' This common order shall dispose of Writ Petitions Nos.17408 of 1997, 12810 to 12813 of 1997, 19746 of 1997, 25760 of 1997, 27952 of 1997, 2286 of 1998, 2538 of 1998, 2807 of 1998, 4145 of 1998, 5287 of 1998, 5288 of 1998, 7975 of 1998, 8074 of 1998 and 8325 of 1998 as they call in question the vires of the West Pakistan Finance Act, 1964, and subsequent amendments made therein.
2. By section 12 of the West Pakistan Finance Act, 1964 (hereinafter called the Act of 1964), the Sugarcane (Development) Cess was levied at the rate of 12 paisas per maund of sugarcane crushed by the Sugar Mill. The incidents of the Cess is shared equally by the Sugar Mill and the seller of the sugarcane. The proceeds of the Cess are required to be utilised for special maintenance, development of roads, plant protection services in the areas comprising the Mill Zones and for other allied activities for the development of the sugarcane. The Rules called the West Pakistan Sugarcane (Development) Cess Rules, 1964, were also framed under the Act. The Act of 1964 was first amended by the Punjab Finance ;Amendment) Ordinance No,XI of 1978 (hereinafter called the Ordinance of 1978) whereby the rate of the Cess was refixed at 56 paisas per 100 Kg. Of the sugarcane. The same was further amended by the Punjab Finance (Amendment)
Ordinance No, XX of 1983) hereinafter referred to as the Ordinance of 1983). The rate of the Cess for the financial year 1983-84 was fixed at 3.5% and for the financial year 1984-85 and onwards at the rate of 5% of the sugarcane price.
3. Messrs Hamid Khan and Syed Mansoor Ali Shah, Advocates, the learned counsel for the petitioners argued that the Ordinances of 1978 and 1983 were invalid and ultra vires the Constitution. According to them, after the Martial Law was proclaimed on 5-7-1977, the Constitution of Pakistan was held in abeyance. The Ordinance-making power of the Governor under Article 128 of the Constitution was no longer exercisable. The learned counsel submitted that even otherwise the impugned Ordinances of 1978 and 1983 had not been validated. They were never placed before the Provincial Assembly for approval after the revival of the Constitution or lifting of Martial Law. It was submitted that an Ordinance promulgated by the Governor was required by Article 128 of the Constitution to be placed before Provincial Assembly within three months for its approval and continuance in force. They further argued that Article 270-A of the Constitution validated and continued the Presidential laws only.
4. The learned counsel contended that the Mill Zones were originally created under the provisions of the Sugar Factories (Control) Act, 1950 (N.-W.F.P.) as adapted by the other Provinces. The Zones have since been abolished. With the abolition of Zones, exist. The impugned Cess could not have been utilised as there were no Mill Zones. The learned counsel submitted that the rate of Cess in the Punjab being 5% of the sugarcane price was higher than prevailing in the other Provinces. The impugned legislation was discriminatory in nature which offended the provisions of Article 25 of the Constitution. The Act of 1964 was not a Provincial law within the meaning of 1973 Constitution having been enacted under the old 1962 Constitution. The same could not have been amended by the Governor. It was argued that the impugned levy of cess was, in fact, a Central Excise Duty which was beyond the competence of the Provincial Legislature. Reference was made to the Black's Law Dictionary, 5th Edition, page 207, the cases of Nishat Mills Ltd., Nishatabad, Faisalabad v. The Federation of Pakistan through Secretary, Ministry of Food and Agriculture and 4 others PLD 1994 Lah. 175, Haji Multan Zareen and 56 others v. Government of N.-W.F.P. And another PLD 1980 Pesh.
137 and Ahmedabad Manufacturing and Calico Printing Co. Ltd., ' Ahmadabad etc. v. State of Gujarat and others AIR 1967 SC 1916. It was emphasised that the statutes were to be interpreted in a literal but purposive manner. The taxing laws were to be applied differently and by clear words. Reliance was placed on the cases of Fother Gill v. Monarth Airlines Limited (1980) 2 All ER 696, Jone v. Wrotham Par (1979) 1 All. ER 286 (289), A.G. v. Carlton Bank (1899) 2 QB 158 and W.T. Ramsay v. Inland Revenue Commissioner 1981 All ER 865.
