SC reserves judgment on insertion of Section 3A in Fed Excise Act, 2005

ISLAMABAD  -  The Supreme Court of Pakistan on Wednesday reserved the judg­ment on insertion of Section 3A in the Federal Excise Act, 2005 for the imposition of excise duty. 

A three-member bench of the apex court headed by Chief Jus­tice of Pakistan Justice Qazi Faez Isa and comprising Justice Amin-ud-Din Khan and Justice Athar Mi­nallah conducted hearing of the Federal Board of Revenue (FBR) appeal against the Sindh High Court (SHC) judgment. 

The court order said that if any counsel wants to file the written arguments he/she could send them within three weeks. After considering the synopsis if there will be need then we shall fix the case for hearing other­wise will proceed to announce the judgment. 

It said that the issue in the pres­ent case is determined in the Su­preme Court judgment in Shakar­garh Sugar Mills Ltd and others vs federation and reported in the judgment of PTCL case, and some of the issues assailed have been decided by the Supreme Court in a judgment dated 18-10-2011. 

Khalid Jawed Khan also argued that certain aspects of the case in­cluding the constitutionality of the levy of duty were not heard. 

The SHC said the Finance Bill re­mained a bill without force of law until it received President’s as­sent on 30-06-2007. Section 3A added to the Federal Excise Act, 2005 by Finance Act, 2007 be­came law only from 30-06-2007 and not on 29-06-2007. When SRO 655(I)/2007 dated 29-06-2007 was issued Section 3A was not in force. It was therefore nul­lity in law and of no legal effect. It did not become effective or come to life, legally speaking on 01-07-2007. 

It held that Section 3A inserted in 2005 Act in 2007 was ultra vires the constitution as being an exces­sive and impermissible delegation of legislative power. It was void ab initio, a nullity in law and of no le­gal effect. The SRO 655 was like­wise a nullity and of no legal effect whatsoever. 

Dr Shah Nawaz, appearing on behalf of the Commissioner Inland Revenue, Karachi, informed the bench that the issue raised in this case has already been decided by a three-judge bench. 

The Chief Justice questioned that then how the Sindh High Court could disregard the apex court judgment. He said that the orders/judgments of the Supreme Court are binding upon the High Courts under Article 189 of the constitution. “We don’t consider the SHC judgment as a judgment in the eyes of law.” The CJP further said that if it is done then the legal structure will collapse. 

Khalid Jawed, who represent­ed one of the companies, contend­ed that the SHC might have passed the judgment in ignorance. He, however, said that the vires of the law has not been decided in the Supreme Court. 

Dr Shah Nawaz contended that Section 3A was inserted in the Federal Excise Act, 2005 through Financial Act 2007, passed by the legislature. The vires of the section and notification SRO 655(I)/2007 dated 29-06-2007 were chal­lenged before the Sindh High Court and the Lahore High Court. The federal government through SRO 655(I)/2007 levied the spe­cial excise duty on the production or manufacture of all goods listed in the First Schedule to the Cus­toms Act, 1969. It became effec­tive from 01-07-2007. 

He argued that the single bench of the LHC dismissed the peti­tion and upheld section 3A. The Intra-Court Appeal (ICA) against that order was also dismissed. The matter was challenged before the Supreme Court, which upheld Sec­tion 3A on 18-10-2011. 

Meanwhile, the Sindh in 2013 allowed the petition on two grounds. Firstly, SRO 655/2007 was issued by the federal gov­ernment on 29-06-2007, but at the time the assent was not giv­en by the President, and as such it was not the law at that relevant time. Secondly, the federal gov­ernment cannot exercise power which is conferred upon it. The Parliament can’t delegate its tax­ing power to the executive, there­fore it declared the section 3A un­constitutional. 

Dr Shah Nawaz said that the LHC relying on Section 22 of Gen­eral Clause Act stated that it is a law that the money bill has special procedure that the President is bound to give assent to the money bill in 10 days, as he has no power to reconsider the bill.

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