' MAMOON KAZI, C J.---These Constitutional petitions' have been heard together as common questions of law have been raised in these petitions.
2. The petitioners have called into question the Constitutional validity of section 18-B of the Customs Act, 1969 which has been recently inserted into the said Act, by the Tax Adjustment (Ordinance LXXXIX of 1996). The said section reads as follows: "18-B. Levy of service charge.--The Federal Government may, by notification in the official Gazette, levy a service charge equivalent to two percent . Ad valorem on all such goods specified in the First Schedule to this Act as are subject to pre-shipment inspection: ' Provided that for the purposes of Sales Tax Act, 1990, such service charge shall not constitute a part of the value of supply."
3. After insertion of the said section in the Customs Act, the Federal Government in purported exercise of powers under section 18-B, issued notification, SRO No,1198(1)/96, dated the 22nd October, 1996, levying a service charge equivalent to two percent. Ad valorem on all such goods as are specified in the First Schedule to the said Act and are subject to inspection under the Inspection, Valuation and Assessm ent of Imported Goods Rules, 1994. The said notification reads as under:-- "SRO 1198(1)96.--In exercise of the powers conferred by section 18-B of the Customs Act, 1969 (IV of 1969) the Federal Government is pleased to levy a service charge equivalent to two percent. Ad valorem on all such goods as are specified in the First Schedule to the said Act and are subject to inspection under the Inspection, Valuation and Assessment of Imported Goods Rules, 1994."
4. The said rules were earlier framed by the Central Board of Revenue vide Notification SRO 1108(1)/94, dated the 14th November 1994, in the purported exercise of powers conferred on it by section 219 of the Customs Act, 1969, with a view to regulate procedure in respect of pre-shipment inspection of certain goods, as specified in the said rules, by certain foreign companies, referred to in the said rules as "PSI Companies".
5. The main contention of the learned counsel appearing on behalf of the petitioners has been that the "service charge", referred to in section 18-B can only be characterised as a fee, which cannot be levied without a quid pro quo as no equivalent service has been provided to the petitioners by the respondents. It was further contended that, neither the said service charge is a customs duty nor can it be levied through the mechanism of the Customs Act under any of the entries referred to in the Fourth Schedule to the Constitution. No doubt, Entry 54 relates to fees but, according to the learned counsel for the petitioners, as is further indicated by the said entry, it can be invoked only if the legislation relates to any of the matters enumerated in Part I of the Fourth Schedule. Since, there is no such entry in Part I under which service charge can be levied, the Legislature has traversed the parameters of its legislative power.
6. The above contentions have been challenged by Mr.Naimur Rehman, the learned Deputy Attorney-General, according to whom, power could be exercised by the Federal Legislature by virtue of entry 43 in the Fourth Schedule, as the service charge purportedly imposed by section 18-B is in fact, a customs duty, the levy of which is fully within the competence of the Federal Legislature.
Support was sought by the learned Deputy Attorney-General from Sohail Jute Mills Ltd. v.
Federation of Pakistan (PLD 1991 SC 329), wherein imposition of an additional customs duty as 'Iqra Surcharge' was upheld by the Supreme Court as a valid imposition, covered by Entry 43.
7. As the impost has been referred to as service charge, the term "service" although used in many senses, according to some of the meanings assigned to it in Ballentine's Law Dictionary, third Edition, at page 1164, means: "Work performed. Employment by another. A contraction of Military Service. A breeding."
' The word "charge", according to Concise Oxford Dictionary, when used as a noun, means, expense price demanded for service or goods.
' Accordingly, according to the learned counsel for the petitioners, the words "service charge" signify compensation or fee for service rendered or duty performed. Although, the words "Duties of customs" or "Customs duty" have not been defined in the Customs Act, but reference to Halsbury's Laws of England, Volume 12, 4th Edition, para. 501 at page 65, indicates as follows: "Duties of customs or customs duties, in the strict sense are pecuniary charges or tolls payable upon goods exported from, or imported into the country, as contrasted with excise duties which are payable upon goods produced and constumed within the country."
' Corpus Juris Secundum, Volume 25 at page 140, describes "customs duties" as "taxes" assessed on merchandise imported from or exported to a foreign country.
