' The petitioners seek a declaration that section 15 of the Finance Act, 1992 and the Federal Education Fee Scheme, devised and issued vide S.R.O. No,139(1) of 1993, dated 16-2-1993 are ultra vires of the Constitution of Islamic Republic of Pakistan, 1973.
2. The petitioner is engaged in the manufacturing of vegetable ghee, Extraction of Oil, Ginning and Pressing of Cotton, Spinning of Yarn and Woollen Yarn and Sales local as well as Export thereof, popularly known as Messrs Fatima Enterprises Limited. A Federal Education Fee has been levied vide section 15 of the Finance Act, 1992. In terms of the above enactment, the Federal Government has framed a Federal Education Fee Scheme and has issued S.R.O. No,139(1) of 1993, dated 16-2- 1993 for the purposes of the assessment and collection of the said fee. As per provisions of the statute and the scheme devised thereunder, a Fee at the prescribed rates is to be levied and collected periodically from every company as defined in the Companies Ordinance, 1984, whose fixed assets as shown in its balance sheet, made on or after 30-6-1992, are valued at more than rupees fifty million. An exemption has been provided to such a company which has set up or sets up, manages and runs Educational Institutions of prescribed level, in terms of the said law and the scheme. The Federal Education Fee Scheme, the Fee is to be assessed and collected by respondents Nos.3 and 5 and the provisions of the Income Tax Ordinance, 1979 and the rules framed thereunder are to apply mutatis mutandis thereon. The charge, assessment and demand for the payment of Federal Education Fee made under section 15 of the Finance, Act, 1993 and the Notification issued thereunder bearing No,S.R.O.139(1) of 1993, dated 16-2-1993 has been challenged by the petitioner on multiple grounds alleging that those are without lawful authority.
3. A report and parawise comments was called from respondent No,3 i,e, Central Board of Revenue, through its Chairman and a notice to the Attorney General of Pakistan was issued for a very early, date on 22-2-1994. No parawise comments have been submitted and Legal Advisor to the respondent had entered appearance and argued the case.
4. The first contention of the learned counsel for the petitioner is that the charging of Fee is provided under entries No,54 and No,5 of Parts 1 and II respectively of the Federal Legislative List in the Fourth Schedule of the Constitution of the Islamic Republic of Pakistan, 1973, and similarly the charging of a Fee is also provided under entry No,44 of the Concurrent Legislative Digest List in the 4th Schedule of the Constitution and in terms of the said entries, a levy in the nature of a Fee can only be imposed with regard to any matter provided in the respective lists of the Fourth Schedule to the Constitution. The said lists do not contain any provision relating to Education or for that matter provide for establishment of Schools by the Federal Legislature. Section 15 of the Finance Act, 1992 and the Federal Education Fee Scheme, framed vide S.R.O. 139(1)/93, dated 16-2-1993, seek to impose of Fee with regard to matters which are not in the domain of the Federal Legislature. The levy is thus ultra vires to the Constitution of Islamic Republic of Pakistan, 1973.
5. Entry No,54 of Part No,1 of the Fourth Schedule which contains the Federal Legislative List reads as under:-
(54) "Fees in respect of any of the matters in this Part, but not including fees taken in any Court. And Entry No,5 in Part II of the Fourth Schedule reads as under:-- ' "Fees in respect of any of the matters in this Part but not including fees taken in any Court."
6. The Concurrent Legislative List mentioned in respect of entry No,44 which reads as under:--
(44) "Fees in respect of any of the matters in this list, but not including fees taken in any Court."
7. Thus, it is clear that both the Federal Legislative Lists and the Concurrent Legislative Lists do not contain any provisions relating to Education or for that matter provided fur establishment of Schools by the Federal Legislature.
8. Section 15 of the Finance Act, 1992 which is impugned 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 13th day of June, 1992 are valued 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.
(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 No,2 of that table within such period as may be notified in the scheme referred to in subsection (1).
