18th Amendment subject of electricity is also included at item No,4 in the Federal List, thus, the Surcharge in question was rightly imposed by the Federal Government. 7. The legal formulations put forwarded by the learned Additional Attorney General, assisted by the learned Deputy Attorney Generals, are to the effect that though the power regarding determination of tariff vests with NEPRA but to notify the same is prerogative of the Federal Government as postulated under section 31(4) of the Act, 1997; that Article 157(2)(b) of the Constitution does not debar the Federation to levy any surcharge on electricity through DISCOs; that the word used under Article 157(2) of the Constitution is "may" therefore, if the Provincial Government does not impose any surcharge on electricity, the Federal Government cannot be debarred to do so; that the imposition of surcharge does not fall within the subjects which are to be referred to CCI rather the same can be imposed by the government through Finance Act and that imposition of EQ
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Surcharge has already been declared legal by a learned Division Bench of High Court of Balochistan, Quetta through its judgment, dated 8-7-2014, rendered in Constitutional Petition No,904/2011 and other allied matters, To substantiate his contentions, learned Additional Attorney General has relied upon the cases reported as Gadoon Textile Mills and 814 others v. WAPDA and others (1997 SCMR 641), Shamshad Bibi v. District Judge, Multan and 2 others (2012 YLR 277) and Shaikh Nadeem Younas, Chief Executive, Noble Textile Mills Pattoki District K asur v. WAPDA and 4 others (1996 CLC 1090). 8. Mr. Muhammad Ilyas Khan Advocate, appearing on behalf of LESCO, pleads that if for the sake of arguments it is admitted that there is some lacuna in the issuance of the notifications, in question, the same can be filled up by this Court while following the dictum laid down in the cases reported as Dr. Akhtar Hassan Khan and others v. Federation of Pakistan (2012 SCMR 455), Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. (2009 PTD 1392), Messrs Elahi Cotton Mills Ltd. And others v. Federation of Pakistan (PLD 1997 SC 582) and Indus Jute Mills Ltd. v. Federation of Pakistan and 3 others (2009 PTD 1473) . 9. Mr. Sarfraz Ahmad Cheema, Advocate for FESCO, in furtherance of the arguments put forwarded by learned counsel for LESCO states that second part of impugned notifications renders it unambiguously clear that the same was issued by the government while exercising powers as contemplated under section 31(5) of the Act, 1997, thus, the impugned Notifications were issued validly; that as language of the notification is explicit, the objection raised by learned counsel for the petitioners has no worth especially when the same is put in juxtaposition to the judgment rendered by the Hon'ble Supreme Court of Pakistan in the case Messrs Jame's Construction Co. (Pvt.) Ltd. Through Executive Director v. Province of Punjab and 3 others (PLD 2002 SC 310). 10. Mr. Aurangzeb Mirza Advocate, representing GEPCO, states that after admission on the part of counsel for the petitioners that the Federal government enjoys power to levy surcharge in view of section 31(5) of the Act, 1997, there is nothing to be left for adjudication by this Court rather the petitions deserve outright dismissal and that as the preposition under discussion, has already been set at rest by a learned Division Bench of High Court of Balochistan, the entire exercise is nothing but wastage of precious time of this court. 11. Learned counsel for the petitioners, while exercising their right of rebuttal, submit that Federal Government cannot impose any surcharge while pressing into service the question of subsidy being given to the consumers of other DISCOs; that the subsidy being provided to the consumers cannot be withdrawn by the Government in view of the verdict of the apex Court of the country in Human Rights Case No,14392 of 2013 (supra); that as the case-law being relied upon by the respondents side relates to tax matters, the same is of no help to the respondents; that tax and surcharge being polls apart from each other cannot be intermingled; that the consumers/petitioners before this Court cannot be burdened with any extra surcharge/levy just to facilitate or accommodate the consumers of inefficient DISCOs in other provinces as lapse on the part of one entity cannot be made ground for punishment to another; that the Federal Government can manage cost of electricity by using less expensive sources for its production in addition to controlling electricity theft etc; that argument advanced by learned counsel appearing on behalf of the respondents that EQ Surcharge is not payable on consumption of electricity rather it is on sale thereof is not tenable as on the face of it the same is payable on consumption and not on sale; that if for the sake of arguments it is admitted that EQ Surcharge was imposed by the government, while exercising powers under section 31(5) of the Act, 1997, the same can be set at naught by following the principle of "reading down"; that the judgment passed by the High Court of Balochistan is not binding on this Court; that, as a matter of fact, the question regarding EQ Surcharge has not been dealt with by High Court of Balochistan independently rather the same was taken up along with proposition qua imposition of Fuel Price Adjustment; that the judgment of
