' SARDAR MUHAMMAD RAZA KHAN, J.--- Pakistan Tobacco Company Ltd. And similar other Companies (hereinafter to be referred to as the Tobacco Companies) have called into question the vires of section 11 of the North-West Frontier Province Finance Act, 1996 and its further replacement through section 16 of the N.-W.F.P. Finance Act, 1997; on the grounds that the imposition of Tobacco Development Cess through the aforesaid Legislative Act of the Provincial Assembly being discriminatory, violative of the principles of reasonable classification and intelligible differentia; are illegal, without jurisdiction and ultra vires the Constitution, the Finance Act of 1997 being excessive delegated legislation, in addition.
2. For facility of reference both the. Versions of section 11 are reproduced as follows:- "11. Tobacco Development Cess.--- There shall be levied and collected a development cess on Tobacco at the rate of one rupee per kilogram at the District Council exit points of the Districts of Haripur, Mansehra, Abbottabad, Nowshera, Kohat, Lakki Marwat and DA, Khan. The cess will be collected by the concerned District Councils and credited into Government Treasury."
Finance Act of 1997.
"11. Tobacco Development Cess.--- There shall be levied and collected a development cess on tobacco at the rate as Government may, from time to time, by notification in the official Gazette, specify. The cess shall be collected at the District Council exit points of the Districts of Haripur, Mansehra, Abbottabad, Nowshera, Kohat, Lakki Marwat and D.I. Khan by the concerned District Councils and credited into Government Treasury."
' The difference between the two legislations is quite manifest and the second version of section 11 is challenged as excessive delegated legislation in only the last two Writ Petitions Nos.1448 of 1997 and 1449 of 1997 filed by Pakistan Tobacco Company and Lakson Tobacco Company respectively.
The first and the foremost objection against the imposition of cess is to the effect that it is violative of Entry .49 to 4th Schedule of the Constitution of Pakistan. That, it essentially falls within the legislative authority of the Parliament and hence the Provincial Assembly, by giving any name to the tax, could not impose the tax in question and has done so under the disguise of colourable legislation. In K.C. Gajapati Narayan v. State of Orissa AIR 1953 SC 375 the question of colourable legislation is dealt with. The legislations are sometimes patently wrong, they are manifest or direct but sometimes are disguised, indirect and covert. When falling under the second category, those are dubbed as colourable legislations. It is, therefore, important to see as to IA whether the Provincial Assembly of North-West Frontier have transgressed its legislative limits or have disguised such transgression. For that, one should look into Entry 49 of the Federal Legislative List in 4th Schedule to the Constitution that goes as follows:-- "49. Taxes on the sales and purchases of goods imported, exported, produced, manufactured or consumed."
3. It is argued that the development cess imposed by the Provincial Assembly is in fact a tax on the sale and purchase of tobacco as revealed from the speech of the Finance Minister reproduced in writ petition. From such extract of the speech it appears that the Finance Minister was of the view that the cess be levied on the purchaser of the tobacco. From the plain reading of the impugned sections, it is abundantly clear that the disputed cess is not levied on the sale or purchase of tobacco but it in fact is a cess on the movement of tobacco beyond the Districts of Haripur, Mansehra, Abbottabad, Nowshera, Kohat, Lakki Marwat and D.I. Khan. It contains of no reference whatsoever to sales or purchases of tobacco. According to the impugned sections no tax or cess would be levied if the consignment does not leave the boundaries of the aforesaid Districts. B Having no concern with sales and purchases, Entry 49 of the Federal Legislative List is not at all applicable.
4. Reference to speeches made in the House is a matter which was unnecessary stretched to the extent it was so stretched. Such speeches made by Members of Legislature on the Floor of the House during debate over a bill are inadmissible for interpreting the specific statutory provision.
The interpretation of Statutes allows the reference thereof only to remove some ambiguity like, at times, when the preamble is also referred to an order to explain the intention of the Legislature.
Speech of a mover of the bill can be referred, to ascertain, as held by the Indian Supreme Court, "the mischief sought to be remedied". K.P. Varghese v. Income-tax Officer AIR 1981 SC 1922(b).