Type of CompanyEducational Institutions
(a) Where the value of all fixed assets is more than Rs.50 million but less than Rs.100 million.Middle School
(b) Where the value of all fixed assets is more than Rs.100 million but not more than 250 million rupees.High School
(c) Where the value of all fixed assets is more than Rs.250 million.Technical Education School.
(3) The Federal Government may, by notification in the official Gazette, make rules for carrying out the purposes of this section."
9. A bare reading of the above section shows that it provided a levy of Fee which is to be now as Federal Education Fee from certain specified classes of the Company and the said Fee is being levied for Education purposes. This fact is obvious from the reading of subsection (2) which says that in case the Company has set up Educational Institutions like Middle Schools, High Schools no fee shall be payable by them. In para. No,7 of the Federal Education Fee Scheme promulgated by the Government under the Finance Act, 1992, states that the said Fee shall be used exclusively for the establishment/management of School specified for the scheme and para. No,4 of the Scheme gives three specification of such schools namely Middle Schools, High Schools and Technical School. The Federal Education Fee Rules, 1992 contains details about the establishment and also the equipments which the Schools are required to possess.
10. The learned Legal Advisor of the respondent has referred to (PLD 1991 SC 329). He has made an attempt to show that "education" is referred to at Serial Nos.16 and 17 of the Federal Legislative List and at Serial No,38 of the Concurrent Legislative List. The learned Legal Advisor had no answer when confronted with the situation that Serial No,16 of the Federal Legislative List relates to Federal Education Institution for the purpose of research for professional or technical training or for promotion of special studies which is not the object for which the "Federal Education Fee" has been levied. The reason being that it does not provide or cater any research nor does it contemplate setting up of any institution for this purpose. Similarly, Serial No,17 of the Federal Legislative list is restrict, .d to education of Pakistani students abroad or foreign students in Pakistan. So far as, Item No,38 of Concurrent Legislative List was concerned, it provides for legislation in respect of syllabus, planning policy, centres of excellence and standards of education.
' In the case of Sohail Jute Mills Ltd. And others v. Federation of Pakistan (PLD 1991 SC 329) where competence of the Federal Government to levy the Iqra Surcharge was objected on the Constitutional plane by the petitioner's Mills. The Hon'ble Supreme Court observed that:- ' "The second objection on the Constitutional plane, raised by numerous learned counsel, is to the competence of the Federal Government to levy and such tax as is under consideration. In the Finance Act of 1985 the disputed tax is specified as Iqra Surcharge. 'Iqra' has the dictionary meaning of learning, reading, reciting and going by the pith and substance of the tax it amounts to education tax. According to the learned counsel, education does not find a place either in the Federal Legislative List or in the Concurrent Legislative List and has necessarily to be treated as exclusively a provincial subject. For that reason neither the Federal Legislature could legislate nor could the President pass an Ordinance levying such a duty. Hence, the levy is ultra vires the Constitution.
' It is correct that 'Iqra' has the dictionary meaning as suggested. It is also correct that education as such is not mentioned either directly or indirectly in the Federal Legislative List or the Concurrent Legislative List. What is contained in the Federal Legislative List at Serial No,16 is within 'Federal Agencies and institutes for the following purposes, that is to say, for research, for professional or technical training or for promotion of special studies'. At Serial No,17 in the same list is mentioned 'Education as respects Pakistani students in foreign countries and foreign students in Pakistan.' In the Concurrent Legislative List at serial No,38 exists the entry 'Curriculum, Syllabus, planning, policy, centres of excellence and standards of education'. These entries do not cover the field of adult literacy which was suggested by the use of word 'Iva'. This argument fails on two points. Firstly, the charging sections consistently mentioned it as additional customs duty. No only in name but in substance too it is customs duty because it has been levied on the import of goods, has reference to goods specified in the First Schedule to the Customs Act, 1969 and the value of the goods is to be determined under section 25 of the Customs Act, 1969. At serial No,43 of the Federal Legislaive List is mentioned 'duties of customs, including export duties'. In Halsbury's Law of England, Volume 12, 4th edition, Para. 501, page 65, contains the following recital of law.
' 'Duties of customs, or customs duty, 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 consumed within the country'.