8. The learned counsel for the parties did not appear to be at loggerheads over the question that "customs duty" is a "tax" which is distinct from a fee. There was also no controversy on the point that a tax can be levied irrespective of any service provided, but a fee can be levied only where service is provided to a citizen. In Matthews v. Chicory Marketing Board, 60 CLR 263 it was observed by Lathem, C.J. Of the High Court of Australia: "A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered."
' In State of Rajasthan and others v. Sajjanlal Panjawat and others (AIR 1975 SC 706) a distinction between a tax and a fee was drawn by P. Jaganmohan Reddy, J., thus: "the essence of taxation is compulsion and imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax that is to say, that the levy of tax is for the purposes of general revenue, which when collected forms part of the public revenues of the State. A fee on the other hand is payment for a special benefit or privilege which the individual receives. It is regarded as a sort of a return or consideration for services rendered and should on the face of the legislative provision be correlated to the expenses incurred by Government in rendering the services."
' Similar observations were made by Chandrachud, J., of the Supreme Court of India in The Government of Andhra Pradesh and another v. Hundustan Machine Tools Ltd. (AIR 1975 SC 2037). It was observed in this case that: "Fees are a sort of return or consideration for services rendered, which makes it necessary that there should be an element of quid pro quo' in the imposition of a fee. There has to be a correlationship between the fee levied by an authority and the services rendered by it to the person who is required to pay the fee."
9. In England, Parliament has a right to make or unmake any law. Therefore, the supremacy of the Parliament being unquestionable, no law in England can be challenged on the ground of the Parliament exceeding the parameters of its legislative sphere. It is only where the powers of the Legislature are defined in the Constitution question in regard to its legislative competence may be raised before the Court. However, while determining the validity of an Act of Parliament, its true character must first be ascertained. While referring to the doctrine of "pith and substance " N.S. Bindra, in his book on Interpretation of Statutes, 7th Edition, at page 977, observes: "To determine the Constitutional validity of an Act, its pith and substance should be considered. In other words, where a law is impugned as ultra wires, it is the true character of the legislation that has to be ascertained. That is, it must be ascertained whether the impugned legislation is directly in respect of the subject covered by any particular Article of the Constitution or touches the said Article only incidentally or directly. If it be found that the legislation is in substance one on a matter which has been assigned to the Legislature, there can be no question of its validity even though it might incidentally infringe on matters beyond its competence."
' It has been further observed by the learned author on the same page: "The test of pith and substance is generally and more appropriately applied when a dispute arises as to the legislative competence of the Legislature and it has to be resolved by reference to the entries to which the impugned legislation is relatable. Where there is a conflict between two entries in the legislative lists and legislation by reference to one entry would be competent but not by reference to the other, the doctrine of pith and substance is invoked for the purpose of determining the true nature and character of the legislation in question."
10. A similar question arose before the Supreme Court in Sohail Jute Mills Ltd. v. Federation of Pakistan PLD 1991 SC 329, reference to which has earlier been made in this judgment. The question before the Supreme Court was as to the nature of imposition levied as "Iqra Surcharge" under Finance Ordinance XII of 1982. The Court was to decide, whether the said Surcharge was simply meant to be an additional charge which was to be added to the usual charges or it was in fact a customs duty, falling within the purview of entry 43. It was observed by Shafiur Rahman, J., who delivered the judgment for the Supreme Court, as follows:-- "15. The word 'surcharge' has definitely been used in the charging provision. At the same time, it is not the only material word in the charging provision. The charging provision is complete only if we read it as an additional customs duty as Surcharge on the importation of goods specified in the First Schedule to the Customs Act, 1969'. One word cannot be torn out of the context for giving a meaning different from what the context requires. Read as a whole, it is clear that what was being imposed was an additional duty and this additional duty was in the nature of customs duty and was to be distinguished as Surcharge. It was leviable only on import and only on the goods specified in the First Schedule to the Customs Act, 1969. These words made it clear that it was a customs duty. It was in addition to the customs duties already imposed. It was to be known as a 'surcharge' and it was leviable at the rate of five per cent."
