JUDGMENT SAYED ZAHID HUSSAIN, J.-- Notification dated 25.8.2001 issued under Section 4 of the Punjab Finance Ordinance, 2001 (Ordinance VI of 2001) whereby it was provided that "any person generating the Electric Power from a Generator having the capacity of more than 500 KW shall pay the Electricity dutymonger. 1.7.2001" has been assailed through this and the other petitions on the subject mentioned in the attached list "A".
2. M/s. Salman Akram Raja, Noman Akram Raja and ljaz Ahmed Awan, Advocates have mainly argued the cases on behalf of the petitioners whereas rest of the learned counsel for the petitioners have adopted their arguments.
3. The main thrust of the contentions of the learned counsel for the petitioners is that electricity duty which was levied''through Section 13 of West Pakistan Finance Act, 1964 is payable only with respect to consumption by a consumer when supplied by a licensee, it is contended that mere generation of electricity and its self use is not subject to levy of duty. According to them it is the licensee who is to pay the electricity duty on behalf of the consumer out of the revenue that comes into its hands and that since self use by the licensee generates no revenue there can be no question of payment of electricity duty, in order to supplement and fortify their contentions, amendment made through Punjab Finance Ordinance, 1980 (Ordinance VIII of 1980) in the Punjab Finance Act, 1964 is pressed into service, that the duty was payable on energy charges worked out according to tariff and that since self consumption by a producer of electricity is not subject to a tariff determination, self-consumption cannot be subjected to electricity duty, it is added that supplier of electricity and consumer are two separate entities and both are to be treated distinctly, it is contended that even with the amendment made through Section 4 of the Punjab Finance Ordinance, 2001 (Ordinance VI of 2001) creating a category of deemed licensee, the scope of word supply has not been, altered, it is further contended that even if it be assumed that self- consumption by the producer of electric power by means of private power generators is dutiable even then by virtue of notification dated 13.12.1985 they ard/exempt from its payment which exemption notification has not been withdrawn or rescinded, it is contended that notification dated 25.8.2001 which purports to impose electricity duty on all persons generative electric power from generator having capacity more 500 KW is ultra vires as it has no legal backing i.e. Section 13 of West Pakistan Finance Act, 1964. With reference to the provisions of clause (2)(b) of Article 157 of the Constitution of Islamic Republic of Pakistan, 1973 it is contended that tax can be levied only on consumption of electricity within the Province, it is further contended that the line losses and losses of energy in the course of generation has also not been kept in view as the energy lost: cannot be capable of consumption and the notification is bad for such reason also. Legality of the notification has also been assailed on the ground of retrospectively that whereas the notification was issued on 25.8.2001 it purports to levy electricity duty w.e.f. 1.7.2001, the same cannot operate retrospectively. Reference has been made to Amanullah Khan v. Chief Secretary, Government of N.-W.F.P, and 2 others (1995 SCMR 1856) and B.P. Biscuit Factory Ltd. Karachi v. Wealth Tax Officer and another (1996 SCMR 1470) to highlight the principles applicable for interpreting fiscal laws.
4. The learned Additional Advocate-General, Punjab while contesting, the petitions and controverting the contentions of the learned counsel for the petitioners has contended with reference to the provisions of Article 157 of the Constitution of Islamic Republic of Pakistan, 1973, that levy of electricity duty is within the competence of Provincial Government and Section 13 was validly enacted as also the amendment made through Punjab Finance Ordinance, 2001 Reference in this context has been made by him to Messrs Gadoon Textile Mills and 814 others v. WAPDA and others (1997 SCMR 641) and Messrs Fecto Cement Ltd. v. Federation of Pakistan and others (PLD 2003 Lah. 531). it is contended that not only the petitioners had been paying electricity duty in the past but in all other Provinces also such duty has been levied and is being paid, it is pointed out that even WAPDA is paying the duty as every body generating or consuming energy is liable to pay duty and self-consumption is not excluded. According to him under the West Pakistan Finance Act.