' In Corpus Juris Secundum Vol. 25 at page 140 it is mentioned that 'customs duties are taxes assessed on merchandise imported from or exported to a foreign country'.
' The levy under examination satisfied in name and substance the strictest legal definition of customs duties.
' Secondly, the arguments draws was for its strength not so much on the nature and the stage of the levy on imports, but the ultimate purpose for which the money collected was proposed to be utilized. This is not permissible within the framework of the Constitution. Article 78(1) of the Constitution provides as hereunder:-- ' 'All revenue received by the Federal Government, all loans raised by the Government and all moneys received by it in repayment of any loan, shall form part of consolidated fund, to be known as the Federal Consolidated Fund'.
' Under Article 79 of the Constitution, the withdrawals from the Consolidated Fund take place under the authority of Majlis-e-Shoora.
' It is not possible, therefore, to relate the proposed expenditure with the levy or to make the proposed expenditure the test for examining the validity of the levy.
' Another Constitutional objection to the levy is that it is neither a customs duty nor any other duty but expressed to be 'Surcharge'. Ballentine defines 'Surcharge' as an additional amount added to the usual charge, an exaction'. In Black's Law Dictionary, 'Surcharge' is described as 'an overcharge an exaction imposed or encumbrance beyond what is just and right or beyond one's authority of power'. According to the learned counsel, such a Surcharge has been levied amounts to a penalty and there is no power possessed by the Federal Legislature to penalise without determining and adjudicating on the fault or the delinquency for which such a penalty is prescribed. The learned counsel has referred to the use of word 'Surcharge' in the margin of section 2 of the Finance Ordinance, 1982, in support of this submission. Additionally, it is stated that 'Surcharge' as a distinct item is not at all mentioned as one of the subjects in the Federal or the Concurrent Legislative Lists which could empower the Federal Government to Legislate on the subject.
' The word 'Surcharge' has definitely been used in the charging provisions. At the same time it is not only the material word in the charging,provisions. The charging provision is complete only if we read it 'as an Additional customs duty as surcharge on the importation of the 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 required. 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 custom 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 custom duty. It was in addition to the customs duty already imposed. It was to be known as a 'Surcharge' and was leviable at the rate of five per cent.
' In the Finance Act, E 85, the expression used was 'an additional customs duty as Iqra Surcharge on the importation of the goods specified in the First Schedule to the Customs Act, 1969.' Here also, it was clear from the reading of the taxing provisions that an additional tax was being imposed. It was in the nature of Customs Duty. It was to be distinguished as 'Iqra Surcharge'. It was leviable on import of goods only such as were mentioned in the First Schedule to the Customs Act, 1969.
' The objections to the levy and relatable to the statutory provisions are more than one, In the first place it was contended that under subsection (1) of section 18 of the Customs Act, 1969, customs duty were to be levied at such rate as are prescribed in the First Schedule and the Second Schedule or under any other law for the time being in force.
' The expression 'under any other law for the time being in force" necessarily refers to all laws other than Customs Act under which duties in the nature of customs duties are imposed. On the strength of this provision, the duties imposed by the Finance Ordinance, 1982 and the Finance Act, 1985 und..r examination case to be assimilated to the duties imposed under the Customs Act. On this reasoning, it is contended that the power of exemption contained in section 19 of the Customs Act, 1969 is also general and extensive that the exception granted thereunder will be available subject to the notified conditions, limitations, and/or restrictions to the customs duties of both categories; the one leviable under the Customs Act and the other under the law for which the time being in force. On this contention it is argued that the exemption granted by the recourse to section 19 of the Customs Act will be available equally well against the imposition made by the Finance Ordinance, 1982 and the Finance Act, 1985.
' There are three defects in this argument. The first is that the first exemption order that issued and is in controversy before us related to 1980 (S.R.O.No,700(1) of 1980). It did not anywhere give the indication of doing away with or not applying any future duties of customs that may be imposed. It related to the duties as were leviable under the Customs Act when the notification issued. There was no indication in this notification that future discretion of either the executive authority of the Federation or of the Legislature was being surrendered. In any case, the executive authority of the Federation could not surrender such a Legislative discretion because that would be encroaching on the legislative field. Secondly, the words of the notification allowed exemption by a reference to goods and the duties mentioned in the First Schedule to the Customs Act. Nothing more could be read into it and the levies made under the other laws could not get effected by such a notification.