5. It was next submitted that the impugned cess was levied for the purposes of special maintenance, development of roads, plant protection services and for the development of sugarcane production but no such facilities and services had been provided by the Government.
The element of quid pro quo was absent in the present case. The impugned legislation was liable to be struck down on that ground. Reference was made to the cases of Ayaz Textile Mills Ltd. v.
Federation of Pakistan through Secretary, Commerce and another PLD 1993 Lah. 194, Gwalior Sugar Co. Ltd. And others v. State of Madhya Bharat AIR 1954 MB 196, Jaora Sugar Mills (P.) Ltd. v. The State of Madhya Pradesh and others AIR 1966 SC 416, Krishi Upaj Mandi Samiti and others v. Orient Paper and Industries Ltd. (1995) 1 SCC 655, Messrs Krishan Lal Lakhmi Chand and others v. State of Haryana and others 1993 Supp. (4) SCC 461, The Paracha Textile Mills Ltd. v. Pakistan and others PLD 1963 Kar. 319 (D.B.), Rahimullah Khan and 65 others v. Government of N.-W.F.P. Through Secretary, Agriculture, Forest and Cooperative Department, Peshawar and 5 others 1990 CLC 550, Government of N.-W.F.P. Through Secretary, Agriculture and others v. Rahimullah and others 1992 SCMR 750, Noon Sugar Mills Ltd. v. Market Committee and others PLD 1989 SC 449, Federation of Pakistan through Ministry of Finance and others v. Messrs Noori Trading Corporation (Pvt.) Ltd. And 14 others 1992 SCMR 710, Assistant Collector of Central Excise and Land Customs and 2 others v.
Orient Straw Board and Paper Mills Ltd. PLD 1991 SC 992 and Hirjina & Co. v. Islamic Republic of Pakistan 1993 SCMR 1342.
6. The learned counsel further argued that without there being a proper price of the sugar the fundamental rights guaranteed by Article 18 of the Constitution could not be secured. The levy was not in the public interest and was also violative of the economic equality, the freedom inter- Provincial trade and business guaranteed by Articles 18, 23, 25 and 151. It was contended that Articles 18 and 23 of the Constitution were to be read together for the purpose of securing fundamental rights of freedom of trade and property. Reliance was placed on Mr. Fazlul Quader Chowdhry and others v. Mr. Muhammad Abdul Hague PLD 1963 SC 486, Asia Flour Mills (Pvt.) Ltd.
And 6 others v. Director, Food, Department of Food, Punjab, Lahore and 5 others PLD 1996 Lah. 133, Sapphire Textile Mills Ltd. And 9 others v. Government of Sindh and others PLD 1990 Kar. 456, Mahmood Majid, Director, Asia Flour Mills (Pvt.) Ltd., Bahawalpur v. The State and 3 others PLD 1998 Lah. 296, The State of Madras v. N.K. Nataraja Mudaliar AIR 1969 SC 147, Weston Electronics and another v. State of Gujarat and another AIR 1988 SC 2038, Cole v. Whitfield (1988) 165 CLR 360, Syed Wasi Zafar v. Federation of Pakistan PLD 1991 SC 671, Fauji Sugar Mills v. Province of Punjab 1996 CLC 592, K.C. Varadachari, Partner, Madras Oil Mills and Products v. The State of Madras, by the Secretary to the Government of Madras, Food and Agriculture Department AIR 1952 Mad. 764, Frontier Textile Mills v. Textile Commissioner PLD 1959 Lah. 385, Nasirabad Properties Ltd. v.