5. Applying the above principle of interpretation to the present case, we should now refer to the impugned section 11 of the Finance Acts of 1996-97. The plain reading of the sections would indicate that the development cess/tax is levied on the movement of tobacco from certain Districts and is not at all a tax on the sales and purchases. As the wordings of the sections are totally unambiguous, we should not refer to any speech of the Finance Minister because the speech, rather, goes to create ambiguity. The sections are neither ambiguous nor obscure nor lead to absurdity. We, therefore, hold that the cess/tax is levied on the movement of goods. We have been using the words "cess" and "tax" alternately because as held by our own High Court in Haji Multan Zarin and others v. Government of N.-W.F.P. PLD 1980 Pesh. 137 words "tax" and "cess" are not distinct from each other. The aforesaid ruling is also relied upon by the learned counsel for the petitioners but it is distinguishable, in that, it dealt with a cess which was levied on the, sale of marble chips and not on the movement thereof and hence was rightly held to be offending the provisions of Entry 49 read with 59 of Federal Legislative List.
6. Next argument assailing the tax in question was that it was a double taxation and the tobacco companies are subjected to the payment of cess already levied. Syed Zahid Hussain,, learned counsel for the petitioner argued that though no prohibition is laid down in the Constitution on double taxation yet it is deprecated by the superior Courts of the country. Case of Kohi Noor Industries v. Government of Pakistan 1989 M LD 1 was relied upon where double taxation was held not permissible but it is also distinguishable because double taxes were imposed under the provisions of the same Act i,e, under section 3(1) of Central Excises and Salt Act. It was held therein that imposition of excise duty on production capacity under section 3(4) of the Act could be only in lieu of and not in addition to the excise duty specified in section 3(1) of the said Act. We could not be convinced as to how in the instant case the provisions of section 11 of the Finance Acst, 1996 and 1997 could be hit by the principle of double taxation.
7. The principles of reasonable classification and intelligible differentia were the next to be vehemently stressed by the learned counsel for the petitioners. This was rather the main thrust of the arguments. It was said that most important tobacco growing districts like Mardan, Swabi, Buner, Swat and Charsadda etc. Were excluded from the operation of impugned section 11 of the Finance Acts. It was further added that districts like Abbottabad, Lakki Marwat and D.I. Khan etc. Were included in the section despite the fact that no tobacco at all is grown in these districts. From Government of Pakistan v. Zafar Iqbal 1992 CLC 219, Harman Singh and others v. Regional Transport Authority AIR 1954 SC 190, Western India Theatres Limited v. Cantonment Board, Pona AIR 1959 SC 582, Messrs East. India Tobacco Co. v. State of Andhra Pradesh AIR 1962 SC 1733 and Mineral Development Limited v. State. Of Bihar AIR 1960 SC 468; we have conveniently gathered that no universal principle of applicability can be attracted to the cases in general concerning reasonability of a legislation, and, reasonableness should be applied to each individual case under its own given circumstances. A classification is unreasonable only when within the range of its selection the law operates unequally and that cannot be justified on the basis of any valid classification. Moreover, the mischief applies where equals are treated differently without any reasonable basis. It is not applicable where equals and unequals are treated differently. We would shortly be attending to this important classification in the instant case.
8. Coming to the question of intelligible differentia, we believe that this is closely connected in the instant case with the principle of reasonable 'classification. If the classification is reasonable, it can be intelligibly differentiated and vice versa. The case of Elahi Cotton Mills v. Federation of Pakistan PLD 1997 SC 582 and Kangshari Haldar v. State of Bengal AIR 1960 SC 457 have amicably discussed the principle of intelligible differentia. If there is equality and uniformity within each group founded on intelligible differentia having rational nexus with the object sought to be achieved by. The law, it cannot be treated as discriminatory. Reasonable classification as observed by our Supreme Court, is permissible provided the same is based on an intelligible differentia which distincts persons or things that are grouped together from those who have been left out and that differentia must have rational nexus to the object sought to be achieved by. Such classification. The criteria laid down by the Indian Supreme Court was to see as to whether (1) the basis of differentia has any rational nexus with its avowed policy and object and (2) is the classification rational and based on intelligible differentia.