Thirdly, the Finance Ordinance, 1982 and the Finance Act, 1985 are special provisions, exhaustive in themselves because not only they contain the charging provision but also a power of exemption reserved therein in the same terms as is contained in section 19 of the Customs Act relatable to the duties under the Customs Act. Where a self-contained and a special exists, the general law and general exemption power contained elsewhere cannot be utilized or invoked for claiming relief under the special law. Whatever, doubts in this regard existed, they have been set right by the declaratory provisions made in Finance Ordinance, 1983 to the effect that No exemption from payment of Customs Duty under the Customs Act, 1969 or any other law for the time being in force' shall be deemed to apply to the additional Customs duty leviable under the said subsection and this was not only added then but was deemed always to have been so added.
' One of the learned counsel representing some of the appellants (Mr. Rashid Akhund) contended by way of an alternative arguments that if the duties imposed by Finance Ordinance, 1982 and the Finance Act, 1985 are not treated as Customs duty leviable under the Customs Act, then the whole machinery provided in the Customs Act for recovery thereof would of be available and the action taken in levying the duty Would be unauthorised and untenable under the law. According to the learned counsel, section 4 of Customs Act, authorises the Officer appointed under section 3 thereof to exercise such powers and discharge such duties as are conferred or imposed on them by all under this Act. If these levies made by the Finance Ordinance, 1982 and Finance Act, 1985 are not treated as levies under the Customs Act, then the Officers appointed and dealing with the matters can have no authority whatsoever and on what ground also their actions had to be declared to be without lawful authority and of no legal effect.
' It has already been pointed out while examining the nature of imposition and levy, that it is basically customs duty that it is additional to all other customs duties, that what in one case it is distinguished by the name of 'Surcharge', in the other by the name of 'Iqra Surcharge', and that under section 18 of the Customs Act it is assimilated for the purposes of being dealt with, so far a the machinery provisions requirements are concerned by the Customs Act, the Officers and authorities dealing with it were fully authorised to deal with it."
11. The levy of the Federal Education Fee Scheme is in no way the same in nature as Iqra Surcharge.
That was a levy within the jurisdiction of the Federal Government. Customs being included in the Federal Legislative List. The Federal Education Fee Scheme is for education and Education is the Provincial matter. The Federal Government cannot frame legislation about it, as it did not fall in the Federal Legislative List or Concurrent Legislative List. For this reason the levy of Federal Education Fee Scheme is ultra vires of the Constitution. The learned counsel for the petitioner has also attacked the levy in question by advancing the arguments that it is an indirect violation of Articles Nos.70, 72 and 73 of the Constitution. The said Articles of the Constitution deal with the "Legislative Procedure" and read as under:-- ' "(70)Introduction and passing of Bills.----(1) A Bill with respect to any matter in the Federal Legislative List or in the Concurrent Legislative List may originate in either House and shall, if it is passed by the House and shall, if it is passed by the House in which it originated, be transmitted to the other House; and, if the Bill is passed without amendment, by the other House also, it shall be presented to the President for assent.
(2) If a Bill transmitted to a House under clause (1) is rejected or is not passed within ninety days of its receipt or is passed with amendment, the Bill, at the request of the House in which it originated, shall be considered in a joint sitting.
(3) If a request is made under clause (2), the President shall summon a joint sitting; and, if the Bill is passed in the joint sitting with or without amendment by the votes of the majority of the total membership of the two Houses, it shall he presented to the President for assent.
(4) In this Article and the succeeding provision of the Constitution, 'Federal Legislative List' and 'Concurrent Legislative List' mean respectively the Federal Legislative List and the Concurrent Legislative List in the Fourth Schedule.