1964, West Pakistan Electricity Duty Rules, 1964 had been framed, the petitioners had the alternate remedy under rule 11 thereof before the Electric Inspector, therefore, the petitions are liable to be dismissed for that reason.
The learned counsel for the petitioners, responded to the alternate remedy aspect that the issues of vires and legality of the liveability cannot be adequately decided by the Electric Inspector, therefore, the petitioners' availing of the said remedy could not serve any real purpose.
5. in order to comprehend and resolve the controversy reference may be made to the relevant Constitutional and statutory provisions, it is Article 157 of the Constitution of Islamic Republic of Pakistan, 1973 which reads as follows:-- "157. (1) The Federal Government may in any Province construct or cause to be constructed hydro- electric or thermal power installations or grid stations for the generation of electricity and lay or cause to be laid inter-provincial transmission lines.
(2) The Government of a Province riay--
(a) to the extent electricity is supplied to the Province from the national grid, require supply to be made in bulk for transmission and distribution within the Province;
(b) levy tax on consumption of electricity within the Province; construct power houses and grid stations and lay transmission lines for use within the Province; and
(d) (c)determine the tariff for distribution of electricity within the Province.
This provision of the Constitution came to be considered by their Lordships of the^Supreme Court of Pakistan in Messrs Godoon Textile Mills and 814 others v. WAPDA and others (1997 SCMR 641) and it was observed that sub-clause (b) of clause (2) empowers the Government of a Province to levy tax on consumption of electricity within the Province. This provision and provisions of Section 13 of West Pakistan Finance Act, 1964 were also considered by a learned Bench of this Court in Messrs Fecto Cement Ltd. v. Federation of Pakistan and others (PLD 2003 Lah. 531), though in some different context yet on consideration of the matter the validity of Section 13 of West. Pakistan Finance Act, 1964 was upheld.
6. Through the Punjab Finance Act, 1964 (Act XXXIV of 1964) by enacting Section 13, electricity duty was imposed w.e.f. 1st of July, 1964. Due to its relevance and significance it is reproduced hereunder:- "13. (1) From the first day of July, 1964, there shall be levied and paid to Government, on the units of energy consumed for the purposes specified in the first colum of the Fifth Schedule, excluding losses of energy in transmission and transformation, a duty (hereinafter referred to as 'Electricity Duty') at the rates specified in the second column of that Schedule: Provided that Electricity .Duty shall not be leviable on the energy consumed by, or in respect of the consumers enumerated in the Sixth Schedule, except to the extent specified therein: Provided further that for * reasons to be recorded, Government may, by notification in the official Gazette, exempt any other consumer or class of consumers from the operation of this section.
Explanation. - in this section, unless there is anything repugnant in the subject or context--
(a) "consumer" means any person other than a distributing licensee, who is supplied with energy by licensee;
(b) "energy" means electrical energy when generated, transmitted, supplied or used for any purpose except the transmission of a message;
(c) "licensee" means any person licensed under Part II of the Electricity Act, 1910 (Act IX of 1910), to supply energy and includes any person who has obtained the sanction of the Government under Section 28 of the Act. (This clause was amended in 2001 which finds mention in the subsequent paragraphs).
(2) Every licensee shall collect and pay to the Government the Electricity Duty payable under this section in such manner as may be prescribed. The duty so payable shall be a first charge on amount recoverable by the licensee for the energy supplied by him and shall be a debt due by him to the Government: Provided that:--
(i) the licensee shall not be liable to pay the duty in respect of any energy supplied by him for which he has been unable to recover his dues;
(ii) the licensee shall be entitled, for his cost of collection of the duty, to a rebate of such percentage, as may be determined by the Government, on the amount of the duty collected and paid by him under this subsection.
(3) Where any person fails or neglects to pay the amount of electricity Duty due from, him, the licensee may, without prejudice to the right of Government to recover the amount under Section 3 of the [Punjab] Government Dues Recovery Ordinance, 1962 (West Pakistan Ordinance XXII of 1962), discontinue to supply energy to him and for this purpose, exercise the power, conferred on a licensee by subsection (1) of Section 24 of the Electricity Act, 1910 for recovery of any charge or sum due in respect of energy supplied by the licensee..