11. The learned counsel for the petitioners have, however, called in aid an unreported judgment of the Lahore High Court in Writ Petition No,20061 of 1996 and other connected petitions, wherein the same legislation had been challenged. The provisions of section 18-B have been struck down as invalid and ultra vires the Constitution by the learned Judges of the Lahore High Court. It has been held in the said case that levy of the impost as service charge on the import of goods was beyond the competence of the Federal Legislature and, therefore, the legislation was struck down as invalid. It was further held that the impugned levy was a fee which could not be charged from the petitioners as no service had been rendered to the petitioners by the Federal Government.
Although, reference was made in this judgment to the case of Sohail Jute Mills PLD 1991 SC 329, but according to the learned Judges of the Lahore High Court, the judgment of the Supreme Court could not be pressed into service for the reason that Iqra Surcharge had been described in the relevant Ordinance as an additional duty of customs, but no similar provision was made in respect of service charge. Therefore, the said case decided by the Supreme Court was held to be distinguishable.
12. It may be pointed out with utmost respect that, the Federal Legislature has been vested with power to legislate in respect of matters falling within different entries in the Federal Legislative List and the Concurrent Legislative List, as embodied in the Fourth Schedule to the Constitution. The residuary legislative power falls to the Provinces, Entry 43 in part I of the Fourth Schedule refers to "Duties of Customs including export duties". However, the legislation in question refers to "service charge" equivalent to two percent ad valorem on such goods which are specified in the First Schedule to the Customs Act and are subject to pre-shipment inspection. The Notification, SRO 1198(1)/96, further specifies the goods as such goods as are specified in the First Schedule to the Customs Act and are subject to inspection under the Inspection, Valuation and Assessment of Imported Goods Rules, 1994. The said rules, no doubt, indicate that they have been framed with a view to regulate procedure for inspection of goods by PSI Companies and the learned counsel for the petitioners have also invited our attention to a letter, dated 16-12-1996, of Mr. Khalid Mehmood, the Secretary, Valuation and T&W, Central Board of Revenue, addressed to the President, Federation of Pakistan Chambers of Commerce and. Industry, Lahore, indicating that, the said two per cent. "service charge" was leviable only in respect of goods subject to inspection by the PSI Companies. However, these are not questions, upon which vires of a statute can depend. Nothing can be spelled out from the impugned Legislation itself to indicate that the said "service charge" relates to any expenditure incurred by the Federal Government on account of pre-shipment inspection of goods by the PSI Companies. The contention of the learned counsel for the petitioners has been that, in case of Customs duty referred to in Entry 43, the taxable event would either be the import or the export of goods, but since the impugned legislation purports to levy an impost as "service charge", the taxable event in such case would be inspection of goods by the customs authorities, as compared to import or export, therefore, entry 43 cannot be invoked in the present case. However, this contention can hardly advance the petitioners' case. "Import", according to Ballentine, signifies bringing or carrying of a substance or article into the country from outside. The machinery provisions of the Customs Act, 1969, become operative only on import of goods into Pakistan. As the goods become chargeable after their import, the contention in fact, has more pursuasive force to support the rival contention. The learned Deputy Attorney-General has all along contended that the subject-matter of the legislation relates to Entry 43. The contention of the learned counsel that the impugned "service charge" is in fact a fee, charged on account of pre- shipment inspection of goods, merely appears to have been drawn as an inference from the fact that only such goods, as are subject to pre-shipment inspection, fall within the mischief of the impugned legislation. However, no such intention can be spelt out from the legislation itself to indicate that, such charge is intended to be levied on account of any service rendered by the PSI Companies or that the same has been levied for their benefit. It is also significant that the said "service charge" levied under the impugned legislation is to be credited to the Consolidated Fund.
Article 78(1) of the Constitution provides: "78.--(1) All revenues received by the Federal Government, all loans raised by that Government, and all moneys received by it in repayment of any loan, shall form part of a consolidated fund, to be known as the Federal Consolidated Fund."
