1. MRS. KHALIDA RACHID, J.--All the following writ petitions, which raise common question of law relating to validity of section 15 of the Finance Act, 1992 (Act VII of 1992), have been heard together and will be disposed of by this single judgment:--
(1) Writ Petition No,105 of 1976 Messrs United Rubber (Pvt.) Ltd. v. Government of Pakistan and others.
(2) Writ Petition No,168 of 1994 Messrs Saif Textile Mills Ltd. v. Government of Pakistan and others.
(3) Writ Petition No,192 of 1994 Messrs Gadoon Textile Mills Ltd. v. Government of Pakistan and others.
(4) Writ Petition No,276 of 1994 Messrs Adil Polypylene Products (Pvt.) Ltd. v. Government of Pakistan and others.
(5) Writ Petition No,504 of 1996 Messrs PEL Appliances Ltd. v. Government of Pakistan and others.
(6) Writ Petition No,596 of 1996 Messrs Royal Textile Mills Ltd. v. Government of Pakistan and others.
(7) Writ Petition No,690 of 1993 Chashma Sugar Mills Ltd. v. Government of Pakistan and others.
(8) Writ Petition No,691 of 1993 Kohat Cement Company Ltd. v. Federation of Pakistan and others.
2. 2.The Federal Government by section 15 of the Finance Act, 1992 levied Federal Education Fee on Industrial Units with fixed assets over 50 million rupees, which reads as under:-- "15. Federal Education Fee.--(1) There shall be levied and collected Federal Education Fee from every company as defined in the Companies Ordinance, 1984 (XLVII of 1984) whose fixed assets as shown in its balance-sheet made on or after the thirtieth day of June 1992, are valued at more than fifty million rupees at such rates and in such manner and from such date as may be specified in a scheme notified by the Federal Government in the official Gazette.
3. (2)No fee under subsection (1) shall be payable by a company specified in column (1) of the table below, if it has set up or sets up, manages and runs educational institution specified in column (2) of that table within such period as may be notified in the scheme referred to in subsection (1).
4. Type of Company Educational Institution
(a) Where the value of all fixed assets is more than Rs,50 million but not more than Rs,100 million.Middle School
(b) Where the value of all fixed assets is more than Rs,100 Million but not more than Rs,250 millionHigh School (c)Where the value of all fixed assets is more than 250 million. Technical Educational Institute (3)The Federal Government may by notification in the official Gazette, make rules for carrying out the purposes of this action."
5. 3.The scheme and rules have been notified by virtue of Notification No, SRO No,139 of 1993, dated February 16, 1993, issued by Ministry of Education Rule 2 of the rules provides the rate of tile fee recoverable from the companies registered under the Companies Ordinance, 1984.
6. 4.In pursuance of provisions of section 15 of the Act, the Deputy Commissioner Income-tax, Companies Circle I, Peshawar, issued show-cause notices to the petitioners/companies demanding the payment of fee in question by a 'cutoff date' failing which a proposal for cancellation of exemption certificate under sections 50(4) and 50(5) will be made'.
7. 5.Aggrieved of the said provisions and notices the petitioners have challenged the legality and validity of section 15 of Act 1992 in their petitions mainly on the following grounds:-- (a)That the Federal Government cannot levy any tax on education nor can receive any educational fee,- as education is a Provincial matter, being neither included in the Federal legislative list nor in the Concurrent Legislative List.
8. (b)That impugned levy is in the form of a tax and not a fee, since fee could only be levied for the services rendered.
9. (c)That the education fee is to be collected by the Federal Government as part of income-tax, for the benefit of those who are under the sphere of the Federal Government.
10. 6.The respondents, despite repeated reminders did not furnish comments/written statements.
11. 7.We have been assisted by Mr. Abdul Latif Yousufzai for petitioners in Writ Petition Nos.168 of 1994, 192 of 1994, 105 of 1996, 504 of 1996, 596 of 1996, Mr. Mohibullah Kakakhel in Writ Petition No,276 of 1994 and Qazi Muhammad Anwar, Writ Petitions Nos.690 of 1994 and 691 of 1994 and Mr. Mursalin Khan has appeared for the respondents. The main arguments in these cases have been addressed by Mr. Abdul Latif Yousufzai, Advocate, while the learned counsel representing the .Petitioners in other cases went along with the submissions advanced by Mr. Yousufzai.
12. 8.The first objection raised by the learned counsel for the petitioners was to the jurisdiction of Federal Government to levy fee in question. Taking serious exception to the provisions of section 15 of the Act the learned counsel for the petitioners argued that education is a Provincial subject and nowhere it is specified in the Federal or Concurrent Legislative List, therefore, Federal Government acted beyond its dominion in imposing the fee in question. The learned counsel, referring to paras. (1) and (2) of the Fourth Schedule to Article 70(4) of the Constitution, submitted that education as such, does not find place in the Federal Legislative List or Concurrent Legislative List, thus, it is solely a provincial responsibility. In this context, the learned counsel relied on Sohail Textile Mill and others v. Federation of Pakistan and others PLD 1991 SC 329.