(4) in case of energy other than that supplied by a licensee, the person generating the energy shall pay to the Government the Electricity Duty payable under this section in respect of the energy consumed, in such manner as may be prescribed.
Section 17 thereof empowered the Government to make rules for that purpose. Accordingly West Pakistan Electricity Duty Rules, 1964 were framed. Section 13(1) of Punjab Finance Act, 1964 (Act XXXIV ofy1964) was sought to be substituted through Punjab Finance Ordinance, 1978. However, the said Ordinance was repealed on 9.7.1978 w.e.f, from the date of its promulgation, which lost its legal efficacy. Through the Punjab Finance Ordinance, 1980 some amendments were carried out in the Fifth and Sixth Schedule. Thereafter the relevant legislation came through Section 4 of Punjab Finance Ordinance, 2001 (No. VI of 2001) substituting explanation "c" to sub-section (1) of Section 13 of the Punjab Finance Act, 1964 (Act XXXIV of 1964). This because of its significance is reproduced:-- "(c) "licensee" means a person licensed under Section 15 or 20 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (XL of 1997) to engage in the generation and sale of energy to a consumer and includes any person generating the electric power from a generator having the capacity of more than five hundred kilowatt for self use."
Notification dated 25.8.2001 was then issued, which has been assailed by the petitioners, it reads as follows:-- "In exercise of the powers conferred upon him under Section 4 of the Punjab Finance Ordinance, 2001, and in suppression of all previous notifications, the Governor of the Punjab is pleased to direct that any person . Generating the Electric Power from a Generator having the capacity of more than 500 KW shall pay the Electricity Duty w.e.f. 1.7.2001."
Thus,, the prime question to be considered is as to whether notification dated 25.8.2001 has been issued within the parameters of law and has got the backing of contemporaneous law.
7. There are some settled principles with regard to the interpretation of fiscal statutes as were enumerated in Messrs Elahi Cotton Mills Ltd. And others v. Federation of Pakistan through Secretary M/o Finance, Islamabad and 6 others (PLD 1997 SC 582). Few of them are as under:--
(i) "That in view of wide variety of diverse economic criteria, which are to be considered for the formulation of a fiscal policy, Legislature enjoys a wide latitude in the matter of selection of persons, subject-matter, events, etc. For taxation. But with all this latitude certain irreducible desiderata of equality shall govern classification for differential treatment in taxation law as well.
(ii) That Courts while interpreting laws relating to economic activities view the same with greater latitude than the laws relating to civil rights such as freedom of speech, religion etc., keeping in view the complexity of economic problems which do not admit of solution through any doctrinaire or strait jacket formula as pointed out by Holmes, J. In one of his judgments.
(iii) That Frankfurter J., in Morey v, Doud (1957) U.S. 457 has remarked that "in the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to the legislative judgment".
(iv) That the Legislature is competent to classify persons or properties into different categories subject to different rates of tax. But if the same class of property similarly situated is subject to an incidence of taxation, which results in inequality amongst holders of the same kind of property it is liable to be struck down on account of infringement of the fundamental right relating to equality.
(v) That "a State does not have to tax everything in order to tax something, it is allowed to pick at to choose districts, objects, persons, methods and even rates for taxation if it does so reasonably"
(Willi's Constitutional Law).
(vi)
(vii) .... (viii) That while interpreting Constitutional provisions Court should keep in mind, social setting of the country, growing requirements of the society/nation, burning problems of -the day and the complex issues facing the people, which the Legislature in its wisdom through legislation seeks to solve. The judicial approach should be dynamic rather than static, pragmatic and not pantic and elastic rather than rigid.
(ix) That the law should be saved rather than be destroyed and the Court must lean in favour of upholding the constitutionality of a legislation keeping in view that the rule of Constitutional interpretation is that there is a presumption in favour of the Constitutionality of the legislative enactments unless ex facie it is violative of a Constitutional provision.
(x)
(x) .. (xi) (xii) (xiii) (xiv) .......