(72) Procedure at joint sittings.--(1) The President, after consultation with the Speaker of the National Assembly and the Chairman, may make rules as to the procedure with respect to the joint sittings of, and communications between the two Houses.
(2) At a joint sitting, the Speaker of the National Assembly or, in his absence such person as may be determined by the rules made under clause (1) shall preside.
(3) The rules made wider clause (I) shall be laid before a joint sitting and may be added to, varied, amended or replaced at a joint sitting.
' Subject to the Constitution, all decisions at a joint sitting shall be taken by the votes of the majority of the members present and voting.
(73) Procedure with respect to Money Bills.--(1). Notwithstanding anything contained in Article 70 ***a Money Bill shall originate in the National Assembly and after it has been passed by the Assembly it shall, without being transmitted to the Senate, be presented to the President for assent.
(2) For the purpose of this Chapter, a Bill or amendment shall be deemed to be a Money Bill if it contains provisions dealing with all or any of the following matters, namely:-
(a) the imposition, abolition, remission alteration or regulation of any tax;
(b) the borrowing of money, or the giving of any guarantee, by the Federal Government, or the amendment of the law relating to the financial obligations of that Government;
(c) the custody of the Federal Consolidated Fund, the payment of moneys into, or the issue of money from, that Fund;
(d) the imposition of a charge upon the Federal Consolidated Fund, or the abolition or alteration of any such charge;
(e) the receipt of moneys on account of the public Account of the Federation, the custody or issue of such moneys;
(f) the audit of the accounts of the Federal Government or a Provincial Government, and
(g) any matter incidental to any of the matters specified in the proceeding paragraphs.
(3) A Bill shall not be deemed to be a Money Bill by reason only that it provides---
(a) for the imposition or alteration of any fine or other pecuniary penalty, or for the demand or payment of a licence fee or a fee or charge for any service rendered; or
(b) for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purses.
(4) If any question arises whether a Bill is a Money Bill or not, the decision of the Speaker of the National Assembly thereon shall be final.
(5) Every Money Bill presented to the President for assent shall bear .a certificate under the hand of the Speaker of the National Assembly that it is a Money Bill, and such certificate shall be conclusive for all purposes and shall not be called in question.
(74) Federal Government's consent required for financial measures.---A Money Bill or a Bill or amendment which if enacted and brought into operation would involve expenditure from the Federal Consolidated. Fund or withdrawal from the Public Account of the Federation or affect the coinage or currency of Pakistan or the constitution of functions of the State Bank of Pakistan shall not be introduced or moved in (Majlisc-Shoora (Parliament) except by or with the consent of the Federal Government. "
12. A simple reading of the above Articles makes it clear that a levy in the nature of a Fee can only be imposed through a Bill which is passed by the National Assembly as well as the Senate before being presented to the President for formal assent. The levy in question has been imposed through a Money Bill which is an indirect violation of Articles 70, 72 and 73 of the Constitution of Islamic Republic of Pakistan, 1973.
13. The next contention of the learned counsel for the petitioner is that a Fee, as per the declared law is a sort of a return or consideration for services rendered and is co-relatable to the expenses incurred by the charging authority in rendering the services, while the tax is a compulsory exaction of money by public authority for public purposes enforceable by law ard not a payment for services rendered. Neither the statute nor the scheme, provide for any service to be rendered by the respondents to the assessee, nor could, therefore, any nexus be said to exist between the fee and services, warranting the charging of the fee. The statute and the Scheme. Therefore, manifestly levy a tax in the garb of a fee and the enactment and the Scheme amount to being colourable exercise of authority by the Federal Legislature in violation of Article 77 of the Constitution. There is force in this contention of the learned counsel for the petitioners Article 77 of the Constitution reads as under:--
(77) Tax to he Levied by law only ---No tax shall be levied for the purposes of the Federation except by of under the authority of Act of (Majlis-eShoora Parliament).