9. Seeking guidance from the precedents, we come to the classification made in the impugned law and objected to by the petitioners. We have already held that the tax is imposed not on the sales or purchases of tobacco but it essentially is a tax on the movement of tobacco. It is also evident from the section itself that few districts have been classified. We believe, as also alleged by the learned counsel for the petitioners, that only those districts have been singled out which have an exit to the Province of Punjab. If the classification is based keeping in view the movement of goods towards the Province of Punjab, it becomes reasonable as well as intelligible and hence stands based on intelligible differentia. In that case, we shall have to observe and hold that it is a tax on the movement of tobacco from the Province of North-West Frontier to the Province of Punjab.
10. Here comes the strongest of the objections of the petitioners that Provincial Assembly could not levy a tax on the export of goods to the other province because it violates Entry 27 of the Federal Legislative List, bringing the matter within the competence of Parliament. A perusal of Entry 27 aforesaid would indicate that firstly, it deals with the imports and exports across the borders of Pakistan and secondly, it demarcates legislation for the Parliament concerned Inter-Provincial Trade and Commerce, meaning thereby, that the Parliament can legislate laws concerning Trade and Commerce between the Provinces. It has no reference to the imposition of taxes which entries in the Fourth Schedule start from Entry 43 onwards. The subject of taxation being omitted in Entry 27 of the Federal Legislative List, it does not debar the Provincial Assembly from imposition of taxes on Inter-Provincial Trade, provided always, that it is not violative of Article 151 of the Constitution.
11. Now we advert to the most important aspect of the present case to see if a Provincial Assembly could impose the impugned tax on the movement of tobacco from one Province to another, holding already that it is such movement, and the classification in the impugned sections is based on such intelligible differentia. The differentia, we may reiterate, becomes intelligible and the classification becomes reasonable when we hold, as we have, that the impugned one is a cess/tax on the movement of goods from the Province of North-West Frontier to the Province of Punjab.
12. Learned counsel for the petitioners placed reliance on a judgment of Karachi jurisdiction Sayphire Textile Mills Ltd. v. Government of Sindh PLD 1990 Kar.
402. In this ruling the Honourable Judges have exhaustively explained and defined the word "export" and has distinguished it from Inter-Provincial movement of goods and has described export strictly to be one beyond the frontiers of the country. It was observed that export tax on Intra-Provincial movement of goods was permissible to be levied by the Provincial Assembly or by the Provincial or. Local Government but tax on Inter-Provincial movement of goods cannot be levied, being in contravention of Article 151 of the Constitution. After having gone through the above ruling, we are constrained to observe that sub-Article (3)(b) of Article 151 of the Constitution was not attended to by the Honourable Division Bench of the Karachi High Court. Most probably it was not required to be attended to in the circumstances of that case but it is extremely important in the circumstances of the present case.
13. Article 151 of the Constitution specifically deals with Inter-Provincial Trade. The spirit and essence of the Article is that it aims at the object of free trade and commerce throughout Pakistan. No impediment in the way of such free trade can be placed except in the manner provided by sub- Article (2) of Article 151 which gives powers to the Parliament to make laws accordingly. Under sub- Article (3)(a) a Provincial Assembly or a Provincial Government is bereft of powers of making law or taking any executive action, prohibiting or restricting the entry into or the export from the Province of goods of any class of description. Such prohibition contained in Article 151(3)(a) of the Constitution is not attracted to the present case because by enacting section 11 of the Finance Acts, the Provincial Assembly has in no way prohibited or restricted the movement of goods of any class or description. It has only imposed a cess or tax which is covered by sub-Article (3)(b) of Article 151 of the Constitution. For the facility of reference it is reproduced below:--
(3) A Provincial Assembly or a Provincial Government shall not have power to--
(a) ..............................................................................................................................
(b) impose a tax which, as between goods manufactured or produced in the Province and similar goods not so 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.