Chittagong Development Authority and another PLD 1966 Dacca 472, Chitta Ranjan Sutar v. The Secretary, Judicial Department, Government of East Pakistan and 2 others PLD 1967 Dacca 445, Inamur Rehman v. Federation of Pakistan and others 1992 SCMR 563, Elahi Cotton Mills v. Federation of Pakistan PLD 1997 SC 582, Shaukat Ali and others v. Government of Pakistan through Chairman, Ministry of Railways and others PLD 1997 SC 342, Ittefaq Foundry v. Federation of Pakistan PLD 1990 Lah. 121 and Government of Pakistan through Secretary, Ministry of Religious Affairs, Islamabad and 3 others v. Zafar Iqbal and 3 others 1992 CLC 219, Mirpurkhas Sugar Mills Ltd. v. District Council, Tharparkar and 2 others 1990 MLD 317, Mirpur Khas Sugar Mills Limited v. District Council, Tharparkar through Chairman and 3 others 1991 MLD 715, Lakshman and others v. State of Madhya Pradesh AIR 1983 SC 656 and The Indian Cement and others v. State of Andhra Pradesh and others AIR 1988 SC 567.
7. Mr. Shahid Karim (Writ Petition No,5287 of 1998 and Writ Petition No,5288 of 1998) argued that the refund of the cess could not be refused merely on the ground that it was in the nature of an indirect tax shared equally by the Mill and seller of the sugarcane. He further argued that the recent trend of the judiciary all over the world was to recognise and give effect to the restitutionary rights. The Law Quarterly Review, Vol.109, January, 1993, page 375 was referred to in support of his contentions.
The other learned counsel adopted the arguments addressed by Messrs Hamid Khan and Syed Mansoor Ali Shah, Advocates.
8. On the other hand, Kh. Muhammad Sharif, the learned Advocate-General and Mr. Muhammad Iqbal Khichi, the learned Assistant Advocate-General, Punjab, argued that by virtue of Article 7 of the Constitution, there was a clear distinction between a tax and a cess. The cess levied by the impugned legislation could not be treated to be a tax. The cess had not been shown in any of the items of the Federal or Concurrent Legislative Lists of the Constitution. The subject-matter of the impugned legislation stood covered by the residuary legislative power of the Provincial Assembly under Article 142(2)(c) of the Constitution. Reliance was placed on Firm Ram Krishna Ramnath Agarwal Kamptee v. The Secretary, Municipal Committee, Kamptee AIR 1950 SC 11, The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamier of Sri Shirpur Mutt AIR 1954 SC 282, Sheikh Muhammad Ismail & Co. Ltd. v. The Chief Cotton Inspector, Multan Division and others PLD 1966 SC 388, Noon Sugar Mills Ltd. And Jaora Sugar Mills (Pvt.) Ltd.
(supra). It was argued that the support price of the sugarcane for the year 1997-98 had been fixed at the rate of Rs,35 per 40 Kg. In Punjab and in N.-W.F.P. Whereas it was Rs,36 per 40 Kg. In the Provinces of Sindh and Balochistan. This was clearly shown by letter, dated 30-5-1997 issued by the Food and Agriculture Division, Government of Pakistan. Therefore, there was no question of any discrimination or economic inequality in the present case. The cess money, they argued, was credited to the non-lapsable public account as envisaged by Article 118(2) of the Constitution. The Government of the Punjab had already placed over 90% of the cess amount at the disposal of the Commissioners of Divisions of the Province for utilisation. It was contended that an Ordinance issued during Martial Law period was not required to be placed before the Provincial Assembly in view of Article 270-A of the Constitution of Pakistan. Reliance was placed on the cases of Sally Textile Mills Limited v. Collector of Customs, Customs House, Karachi 1991 SCMR 721 and Sapphire Textile Mills Ltd. v. Collector of Central Excise and Land Customs, Hyderabad 1990 CLC 456. The impugned legislation fostered the public purpose and was justified in view of the law laid down in the case of Fauji Foundation and another v. Shamimur Rehman PLD 1983 SC 457. The learned Advocate-General stated that the Court should uphold the validity of a law rather than destroy it .
Reference was made to the case of Mehreen Zaibun Nisa v. Land Commissioner, Multan and others PLD 1975 SC 397.
