PESHAWAR: Peshawar High Court has allowed the constitutional petition filed by Pakistan Tobacco Company Limited, along with other petitions, against the Khyber Pakhtunkhwa government’s decision, declaring the imposition of the provincial excise duty on un-manufactured tobacco under Section 15 of the KP Finance Act 2024 against constitutional dictates therefore invalid.
Counsels for PTC, Barrister Ibrahim Khan Afridi and Lawangeen Khan, contended that the levy of a provincial excise duty on un-manufactured tobacco was ultra vires the Constitution of Pakistan, since Article 141 and -52 are crystal clear in the domain granted to the Parliament and the Provincial Assemblies in making laws applicable within their jurisdiction.
Counsels argued that “duties of excise” fall exclusively within the legislative competence of the Parliament under Entry No 44 of the Federal Legislative List therefore the encroachment by the KP Assembly into the domain of the Federation by imposing excise duty on tobacco.
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The provincial government contested the plea by defending the law stating that the Act has been imposed lawfully and is not in derogation of constitutional directives. It was contended that the Constitution does not bar the provincial assemblies from imposing excise duties on certain items, such as tobacco for the instant case.
The court after hearing both the parties has accordingly declared the legislation in conflict with the principles laid down in the Constitution and therefore the law remains no longer in field.
The judgment is being viewed as a significant reaffirmation of constitutional principles governing fiscal authority and the division of taxation powers between the federation and the provinces.
Legal and business circles have welcomed the ruling as a precedent-setting interpretation of provincial taxation limits, bringing much-needed clarity and predictability to the investment environment in Khyber Pakhtunkhwa and across Pakistan.
Copyright Business Recorder, 2025
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