PHC strikes down K-P tobacco duty

The Peshawar High Court (PHC) has declared the collection of provincial excise duty on unprocessed tobacco in Khyber-Pakhtunkhwa illegal, striking down the Khyber-Pakhtunkhwa Provincial Excise Duty Act 2024 as unconstitutional.

A two-member bench comprising Justice Syed Arshad Ali and Justice Dr Khurshid Iqbal announced the verdict while hearing petitions filed by Pakistan Tobacco Company (PTC) and others challenging the imposition of excise duty on unprocessed tobacco.

During the proceedings, Barrister Ibrahim Afridi and Advocate Lowangeen Khan appeared on behalf of the petitioners. They argued that the provincial government's decision to impose excise duty through the K-P Finance Act 2024 was unconstitutional, as under Articles 141 and 152 of the Constitution, legislative powers are clearly divided between the federation and the provinces.

The petitioners contended that the authority to levy excise duties rests solely with the federal parliament, and the province's move amounts to interference in the federal domain. They further maintained that such taxation beyond constitutional limits could negatively impact investment in the province.

Conversely, the provincial government defended the law, stating that it was enacted in line with constitutional provisions and that provincial assemblies have the authority to impose excise duties on specific items, including tobacco.

The bench ruled that the Provincial Excise Duty Act 2024 conflicts with the financial principles.