9. I have considered ,the arguments of the learned counsel for the parties. The impugned Ordinances of 1978 and 1983 were promulgated by the Governor of the Punjab during the Martial Law period. By proclamation of Martial Law on 5-7-1977, the Constitution of Islamic Republic of Pakistan, 1973, was held in abeyance. On the same day, the Chief Martial Law Administrator promulgated C.M.L.A.'s Order No,1 of 1977 called the Laws (Continuance in Force) Order, 1977. Article 2 of the said Order provided that notwithstanding the abeyance of the provisions of the Constitution, but subject to a Presidential Order or Martial Law Regulation or Martial Law Order, Pakistan would be governed, as nearly as may be, in accordance with the Constitution. Article 7 of the said Order provided that an Ordinance promulgated by the President or the Governor would not be subject to the limitation as to its duration prescribed in the Constitution. As such, the Constitution of 1973 continued to hold the field except that certain parts thereof were held in abeyance. This position was recognised in the case of Begum Nusrat Bhutto v. Chief of Army Staff PLD 1977 SC 657. Later, the Provisional Constitution Order, 1981, was promulgated by the Chief Martial Law Administrator. The same was amended by the Provisional Constitution (Amendment) Order, 1981 (C.M.L.A.'s Order No,2 of 1981) which expressly made Article 128 of the Constitution, 1973, applicable. Therefore, the Governor was always empowered under Article 128 of the Constitution to promulgate the impugned Ordinances of 1978 and 1983. The same are not liable to be struck down on that ground.
10. By Presidential Notification, dated 10-3-1985, the Constitution of Islamic Republic of Pakistan, 1973, was revived except certain provisions thereof. However, by other notifications, dated 29-12- 1985 and 30-12-1985, the suspended provisions of the Constitution were also restored by the Martial Law was withdrawn by the Chief Martial Law Administrator. The Parliament added Article 270-A of the Constitution effective from the day of lifting of Martial Law. The Presidential Orders, Ordinances, Martial Law Regulations/Orders and all other laws made during Martial Law were validated and, if in force, were continued but subject to their repeal or amendment by the competent Authority.
Therefore, there was no need of placing the impugned Ordinances before the Provincial Assembly for their approval and continuance in view of the non obstante clauses of Article 270-A of the Constitution. In taking this view, I am fortified by the cases of Abu Farida Khan v. The Province of East Pakistan and 2 others PLD 1964 Dacca 473, Sheikh Atta Muhammad v. Mian Muhammad Abdullah and 10 others PLD 1971 Lah. 210, S.A. Rafi and another v. Government of West Pakistan through the Secretary to the Government of West Pakistan, Lahore and 4 others PLD 1973 Lah. 539, Usman Ltd. v. The Collector of Customs (Appraisement), Customs House, Quetta and another PLD 1990 Quetta 1 and Sally Textile Mills Limited (supra). The validation clause equally covered the laws, etc., made by the President and other authorities including Martial Law Regulations/Orders.
11. The argument of the learned Advocate-General that a cess is always different than a tax does not seem to be well-founded. Ordinarily, access belongs to the family of taxes levied for a definite purpose often with the prefixed words defining the object. A tax properly called adds to the general revenues in which case the essence of quid pro quo is absent. The receipts of the Sugar Development Cess are credited to a non-lapsable public account separately maintained by the Provincial Government. They do not form part of the general revenues of the Province. Nothing was brought on record to show that any amount of the cess was ever used for a purpose other than the one for which it was collected. The letter, dated 21-10-1997 issued by the Government of the Punjab, Finance Department, clearly shows that more than 90% of the amount of Sugarcane Development Cess has already been released for utilisation by the Divisional Commissioners of the Province for the purpose it was collected. This also establishes the quid pro quo between the levy and the services even if the Cess is considered to be not a provincial tax. The impugned cess is intimately connected with the development of the sugarcane industry which is an agricultural produce. The subject-matter of sugarcane is not enumerated in either of the Legislative Lists. The levy of the cess, in pith and substance, is a provincial matter particularly when its object is the construction, maintenance and development of the local roads for promoting the sugarcane industry.
12. In the Federation of Pakistan, the Constitution-makers had taken special care to give wide latitude to the Provinces in the matter of taxation and fees.
