ISLAMABAD: The Federal Constitutional Court (FCC) was asked to declare the Sindh Infrastructure Development Cess (SIDC) unconstitutional, with lawyers arguing that it could not be sustained as either a tax or a fee.
A two-member bench, headed by Chief Justice Amin-ud-Din Khan, on Tuesday heard the arguments against the Sindh Infrastructure Development Cess. The petitioners’ counsels contended that the province had imposed a customs duty under the garb of developing infrastructure. The Sindh government levied a charge of 1.8 percent on goods imported into Pakistan.
Senior lawyers Makhdoom Ali Khan, Raashid Anwer and Khalid Jawed Khan represented the petitioners in cases challenging the Sindh and Khyber Pakhtunkhwa infrastructure cess.
The counsels submitted that the Sindh levy was introduced in 1994 and had undergone successive changes following litigation. The Sindh Development and Maintenance of Infrastructure Cess Act, 2017, was enacted with retrospective effect from July 1, 1994. They argued that the levy could not be sustained either as a tax or as a fee.
As a tax, they contended, it encroached upon Parliament’s exclusive authority to impose duties of customs under the Federal Legislative List. The taxable event was the entry or exit of goods from or for outside the country.
The petitioners’ lawyers submitted that the stated purpose of developing infrastructure could not confer legislative competence on the province. They also questioned the province’s reliance on infrastructure falling within the federal domain, including national highways.
They argued that liability could arise even without the use of provincial road infrastructure. Giving an example, they stated that a passenger bringing diamonds from abroad into Karachi Airport (which is Federal property) could attract the cess even if the passenger then travelled to Lahore by air without using any of Sindh’s roads or infrastructure.
Regarding the claim that the levy concerned carriage of goods by road, counsel submitted that it was calculated predominantly on the customs-assessed value of goods. The distance component was only one paisa per kilometre, while the rates varied marginally with weight. Thus, industrial machinery worth Rs100 crore which travelled from Karachi to Rahim Yar Khan would pay Rs1.8 crore on the value and a mere Rs6 on account of the 600 km distance. This made it clear that the distance component was purely illusory.
They maintained that higher-value goods did not necessarily cause greater wear and tear, and that the nominal weight and distance components did not change the levy’s true character. They further argued that the cess violated Article 25 by treating comparable users of the same infrastructure differently.
They stated that two trucks carrying identical goods of equal weight from Karachi to Sukkur would cause the same wear and tear, yet only the imported goods would attract the cess. The distinction, they contended, had no rational nexus with the development and maintenance of infrastructure.
On retrospective validation, counsel submitted that earlier collections could not be validated without removing the underlying constitutional defects. They requested the court to declare the impugned levy unconstitutional.
The case is adjourned until today (Wednesday), when arguments concerning the Khyber Pakhtunkhwa infrastructure cesswill be heard.
Copyright Business Recorder, 2026
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