' According to Article 79 of the Constitution, the custody of the Federal Consolidated Fund and withdrawal of moneys therefrom are to be regulated by an Act of Majlis-e-Shoora (Parliament) or until the provisions in this behalf are made, by rules made by the President. Therefore, even if some compensation is authorised to be made for the PSI Companies from the Consolidated Fund, hardly an inference can be drawn therefrom, as contended by the learned counsel for the petitioners. In the case of Sohail Jute Mills, although the impositions had been expressed to be an Iqra Surcharge', the Supreme Court nevertheless concluded that it was a customs duty which had been imposed in addition to the customs duties already imposed and such duty was merely to be distinguished as Iqra Surcharge. No doubt in this case, the imposition besides being referred to as 'Iqra Surcharge' was also referred to as 'customs duty', but a mere omission in the present case to call the imposition customs duty, cannot make it something other than such duty, if otherwise it has all the characteristics of customs duty. The imposition in the charging section has of course been referred to as service charge' and according to the ordinary dictionary meaning of the said words, they signify a charge for rendering of a service. Although 'services' has been defined by the Inspection, Valuation and Assessm ent of Imported Goods Rules, 1994, and the definition indicates that it has reference to inspection of goods by the PSI Companies, but the expression "service charge" has not been defined either by the said Rules or by the legislation in question. Words which have not been defined in the statute and of them. There exists no established definition, are susceptible of a wider connotation when question arises as to the competence of the Legislature to legislate on a particular subject-matter with reference to entries in legislative lists. Consequently, as the said imposition, as an additional charge, has been levied on import of goods, it can reasonably be construed as a tax on import. The imposition cannot be construed to be different in character than a tax on import merely because the law-maker chose to call it "service charge". After all entries in the legislative lists do not strictly circumscribe the ambit of legislative power, but they only demarcate the legislative field. Bindra, while referring to the doctrine of "Liberal Construction", at page 958 has observed: "None of the items in the lists is to be read in a narrow or restricted sense. Each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it."
' Again, at page 959, the learned author has further observed: "In case of legislative entry conferring powers of taxation, if the subject-matter is enacted, but there exists no legal definition of it, it would be competent on the part of the State Legislature to give it a wide meaning and it would not necessarily be governed by mere judicial decisions or interpretation of any and every fiscal statute. It will be different, however, if the subject-matter itself has been defined by some statute, that definition should prevail."
Accordingly, notwithstanding the fact that the impost in question has been characterised as "service charge", but as it is leviable on goods at the time of their import, it is in fact, a customs duty to be charged in addition to the usual customs duties on import of goods. It has been made applicable to goods, that have been classified as goods which are specified in the First Schedule to the Customs Act and are subject to pre-shipment inspection. The imposition is merely to be distinguished as a "service charge".
13. There is also no element of any discrimination involved in the legislation as such classification is permissible under Article 25 of the Constitution. As was observed in Brig. (Retd.) F.B. Ali v. The State PLD 1975 SC 506, "the concept of the 'equal protection of laws' which-is derived from the American Constitution, is not susceptible of any exact definition ... ... ... This guarantee does not forbid discrimination with respect to things that are different nor does it prohibit classification which is reasonable and is based upon substantial differences having a relation to the objects or persons dealt with and to the public purpose sought to be achieved. It guarantees equality and not identity of rights".
14. There can, therefore, be no doubt, that neither the said legislation is invalid nor it is ultra vires the Constitution. No doubt, a provision for such levy could be made by the Legislature by further amendment of section 18 of the Customs Act, which refers to dutiable goods, but this method of legislation by introduction of a separate provision is not alien to the Customs Act. Sections 18-A and 22 of the Customs Act can be cited as examples whereby provisions were respectively made for levying special customs duty on excisable goods or on re-importation of goods produced or manufactured in Pakistan. If the impugned legislation is found to be relatable to any entry in a legislative list, the method of legislation would not be of any consequence, if the legislation can otherwise be found to be within the competence of the Legislature.
15. The legislation has also been challenged on the ground of excessive delegation of powers as, according to the learned counsel, determination of the value of the goods imported into Pakistan was the statutory duty of the customs under section 25 of the Customs Act, which power could not be delegated to any other authority, but the argument was not pressed by the learned counsel at the time of hearing of these petitions. Therefore, any discussion in respect of the said contention would be futile.
16. Since, no other contention has been raised, in the result, these petitions are dismissed.