(xv) (xvi) That generally the effect of a deeming provision in a taxing statute is that it brings within the tax net an amount which ordinarily would not have been treated as an income, in other words, it brings within the net of chargeability income not actually accrued but which supposedly to have accrued notionally.
(xvii) (xviii) That where a person is deemed to be something the only meaning possible is that whereas he is not in reality that something, the Act required him to be treated as he were with all inevitable corollaries of that state of affairs.
These are the salutary principles to be kept in view while deciding the controversy.
8. The contentions of the petitioners if considered with reference to Section 13(1) of Act XXXIV of 1984 alone, it appears to be attractive, however, on a closer examination when considered in the context of all the legislative measures including provisions of Section 4 of Punjab Finance Ordinance, 2001, the tenability of the claim of the petitioners becomes questionable and is found to be not worthy of countenance. Section 13(1) provides the levy of electricity duty on the units of energy consumed Explanation thereto defines "consumer", "energy" and the "licensee". Sub-section (2) thereof burdened the licensee with the duty to collect and pay the electricity duty to the Government. Sub- section (4) thereof is, however, of some significance according to which in the case of energy other than that supplied by a licensee, the person generating the energy shall pay to the Government the electricity duty payable under this section in respect of the energy consumed, it brought within its ambit the person generating the energy. If there was some obscurity the same was set at rest with the promulgation of Ordinance (VI of 2001) i.e. The Punjab Finance Ordinance, 2001. Section 4 whereof substituted the term "licensee" and enlarged its meaning to "include any person generating the electric power from a generator having the capacity of more than five hundred killowatt for self use".
9. Too much1 stress and emphasis has been laid upon the expression "consumer" and "consumption" as used in Section 13(1) of the Punjab Finance Act, 1964 (W.P. Act XXXIV of 1964) and sub-clause (b) of clause. (2) of Article 157 of the Constitution of Islamic Republic of Pakistan, 1973. it need to be kept in view that these terms are not to be construed in a pedantic, restrictive and limited manner. With the changing trends and passage of time, dependency upon the supply of energy from the national grid system has lessened and self-generation for self-consumption is being encouraged and taking place. The provisions of law cannot, therefore, be interpreted in isolation, ignoring the progressive trends of time, it may be observed that while discovering the true meanings one must have regard to the enactment as a whole, to its objects and to the scope and effect of the provisions.
The issuance of notification dated 25.8.2001 that "any person generating the Electric Power from a Generator having the capacity of more than 500 KW shall pay the electricity Duty w.e.f. 1.7.2001" was consistent with the legislative field of power of Provincial Government and its will. The notification thus sought to be assailed had the backing of the statutory provisions, validity whereof is beyond any doubt. The levy of the duty, therefore, cannot be disputed or assailed on any sustainable grounds.
10. The reliance of the petitioners on exemption notification of 1985 whereby "consumers using private generators" were exempt from the payment of electricity duty is also not apt inasmuch as notification dated 25.8.2001 was issued "in suppression of all previous notification", thus the notification relied upon by the petitioners (regarding exemption) had lost its legal efficacy having been superseded and cannot be pressed into service.
11. There is some substance, however, in the contention of the learned counsel as to the retrospective operation of notification dated 25.8.2001. Whereas the notification dated 25.8.2001 is and has been found to be valid and intra vires having the backing of law, its application w.e.f, a date prior to its issuance cannot be regarded as legal. From the tenor of notification it appears that the same has been given effect w.e.f. 1.7.2001 whereas it was issued on 25.8.2001. in view of the settled law that such subordinate legislative measures cannot operate retrospective it is clarified that the notification will be effective from the date of its issuance i.e. 25.8.2001 and not from 1st July, 2001.
12. There are few peripheral issues about the energy lost in the process of generation etc. For the settlement of such disputes resort can be had to the provisions of rule 11 of West Pakistan Electricity Duty Rules, 1964 which statedly are still in force and the Electric Inspector can well enquire into such issues and decide the matter according of law.
In view of the. Above the petition is dismissed with the clarification made in paragraph No. 11 and observations contained in paragraph No. 12 above.
The parties to bear their own costs.