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High Court of Balochistan is also distinguishable on the ground that QESCO cannot be equated with distribution companies, whose consumers have instituted these petitions; that the judgment passed by the High Court of Balochistan cannot be considered on all fours as the principle of "reading down" has not been discussed in the said judgment; that Karachi Electricity Supply Company (KESC now K-Electric) has not been burdened with such surcharge which speaks volumes about the discriminatory attitude of Government of Pakistan, Ministry of Water and Power towards different DISCOs. To conclude his arguments, Mr.Azhar Siddique, Advocate has pleaded that had the notification been issued under section 31(5) of the Act, 1997, the petitioners would have definitely challenged the same while calling in question the vires of said section. 12. At this juncture, learned Additional Attorney General, assisted by Sheikh Muhammad Ali, Advocate, in furtherance of his arguments enumerated above, states that as the K-Electric has multiple licenses viz. In respect of "Generation", "Transmission" and "Distribution", the same cannot be quoted as precedent in respect of tariff/surcharge being levied against other Generation, Transmission and Distribution Companies; that since the promulgation of the Act, 1997 all the notifications by the government are being issued under section 31(4) of the Act, 1997, thus the impugned notifications cannot be set at naught only for the reason that the same were issued while mentioning wrong provision of law; that as uniform policy is being followed by the government in respect of tariffs for different DISCOs except K-Electric for the reasons narrated above, the petitioners have no cheeks to press into service the point of discrimination; that in order to meet with raising demand of electricity, same is being produced on commercial basis and the consumers are bound to face the brunt of fluctuation in cost thereof, in particular the fuel being used for the said purpose; that the intent of the government is not to put additional burden on the consumers rather is to manage funds to provide subsidy to the consumers who are not able to bear the raising price of the electricity. 13. I have given patient hearing to learned counsel for the parties and have also scanned the relevant documents in addition to going through the provisions of law as well as the ease-law cited at the bar. 14. Firstly, taking up the plea of the respondents that after withdrawal of impugned notifications, these petitions have become infructuous, I do not find myself in agreement on the said point for the reason that not only the imposition of Surcharge has been challenged in these petitions but the petitioners have also prayed for refund of the amount already deducted on that account. 15. It is of common knowledge that in this era, the electricity has assumed crucial role for survival of a nation and to compete with others in the comity of nations. The energy, as such, has become one of the basic components of everyday life. With the change in seasonal cycle and raising demand, the production of the electricity on priority basis through alternate sources has become one of the foremost challenges for the persons at the helm of the affairs of a State. With a view to fulfil the raising demand of electricity the government is compelled to introduce lucrative packages for private power generation entities just to expand the sources for production of electricity. During the said process, sometimes the private power generation companies, with a view to extract maximum profit and blackmail the consumer on the one hand and the government on the other, create a monopoly. Due to monopolistic attitude of the power generation units the consumers have to bear extra burden. This Court, being custodian of the fundamental rights, can take judicial notice in order to have the continuous supply of energy for the B present and future domestic and commercial needs in addition to maintaining the present sources of energy along with expansion of new sources of energy. Therefore, while imposing the levies and fixation of rates by the Government, in particular NEPRA, a balance has to be struck between the financial status of citizens of the country and the extent of national requirement for energy on the one hand and available resources for electricity on the other. Thus, a very heavy duty casts upon the public functionaries,