9. In fact, perusal of both the lists confirmed that the education, as such, has not been mentioned in either of the lists. Though Serial No,16 of the Federal Legislative List describes, "Federal agencies and institutes for the following purposes, that is to say, for research, for professional or technical training, or for the promotion of special studies." Similarly, entry at Serial No,17 adds, "Education as respects Pakistan students in foreign countries and Foreign students in Pakistan". Both the entries have no nexus with the subject covered by the impugned fee. Since this fee is not intended for providing facilities for research, professional or technical training nor assist Pakistani students in foreign countries, but relates to the establishment of new institutions for middle, high for technical education only.
13. 10.We are also not inclined to agree with Mr. Mursalin Khan that education fee is covered under the categories of entries at Serial Nos. 38 and 44 of the concurrent Legislative List Entry at Serial No,38 pertains to curriculum syllabus, planning, policy, Centers of Excellence and standards of education, while Serial No,44 refers to fees in respect of any matters included in the concurrent List. The case of Sohail Textile Mills PLD 1991 SC 329 cannot be benefited from by the respondents because there in the Honourable Supreme Court had justified the imposition of "Iqra Surcharge" holding the same to be a customs duty. Regardless of the name "Iqra" used for that and hence within the jurisdiction of Federal Government, Customs being included in Federal Legislative List. It was observed that mere use of word "Iqra" (meaning reading, writing, reciting etc.) did not bring the levy within the domain of education and hence Provincial Legislative List.
14. 11.Education being the Provincial matter the Federal Government could frame no legislation thereabout, for it did not fall the under Federal Legislative List or Concurrent Legislative List. Any law made by the Legislature conflicting the provisions of the Constitution is void, since the law making power is always subject to the provisions of the constitution. Hence, impugned impost made by the Federal Government beyond the legislative powers specified by the Constitution can rightly be declared as ultra vires the Constitution.
15. 12.The next point that posed for solution before us is whether impugned levy is a fee or a tax. The learned counsel for the petitioners insisted on the view that education fee is a tax. He argued that the tax is for general purposes which is levied only to earn and enhance the revenues for the Federal Government, while fee is realized against the services rendered for the benefit extended to those who are made to pay the same. The learned counsel contended that the respondents had not rendered any service to the benefit of the petitioners/companies, therefore, under the law they have no authority to impose the said fee. He went on to argue that even the imposition of tax has been made against the prescribed procedure of law and hence the impugned levy, even if considered to be a tax, is ultra vires the Constitution. Conversely, Mr. Mursalin Khan, Standing Counsel for the Federation, submitted that the impugned fee is charged for the services which are intended to be rendered to the petitioners by establishing schools for the education of the children of the workers, even otherwise, he further argued, the imposition of fee cannot necessarily be restricted for any services rendered in this context, he referred to 1990 CLC 636.
16. 13.Before, we embark upon deciding the issue, whether the levy is charged as a tax or a fee, we may refer to distinction observed by august Supreme Court in Muhammad Ismail & Co. v. The Chief Cotton Inspector PLD 1966 SC 388. The Honourable Supreme Court referred to the definition of a fee and a tax as given by Mr. Latham, Chief Justice, High Court of Australia in Mathew v. Chicory Marketing Board: "A tax is a compulsory exaction of money by public 'authority for public purposes enforceable by law and is not payment for services rendered". Whereas, a fee is charged for special service rendered to individuals by some Governmental agency". Similar observations were made by the Honourable High Court, Dacca in Abdul Majeed v. Province of East Pakistan PLD 1960 Dacca, 502 which reads as: "The distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of common burden, while fee is a payment for special benefit or a privilege". Thus, a tax is levied to raise funds to augment the State Revenue to meet the necessary expenses whereas fee is a payment to public or private body in lieu of special services rendered or privileges extended to the payee similar view was taken by Honourable Judge in Sindh Glass Industries Ltd. v. Chief Controller of Import and Export, Islamabad and others 1990 CLC 638 relied upon by the standing counsel for the Federation. We feel persuaded, to agree with the arguments of the learned counsel for the petitioners that there's nothing in the impugned provision of law to show that the fee is levied for some special services rendered or to be rendered to the petitioners/companies. We could again refer to Abdul Majeed's case, where his Lordship Akbar, J. Said "if, as we hold, a fee is regarded as a sort of return or consideration for services rendered, it is absolutely necessary that the levy of fees should, on the face of the legislative provision, be co-related to the expenses incurred by the Government in rendering the services". It was not disclosed by the respondents that as to under what head the fee could be utilized and in what style the services would be rendered to the benefit of the petitioners when the petitioners/companies are already paying education fees at the rate of Rs,100 per worker per annum to the Provincial Government under Ordinance XI of 1972, known as "Workers' Children Education) Ordinance, 1972". The Provincial Government, under section 4 of the said Ordinance is required to take care of the education of the children of the workers.
17. 14.We also see force in the contention of the learned counsel for the petitioners that the impugned fee, which is to be collected through income-tax authorities, is undoubtedly beneficial to the Federal Government, since no mechanism for further distribution to provinces from the common pool has been identified in section 15 of the Finance Act or scheme and rules made thereunder. It is also true that for creating any liability, there should be a parent law for that field. No parent law is disclosed to be in existence for charging the education fee. Thus, the fixation of the fee in question through rules is violative of the constitution.
18. 15.In view of the above discussion, we, by accepting the petitions, declare the provisions of section 15 of the Finance Act, 1972 as unlawful, without jurisdiction and repugnant to the provisions of Constitution. No order as to costs.