' Unlike India, our Constitution has reserved the unoccupied field of legislation for a Provincial Assembly. In Babu Jhalak Prasad Singh and others v. Province of Bihar AIR 1941 Pat. 306 (F.B.), the levy of a local cess under the Bihar Agricultural Income-tax Act, 1938, was held to be valid. In the case of Firm Ram Krishna Ramnath Agarwal Kamptee (supra) the levy of octroi tax was treated to be not a duty of central excise. In Shanmugha Oil Mill Erode by its Partner v. Varadappa Chettiar v.
Coimbatore Market Committee by its Secretary its office at Tiruppur and another AIR 1960 Mad. 160, a cess provision of the Madras Commercial Crops Markets Act, 1933, was held to be a tax in which quid pro quo was not essential. It was further held that the power existed in the State Legislature to raise the funds for its activities by taxation which did not violate the equal protection clause contained in Article 14 of the Constitution of India.
13. By virtue of Article 279, all the taxes and fees levied under any law in force would continue to be levied notwithstanding anything contained in the Constitution. The levy of the Sugarcane Development Cess under the existing Act of 1964 was not subject to the other Constitutional limitations and constraints. Similar provisions are found in Article 277 of the Indian Constitution. In the case of H.C. & P. Works Ltd. v. State of Andhra Pradesh AIR 1964 SC 1870, it was laid down that the existing law would continue in terms of Article 277 so long as the Centre itself did not cover the field occupied by the existing law. In the cases of Union of India and others v. Maharaja Kishangarh Mills Ltd. AIR 1961 SC 683 and Sakti Oushadhataya v. Union of India AIR 1963 SC 622, the Supreme Court of India took the view that Article 277 was in the nature of a saving provision permitting the States to levy a tax or a duty which, after the Constitution, could be levied only by the Centre. In Pakistan Tobacco Co. Ltd. v. Karachi Municipal Corporation PLD 1964 Kar. 468, it was observed that the taxes and fees levied by a Municipal Corporation under the existing Municipal Acts were protected and continued after the commencing day notwithstanding anything in the Constitution. Similar view was taken in the cases of Kazi Abdul Majid v. The Province of Saindh through Secretary, Excise and Taxation and another PLD 1974 Kar. 417, Pakistan Textile Mills Owners' Association, Karachi and 2 others v. Administrator of Karachi and 2 others PLD 1963 SC 137 and Hirjina & Co. And Nishat Mills Ltd.
(supra). In the presence of Article 279, the question of the nature of impugned cess is hardly of any importance.
14. Our Constitution provides a proper mechanism and balance of administrative relations between Federation and Provinces in Part V, Chapter II of the Constitution. Article 151 provides that the trade, commerce and intercourse throughout Pakistan shall be free. A Provincial Assembly or a Provincial Government is prohibited to make any law, or take any executive action, prohibiting or restricting the entry into, or the export from, the Province of goods of any class or description. It prohibits a tax which, as between goods manufactured or produced, discriminates in favour of the former goods or which in the case of goods manufactured or produced outside the Province discriminates between goods manufactured or produced in any area in Pakistan and similar goods manufactured or produced in any other area in Pakistan. The levy of Sugarcane Development Cess is not limited only to one Province. No cess was imposed on the import into or export of sugar from the Province of Punjab. There is a freedom from Provincial taxation in regard to the sugar manufactured in, brought in or exported from, the Province of Punjab. The price of the sugar whether produced in the Province or imported is the same. The mere fact that the rate of levy of Sugarcane Development Cess is at variance from the other Provinces does not per se offend the provisions of Article 151 of the Constitution. Such a levy by one Legislature which is different from another Legislature cannot be held to be violative of Article 25 or Article 151 of the Constitution. In the case of Tika Ramji and others v. The State of Uttar Pradesh and others AIR 1956 SC 676, it was held that the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, was not void on the ground that it was violative of Article 301 of the Constitution (similar to our Article 151 of the Constitution). In the case of The Malwa Bus Service (Pvt.) Ltd. Etc. v. State of Punjab and others AIR 1983 SC 634, the enhancement of tax on stage carriers under the provisions of the Punjab Motor Vehicles Taxation