1. ' SHABBIR AHMED, the petitioner with a corporate identity is engaged in purification, transmission and distribution of gas in Province of Sindh and Balochistan and also engaged in marketing of L.P.G. (Liquefied Petroleum Gas) in Pakistan, has invoked the Constitutional jurisdiction of this Court with the prayer in the following terms:--
(a) That the orders of the respondent Nos. 2 and 3 dated 4-3-1999, 20-6-1995 and 22-6-1995 respectively, alongwith their consequent acts are liable to be quashed and declared illegal, void, without lawful authority and ultra vires.
(b) Costs of this petition any also be awarded to the petitioner.
(c) Any other relief which this Hon'ble. Court deem appropriate, in the circumstances of this case, may be granted.
2. ' The petition emanates in the following circumstances.
3. ' The petitioner an establishment having worker as defined in Worker's Children Education Ordinance, 1972 (for short-the Ordinance) and was in the net of Education Cess which was being collected under Sindh Workers' Children (Education) Cess Rules, 1974 by Excise and Texation Department. The said rule was repelled by Sindh Workers' Children Education Cess (Collection)
4. Rules, 1994 whereby the responsibility for the collection of Cess was assigned to Sindh Employees Social Security Institution. On 30-10-1994, the petitioner was intimated by the respondent No,1 that the task of collection of Education Cess in the Province of Sindh has been assigned to them and Education Cess is not longer payable to Excise Department. The petitioners were advised to file the requisite return on Form EC-1 and to make payment of the cess at the Directorate to the Director Education Cess. The petitioner intimated that after the settlement with CBA dated 11-5-1995 no worker is in the employment with wage upto Rs,3000. The respondents were not satisfied and they raised the provisional demand in the sum of Rs,1,80,000 for (Unit-A) for the year 1994-95 and second provisional demand in the sum of Rs,1,20,000 for (Unit-C) for the same year by provisional demand notices dated 5-5-1995. The petitioner replied the demand notices with the plea that since no worker in the Establishment of the Company has drawn wage less than Rs,3000 during the period, therefore, the demand be withdrawn/dropped. The respondents made the objection in the following terms:- "As per our authentic information, you have the following Departments in your company in which more than 2 thousand (Temporary/regular) employees are working:-- (1). C.S.S. Department.
5. (2). U.D. Department.
6. (3). Distribution. Department.
7. (4). Metie Plant.
8. (5). Workshop.
9. (6). Dop Yard Section.
10. (7). Sales Department (8). K.T. URD. KCY ' Similar was the contention with regard to the second demand. Final demand was raised on 20-6- 1995 through demand notices of even date for Rs,1,80,000 and Rs,1,20,000. The petitioners aggrieved by the above demands tiled appeal under rule 12 of the Sindh Wokers Education Cess (Collection)
11. Rules, 1994 (hereinafter referred to Rules). The appeal was also dismissed by the impugned order dated 4-3-1999. Hence the present petition.
12. ' On notice, the respondent No,2 filed the comments with the plea that in view of the amendment.
13. By Labour Laws (Amendment) Ordinance, 1993, there is no bar on payment of Education Cess if the wages of an employee exceeds of Rs,3000 per month. The petitioner is liable for payment of Education Cess for all his employees as well as engaged through contractor or on contract by the Company. It was also their case that the petitioner was asked for the inspection of the record as to ascertain the actual amount of Education Cess payable by the petitioner. The petitioner instead of producing the record only, produced the bills of Unit-A and no record in respect of Unit-C was produced. The Audit Team further pointed out that over 4000 temporary employees were engaged during the period 1994-95 and afterwards their services were terminated and after production of record during the hearing, the Audit Team noticed 801 workers in respect of whom Education Cess was payable, were appointed on wages less than Rs,3000 per month. The petitioners were required to pay the Education Cess for the years 1995-96, 1996-97, 1997-98 and 1998-99.
14. ' We have heard the learned counsel for the parties for disposal of the petition at Katcha peshi stage.
15. ' Before addressing the respective contentions, it would be advantageous to reproduce the relevant provisions of the Ordinance and the Rules.
