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LOW Source:
Pakistan Deaths
Pakistan Cases
0.85% positivity

ISLAMABAD: The Sindh High Court (SHC) has declared 75 paisa federal excise duty (FED) on phone calls exceeding five minutes as ultra vires to the Constitution.

According to a judgement of the SHC, the court has struck down the said FED on call exceeding five minutes.

It declared that the impugned legislation/Entry 6A to Table-II of First Schedule, ultra vires to the Constitution and as a consequence whereof is being strike down and the petitions are as such allowed to this effect.

Three petitions were filed by telecom companies involving common questions of law arising out of latest amendment vide Finance Act June 2021 effective from July 1, 2011 carried out in Table-II of First Schedule to Federal Excise Act, 2005 (Act 2005), whereby, Serial 6A was introduced without qualification.

The petitioners argued that after the 18th Amendment to the Constitution, this impugned amendment 6A Table II First Schedule (“6A”) was ultra vires the Constitution as it (6A) imposes federal excise duty at the rate of 75 Paisa per call, if it exceeds five minutes.

GSMA urges govt to withdraw FED on cellular calls

This insertion is not as qualified as was earlier Serial No6.

The petitioners’ primary contention was that the levy and collection of FED under the impugned Entry 6A within the area of Sindh province by the federation is in violation of the legislative competence, as established through Entry No49 of Federal Legislative List to Constitution 1973.

It is argued that via the 18th Amendment, Entry 49 to the Fourth Schedule to the Constitution was amended to exclude subject of sales tax on services from purview of Federation and consequently, provisions of Act 2005 precisely for rendering and providing services were/are rendered ultra vires the Constitution w.e.f. July 1, 2011.

The counsel argued that this is yet another attempt to step over the provincial domain legitimised by the Constitution followed by Sindh Sales Tax on Services Act, 2011. The SHC stated that the federation and the province do not have concurrent powers to tax the same common event.

The constitutional scheme does not permit two taxes in respect of same event and that too being imposed by two separate legislatures, i.e., Federation and province.

The event that enabled the legislature to legislate after insertion of 6A, is a call that originates from a particular region within the province for the purpose of a levy.

This event is not trans-provincial. Notwithstanding that the call may end-up in another province or any other part of country with federal domain, the “event” remains the one that call originate from a particular place which form part of a province.

The completion of the event is not dependent on the recipient to receive the call. The event is a call from where it originates, even after event’s conclusion of five minutes duration or even more, the judgement said.

This alone cannot be treated as intra-provincial trade to apply Article 151 to Constitution of Islamic Republic of Pakistan, 1973.

The Entry 49 by virtue of 18th Amendment has 15 excluded the federal competence to legislate on an event of providing or rendering services in a province and 6A being applied to an event of service which is originated and rendered in this province and which area is not in such areas of federation which are not included in any province.

The federation has not demonstrated any part or territory not included in Sindh province where such services are being rendered. The SHC added that it is neither in the competence of the federation to legislate after the 18th Amendment nor it relates to federation to invoke Entry No58 of the Fourth Schedule to the Constitution.

Copyright Business Recorder, 2021

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