14. A close reading of Article 151(3)(b) of the Constitution would clearly suggest that a Provincial Assembly or Government is restrained from imposing tax which discriminates between goods manufactured or produced in the Province and goods not so manufactured or produced outside the Province. The imposition of tax is also allowed when it does not discriminate between the goods manufactured or produced outside the Province and the goods manufactured or produced in any area in Pakistan. We would like to further explain the point of discrimination in giving the example of tobacco. Had the tobacco not been produced in the Province of Punjab and had it only been produced in the Province of North-West Frontier, the imposition of tax on the movement thereof from N.-W.F.P. To the Punjab would have certainly attracted the prohibition and would have been un-Constitutional. Had the tobacco been exported to many other Provinces but the imposition of tax been restricted to one Province alone, it would have discriminated between the other two Provinces and would have been un-Constitutional. In the instant case the tobacco is also produced in the Province of Punjab and hence the prohibition contained in Article 151(3)(b) of the Constitution is not at all attracted. The logic behind this legislation is obvious because had the tobacco not been produced in Punjab, it would have been a restriction towards the freedom of trade throughout Pakistan. Distinguishing the aforesaid ruling given in the case of Sayphire Textile Mills and strictly taking the matter out of the discrimination aimed at by sub-Article (3)(b) of Article 151 of the Constitution, we hold that the imposition of tax on movement of tobacco from N.-W.F.P. To the Punjab is not violative of Article 151 of the Constitution. It does not in any way cause discrimination alluded to and prohibited by Article 151(3)(b) of the Constitution.
15. At one time it was argued from the side of the learned counsel for the petitioners but not very seriously, that such tax is violative of sub-Article (4) of Article 151 of the Constitution, having been made without the consent of the President. The argument holds no ground because the conditions laid down in sub-Article (4) are not at all attracted in the instant case. Neither the imposition of tax in hand relates to public health, public order or morality nor it was for the purpose of protecting animals or plants from disease nor it related to the serious shortage of any essential commodity.
16. Last we advert to the question of excessive delegation with strict reference to section 11 of the Finance Acts of 1997 where the Legislature have delegated the power of determining the rate of taxation to the executive. It is a settled principle of law that quantification of tax is also the prerogative of the Legislature. No such delegation can be made so as to give unlimited powers to the executive to enhance the rate of tax according to its own whims and desires. If at all, the delegation can be done by fixing certain parameters and guidelines, as for example, by fixing the maximum rate of tax. In section 11 of N.-W.F.P. Finance Act, 1997 no such maximum limit is provided and hence there is no limit available for the executive to feel where to stop. This time they have enhanced the cess from one rupee per kilogram to Rupees 1.25 per kilogram. As a matter of fact, it can be enhanced to any extent and hence the delegation is excessive by all means.
17. In Muhammad Aslam v. Government of Punjab 1996 M LD 685 the naked, unbridled and unguided delegation of power was deprecated. The Supreme Court of India in Devi Dad Gopal Krishanan v.
The State of Punjab AIR 1967 SC 1895 and the High Court of Madras in Shamungha Oil Mills case AIR 1960 Mad. 160, had turned down the levy of tax by the Provincial Government for the reason that the power was uncontrolled, that no guidelines were provided for the taxation and for the fixation of rates and no limits, upper or lower, were fixed by the Legislature. Any power by the Legislature delegated to the executive regarding the fixation of rate of tax without fixing the parameters or without fixing the maximum or minimum limit is, therefore, void.
18. The upshot of what has been discussed above, is, that Writ Petitions Nos.653 of 1996, 654 of 1996, 655 of 1996, 728 of 1996, 12391 of 1996, 1371 of 1996 and 1372 of 1996 are hereby dismissed while Writ Petitions Nos.14487 of 1997 and 1449 of 1997 are accepted to the extent only that .25 paisas per kilogram of tax imposed by the Executive is void, unlawful and without jurisdiction. Barring the enhancement of .25 paisas per kilogram of tax, section 11 of the Finance Acts of 1996 and 1997 are held to be lawful and not ultra vires the Constitution.