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

A three-judge bench, headed by Chief Justice Qazi Faez Isa, and comprising Justice Aminuddin Khan, and Justice Athar Minallah, on Wednesday, heard the Federal Board of Revenue (FBR)’s appeal against the Sindh High Court (SHC)’s judgment.

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

It said the issue in the present case is determined in the Supreme Court’s judgment in Shakargar Sugar Mills Ltd and others vs Federation and reported in the judgment of the 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 the force of law until it received the 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 then how the SHC could disregard the apex court’s judgment. He said 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’s judgment as a judgment in the eyes of law.” The CJP further said 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 have not been decided in the Supreme Court.

Dr Shah Nawaz contended that Section 3A was inserted in the Federal Excise Act, 2005 through the 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 SHC and the Lahore High Court (LHC).

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 SHC in 2013 allowed the petition on two grounds. First, 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. Second, the federal government cannot exercise power which is not conferred upon it. The parliament cannot 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 the 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

Copyright Business Recorder, 2023


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Parvez Dec 07, 2023 07:01pm
Pointless exercise by the SC..... because if the government decides the ruling is not in their interest, they simply devise an excuse and ignore the ruling. This was done by the Shahbaz Sharif/ PDM government when CJSC Bandial ruled on holding elections as per the Constitution.....and the CJ did NOTHING.
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