Act, 1924, was held to be compensatory in character and that there was no violation of Articles 19(1)(g), 301 and 304(b). It was further held that the mandate in Part XII was not that the trade, commerce and intercourse should be absolutely free, i,e, subject to no taxation. In the case of State of Madhya Pradesh v. G.O. Mandawar AIR 1954 SC 493, the following statement of law appears:- "When the same Legislature enacts two different laws but in substance they form one legislation, it might be open to the Court to disregard the form and treat them as one law and strike it down, if in its opinion they result in discrimination. But such a course is not open where the two laws sought to be read in conjunction are by two different Governments and by different Legislatures. Article 14 does not authorise the striking down of a law of one State on the ground that in contrast with a law of another State on the same subject, its provisions are discriminatory. Nor does it contemplate a law of the Centre or of the State dealing with similar subjects being held to be unconstitutional by a process of comparative study of the provisions of two enactments. The sources of authority for the two Statutes being different, Article 14 can have no application. "
I dealt with the ambit and scope of Article 151 of the Constitution of Pakistan recently in the case of Mahmood Majid, Director, Asia Flour Mills (Pvt.), Bahawalpur (supra) in which I took the view that the regulatory measures and the imposition of compensatory taxes would not be hit by the limitations as contemplated by Article 151 of the Constitution. In my opinion, the impugned legislation does not in any 'manner involve the application of Article 151 of the Constitution of Pakistan. If the arguments of the learned counsel for the petitioners are accepted, then no Provincial Legislature would be able to impose any taxes or fees in the Province. Such an approach militates against the provisions of the Constitution which is Federal in character.
15. The fundamental right of any lawful trade or business is not affected by the provisions of the Act of 1964 as amended from time to time. There is no absolute right of trade or business under Article 18 of the Constitution. It is subject to regulation and imposition of reasonable restrictions by law. A similar view has been taken in the cases of Messrs Mirpur Khas Sugar Mills Ltd. v. Consolidated Sugar Mills Ltd. And 3 others PLD 1987 Kar. 225, Ch. Tika Ramji (supra), Government of Pakistan through Secretary, Ministry of Commerce and another v. Zamir Ahmad Khan PLD 1975 SC 667 and Government of Pakistan v. Syed Akhlaque Hussain and another PLD 1965 SC 527. The impugned cess levied by the Act of 1964 being compensatory in nature does not offend the provisions of Articles 18 and 23 of the Constitution of I Pakistan.
16. There is a fallacy in the argument of the learned counsel that the purpose of levy has ceased to exist. The charging provisions of section 12 of the West Pakistan Finance Act, 1964, cannot be said to have ceased to exist or havin become redundant even if the Mill Zones have been abolished for the purpose of Sugar Factories (Control) Act, 1950. The validity of a law depends not upon any theory of law or extrinsic considerations but on the touchstone of the provisions of the Constitution as held in the case of Fauji Foundation (supra). The implied repeal or redundancy of a statute is not to be favoured. The efficiency of the impugned Act/Ordinance is not affected by the action or inaction of the Government under the Act of 1950. There should be no difficulty for the Government to utilise the proceeds of the cess in the areas comprising the Mill Zones as already constituted or by reconstituting the same.
17. The other argument of the learned counsel for the petitioners as to the impugned cess being a duty of central excise is not tenable. A sugarcane is not excisable goods within the meaning of section 3 of the Central Excises and Salt Act, 1944. However, a duty of central excise has already been levied on the production of sugar.
18. For the foregoing reasons, I hold that no exception can be taken to the impugned laws, levy and collection of the impugned Sugarcane Development Cess by the Government of the Punjab.
Resultantly, these writ petitions fail and are dismissed in limine.
19. Before parting with the order, I would like to place on record my appreciation of the valuable assistance rendered by the learned counsel particularly Messrs Hamid Khan, Syed Mansoor Ali Shah, Mr. Shahid Karim, ' Advocates, the learned counsel for the petitioners, the learned Advocate-General and the learned Assistant Advocate-General, Punjab.