‘Don’t tax liquor sold outside Punjab’

Judge observes that laws with inter-provincial operation are beyond the competence of a Provincial Assembly


Rana Tanveer July 04, 2016
Lahore High Court on Monday declared illegal a still head duty imposed by the Excise and Taxation Department on all Pakistan-made foreign liquor and beer (PMFLB) to be sold outside of the province. PHOTO: AFP

LAHORE: Lahore High Court on Monday declared illegal a still head duty imposed by the Excise and Taxation Department on all Pakistan-made foreign liquor and beer (PMFLB) to be sold outside of the province. The duty was imposed on July 1, 2015. Justice Shahid Karim passed the order on a petition filed by Murree Brewery Company Limited and Sindh Wine Merchants’ Welfare Association.

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The judge observed that the Parliament could make laws for the whole or a part of the country but a Provincial Assembly could do so only for the province or a part of it. He said laws that could have an extra-territorial or inter-provincial operation were beyond the competence of a Provincial Assembly. He said such laws were beyond the scope of Article 141 (extent of federal and provincial laws) of the Constitution. If they affected freedom of trade, commerce and intercourse, such laws would also impinge upon the rights guaranteed in Article 151 (inter-provincial trade), he added.

The judge accepted the petitions and declared the impugned notification ultra vires (without lawful authority). He said such actions could threaten the concept of federalism.

Earlier, the petitioners’ counsel, Shahid Hamid, submitted that the levy impinged upon freedoms enshrined in Article 151 (1) of the Constitution (trade, commerce and intercourse). He said that in an earlier order the LHC had declared such a levy against the free trade clause of Article 151.

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Hamid said the imposition of the duty had rendered petitioners as uncompetitive in the markets of Sindh. He said under the “duty follows consumption” policy mentioned in the Punjab Excise Manual the petitioners were not liable to pay the still head excise duty to the provincial government of the Punjab. They were liable only to pay the duty imposed by provincial government of Sindh under the Sindh Abkari Act 1878, he added. The petitioner said that Rs600 per gallon had been added to the price of PMFLB products, increasing the price of liquor to Rs4,399 per gallon and of beer to Rs310 per litre in Sindh.

Appearing on behalf of the provincial government, an assistant advocate general submitted that the government was empowered to levy such duties in accordance with the Item 44 (that forbade the federation from collecting duties on alcoholic liquors, opium and other narcotics) of the Federal Legislative List in 4th Schedule of the Constitution.

Published in The Express Tribune, July 5th, 2016.

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