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the executive as well as judiciary to see that balance is struck in such a manner that the system flourishes and continue progressing on the one hand and the interest of customers/citizens is ensured on the other. 16. Now reverting to the merits of the case, out of divergent contentions urged by learned counsel for the parties, inter alia following legal propositions have emerged out for determination by this court: - (i) Whether word "Surcharge" carries the same meaning as those of "Tariff", "Rate" or "Charge" or it has independent character? (ii) Whether Surcharge is a tax and. Further as to whether Federal Government is empowered to impose Surcharge in electricity bills or not? (iii) Whether the Government is bound to refer the matter to NEPRA prior to imposition of Surcharge? (iv) Whether a notification issued under section 31(4) of the Act, 1997 can be considered as under section 31(5) of the said Act? (v) Whether the matter regarding levy of Surcharge was to be routed through the Council of Common Interests (CCI)? (vi) Whether under Article 157 of the Constitution the provincial government has the exclusive power to levy any tax/surcharge on distribution of electricity in the province or the Federal Government has simultaneous powers to do so? (vii) Whether the questioned levies are excessive and unreasonable and, hence, are liable to be struck down, in exercise of power of judicial review by this Court? (vii) Whether subsection (5) of section 31 of the Act, 1997 can be struck down while following the principle of "reading down"? (viii)Whether non-imposition of Surcharge, under discussion, against Karachi Electricity Company (KESE now K- Electric) or against a particular category of consumers can be considered as discrimination on the part of the government? 17. Firstly, taking up the question as to whether the word "Surcharge" can be equated with the terms known as "Tariff" "Rate" and "Charge", it is imperative to know their respective meanings. According to K. J. Aiyar Judicial Dictionary, 16th Edition 2014, the word "tariff" means- "A table alphabetically arranged and containing duties, bounties, etc. Charged upon merchandise exported and imported, as settled by authority or authorities that hold commerce together. It is a list of duties charged on specified articles; any list of charges. Includes within its ambit not only the fixation of rates but also the rules and regulations relating to it. " In Wharton's Law Lexicon, 14th Edition, the word "Tariff" has been defined as- "Tariff: [Span.] a cartel of commerce, a book of rates, a table or catalogue, drawn up usually in alphabetical order, containing the names of several kinds of merchandise, with the duties or customs to be paid for the same, as settled by authority or agreed on between the several States that hold commerce together." The word "Tariff" in BLACK'S LAW DICTIONARY, Eighth Edition has been defined as:-- "A schedule or system of duties imposed by a government on imported or exported goods. In the United States, tariffs are imposed on imported goods only. A duty imposed on imported or exported goods under such a system." According to ADVANCED LAW LEXICON by P Ramanatha Aiyar's 4th Edition Volume 1 and 4 word "Tariff" means:- "Duties or customs to be paid on imports or exports, such duties collectively; law imposing these duties.
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'Tariffmeans a rate of tariff leviable upon the consumption of electricity in the State supplied by the licensee and as fixed by the Tamil Nadu electricity Regulatory Commission.' Determination, ascertainment, a table of rates of export and import duties, in which sense the word has been adopted in English and other European languages. Levied either on ad valorem basis or on a specific basis, customs duty on merchandise imports. Custom, duties, toll, or tribute, payable upon merchandise exported and imported, are so called, (Tomlin)." Similarly word "tariff" has been defined in The Chambers Dictionary 12th Edition as under:-- "a list or set of customs duties; a customs duty levied on particular goods (eg at a hotel); (a list of) standard rates charged for a service, eg electricity or insurance; a menu; a scale of penalties established by law for sentencing those convicted of certain crimes." Likewise, the word "tariff" in Halsbury's Laws of India, Volume 42, has been explained as under:- "where the exigibility to duty cannot be gathered from positive terms under a particular entry, it must be deduced from a proper construction of the tariff entry." The Major Law Lexicon, Volume VI, defines "tariff" in the following manner:-- "Duties or customs to be paid on imports or exports, such duties collectively; law imposing these duties." Insofar as meaning of the word "RATE" is concerned, the same has been defined in K J Aiyar Judicial…
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