1. ' MAMOON KAZI, J.---The brief facts giving rise to this petition are that the petitioner which is a private limited company received a challan from the respondent No, 1 claiming Rs, 17,800 on account of education cess for the year 1988-89 on the basis of highest numbers of workers engaged by the petitioner at the rate of Rs,100 per worker on annual basis. The total number of workers employed by the petitioner quarterwise in the year 1988-89 were as under:-- 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter July to Sep. Oct. To Dec. Jan. To March April to June 168 178 167 167 ' The case of the petitioner is that as according to the judgment of court in the case of Mehran Sugar Mills v. Excise and Taxation Officer 5 0/82), (1989 MLD 4388), holding that second proviso to rule 3(3) of Workers' Children (Education) Cess Rules, 1974 was ultra vires section 3 of the Workers'
2. Children (Education) Cess Ordinance, 1972, the petitioners were liable to pay only Rs,17,000, consequently the petitioner requested respondent No, 1 to follow the said judgment but the respondent replied vide its letter dated 24-12-1989, stating that the said judgment was binding on the department only in so far as the parties to the said case are concerned. It has, therefore, inter - alio, been prayed that the said rule be declared ultra vires and the demand made by respondent No, 1 on the basis of the said rule be declared as without lawful authority.
3. ' Learned counsel for the petitioner has invited our attention to the said judgment of this Court dated 26-4-1989 given in the case of Mehran Sugar Mills. In this case the same question had been raised by the petitioner which found favour with the learned Division Bench. The relevant part of the judgment is reproduced as follows:-- "From careful reading of the above proviso it will emerge that under subsection (1) of section 3 a liability is created on every establishment which employed ten or more workers at any time during a year to pay education cess at the rate of Rs,100 per annum per worker. However, the charging provision in the Ordinance is not subsection (1) but it is subsection (3) of section 3, which provides for levy of Education cess on the basis of the number of workers shown in the return filed quarterly by an employer under section 3(2) ibid. We are, therefore, of the view that education cess under section 3 of the Ordinance, is levied quarterly on the basis of number of workers employed in each quarter. This basis for levy of education cess is clearly provided in section 3(3) of the Ordinance and, as such we are unable to agree with the learned A.A.-G. That the cess under the Ordinance is to be recoverable on the basis of highest number of workers employed at any time during the year on annual basis. It is a well-settled rule of interpretation that before a subject is brought under taxing statute it must clearly fall within its letter. Subsection (3) of section 3 of the Ordinance having provided for levy of education cess on the basis of number of workers shown in the return filed by the employer under subsection (2), the basis of taxation could not be changed by providing in the rules, framed under the Ordinance to give effect to the above provision, that the cess will be paid on the basis of highest number of workers employed by an establishment during the year, for the whole year. It is not disputed before us that the Rules framed under the Ordinance by the respective Governments of Punjab, N.-W.F.P., Balochistan and Federal Territory, Islamabad, provide for recovery of education cess under section 3 of the Ordinance on quarterly basis according to number of workers employed by the establishment 'wring each quarter and in our view these rules harmonise with the of the legislation. If the contention of learned counsel for the dependents is accepted, it will produce startling consequences in so cases. For instance, in cases of seasonal establishment like Sugar Mills etc., which do not work with full strength throughout the year, the number of workers may be very high during the peak of the crushing is over. On the interpretation suggested by the learned counsel for the season but the number of workers decline substantially when the season respondents, such establishment will have to pay education cess on the highest number of workers employed by them at any time during the year while such workers may be in the employment of the establishment for a very short period of the year. No such intention appears from the plain language of section 3 of the Ordinance. We, accordingly, hold that 2nd proviso to sub-rule (3) of Rule 3 of the Rules is ultra vires of the Ordinance and accordingly the petitioners are not liable to pay education cess calculated by the respondents on the basis of said second proviso to rule 3(3) of the Rules. There will be no order as to costs."
4. We find that the present case is completely covered by the aforesaid observations made by the learned Division Bench. We may further observe that the said judgment also deserved utmost respect from the respondents and the respondents have erroneously reached the conclusion that the said judgment was binding only on parties to the case in which it had been given. We would like to point out that in the said judgment the vires of the second proviso to rule 3 of the Sindh Workers' Children (Education) Cess Rules, 1974 had been challenged and the said proviso was held to be ultra vires of the main provisions of the parent Act. Consequently, the judgment should have been followed and it is regrettable that when this fact was brought to the notice of the concerned department it declined to follow the judgment.
5. ' In the result, we allow this petition and declare the impugned action as without lawful authority and we further direct that the said education cess be charged from the petitioner in accordance with the directions given by this Court in the aforesaid judgment. We leave the parties to bear their own costs.
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