14. This article provides that no tax can be levied for the purposes of the Federation except by or under the authority of an Act of Parliament. There is no cavil that the prohibition under Article 77 is in respect of taxes and not fees and there is a clear distinction between a tax and a fee and Constitution recognises this distinction. The main distinction between a tax and a fee is that a tax is levied as part of a common burden, while a fee is a payment for special benefit, privilege or services. In regard to fees there must be a co-relation between the fee collected and the service intended to be rendered. In ( the case of a fee, it is the special benefit or privilege accruing to an individual which is the reason for its payment, whereas in the case of a tax the particular advantage, if it exists at all, is an incidental result of a State action. There is also no cavil in the prohibition levied by a statute amounts to a fee or tax will always be a question of fact to be determined in the circumstances of each case.
15. The Finance Act, 1992, the rule framed thereunder and the Scheme do not show that Schools or the Education Institutions are to be set up to provide for the Educational needs of the company, their employee or work man. Thus, there is no nexus between the service sort to be rendered and the petitioners. The imposition is, therefore, a tax in the garb of a fee which is unlawful.
16. The next contention of the learned counsel for the petitioner is that the impugned enactment is in violation of Articles 4, 24 and 25.
' The said Articles are reproduced for ready reference:--
(4) Right of individuals to be dealt with in accordance with law etc.---(1) To enjoy the protection of law to be treated in accordance with law is the inalienable right of every citizen, wherever he may be and of every other person for the time being within Pakistan.
(2) In particular----
(a) no action detrimental to the life; liberty, body. Reputation or property of any person shall be taken except in accordance with law.
(b) no person shall be prevented from or he hindered in doing that which is not prohibited by law; and
(c) no person shall be compelled to do that which the law does not require 1nm to do.
(24) Protection of properly rights.--(1) No person shall be compulsorily deprived of his property save in accordance with law.
(2) No property shall be compulsorily acquired or taken possession of save for apublic purpose, and save by the authority of law which provides for compensation therefor, and either fixes the amount of compensation or specifies the principles on and the manner in which compensation is to be determined and given
(3) Nothing in this Article shall affect the validity of:--
(a) any law permitting the compulsory acquisition or taking possession of any property for preventing danger to life, property or public health; or
(b) any law permitting the taking over of any property which has been acquired, or come into the possession of, any person by any unfair means, or in any manner, contrary to law; or
(c) any law relating to the acquisition. Administration or disposal of any property which is or is deemed to be enemy property or evacuee property under any law (not being property which has ceased to be, evacuee property under any law): or
(d) any law providing for the taking over of the management of any property by the State for a limited period. Either in the public interest or in order to secure the proper management of the property, or for the benefit of its owner; or
(e) any law providing for the acquisition of any class of property for the purpose of ----
(i) providing education and medical aid all or any specified class citizens; Or
(ii) providing housing and public facilities and services such as roads, water, supply, sewerage, gas and electric power to all or any specified class of citizens; or
(iii) providing maintenance to those who, on account of unemployment sickness, infirmity or old age, are unable to maintain themselves, or (f) any existing law or any law made in pursuance of Article 253.
(4) The adequacy or otherwise of any compensation provided for by any such law as is referred to in this Article, or determined in pursuance thereof, shall not be called in question in any Court.
Art.25. Equality of Citizens.-- (1) All citizens are equal before law and are entitled to equal protection of law.
(2) There shall be no discrimination on the basis of sex alone.
(3) Nothing in this Article shall prevent the State from making any special provision for the protection of women and children.
17. The above three articles lay down the principles that every citizen of, and every other person in Pakistan is entitled to the protection of the law and is to be treated in accordance with law, and that no tax can be levied for the purpose of the Government, except under the authority of an Act and that there shall be equal protection of law.
18. For the above reasons, the provision of section 15 of the Finance Act, 1992 and the Federal Education Fee Scheme, devised and issued vide S.R.O.No,139(1)/93, dated 16-2-1993 are declared as unlawful, without jurisdiction and repugnant to the provisions of Constitution and of no legal effect.
Writ Petition is allowed accordingly. No order to costs.
19. Writ Petition No,925 of 1994 being on the same facts and question of law as agitated and decided in this writ petition, the same is also decided accordingly. A copy of this order shall be kept in that writ petition also.