16. ' Section 2(b) and (c) define the terms "Establishment" and "Worker". Clause (b) thereof defines "Establishment" which means any office, firm, industrial unit, undertaking, shop or premises in which workers are employed for the purpose of carrying on any business, trade, manufacture, calling, service, employment or occupation. Whereas clause (c) thereof aefines "Worker" which means any person employed; whether directly or through any other person in any establishment to do any, skilled, or unskilled, manual or clerical work for hire or reward whose monthly wages do not exceed (three thousand) rupees, but does not include.
17. (i).
18. (ii)
19. (iii)..
20. ' Provided that a worker shall not cease to be a worker for the reason that his monthly wages exceed three thousand rupees or the number of persons employed in the Establishment, at any time is reduced to less than ten.] ' Section 3 thereof pertains to the Levy of Education Cess.--(1) Every employer of an Establishment in which the number of workers employed at any time during a year is [ten] or more shall pay to the Provincial Government an Education Cess at the rate of one hundred rupees per worker per annum. (2) Every employer shall, within three months beginning from the first day of the calendar month following the commencement of the Workers' Children (Amendment) Act, 1973, prepare and deliver, or cause to be prepared and delivered, in the form and to the officer prescribed by the Provincial Government, a return showing the number of workers employed in the Establishment during the preceding quarter and shall subscribe a declaration of the truth of the return at the foot thereof. (3) The levy of Education Cess shall be on the basis of the number of workers shown in the return referred to in subsection (2) section 5-A thereof prescribed the collection and administration of cess--The collection of cess referred to in section 3 and its administration may be entrusted to the Social Security Institution or to such other agency as the Provincial Government may nominate. Section 6 thereof gives the Provincial Government rule making power for carrying out the purposes of the Ordinance.
21. ' It is pertinent to note that through Labour Laws (Amendment) Ordinance, 1993 w,e,f, 25-9-1993, a large number of amendments were brought in various statutes relating to the Workers and section 2 (c) was also amended in many respects. In the first instance, the limitation of wages less than Rs,1,500 was substituted with Rs,3000. Secondly the proviso to the following effect was inserted in clause(c): ' Provided that a Worker shall not cease to be a worker for the reason that his monthly wages exceed three thousand rupees or the number of persons employed in the Establishment, at any time is reduced to less than ten.
22. ' It may also be noted that cess was being collected under the Sindh Children Worker Rules, 1974 by the Excise and Texation Department, Government of Sindh, whereas under the Sindh Workers'
23. Education Cess (Collection) Rules, 1994, [for short-the ,Rules 1994] the collection of cess was assigned to the Sindh Employees Social Security Institution. The effect of the amendment was that the workers whose salary was not exceeding Rs,3000 were brought in the, net for the purpose of collection of cess wage ceiling from Rs,1,500 was enhanced to Rs,3000 and once such worker, came in the net, they would remain in the net. Secondly, the case was payable by the employer of an Establishment which having ten or more at any time during a year. If the number of Workers is reduced to less than ten even then the employer would be subject to the cess.
24. ' Mr. Shahid Aziz Bajwa, learned counsel for the petitioner's contention was that when the amendment was made, the petitioner Establishment had no worker of wage at Rs,3000, as such the petitioner would not be subjected to the Education Cess.
25. ' Whereas, learned counsel for the respondents plea was that the Cess is payable by an Establishment having worker with wage not less than Rs,3000 and therefore, the petitioner is subject to be liable to pay the Cess even if the Workers get-out the net by increase of salary or reduction of such worker less than ten.
26. ' Mr. Nazar Akbar also referred the case of Ibrar Hussain and others v. Government of N.-W.F.P. (2001 SCM R 914), wherein .The apex Court pointed out three functions to a proviso, as follows:--
(1) To exempt something from the enacting clause;
(2) to qualify or restrain its generality;
(3) and to exclude some possible misinterpretation of it and extending to cases not intended by the Legislature.
27. ' It is well-settled that proper function of a proviso is to accept and deal with a case which would otherwise fall within the general language of the main section, and its effect is confined to the rule of section to which a proviso has been added. The proper way to regard the proviso is as a limitation upon the effect of principal section or rule. A proviso, which is in fact and in substance a proviso, can only operate to deal with a case which, but for it, would have fallen within the ambit of the section to which the proviso is a proviso. To put it in another way the section deals with a particular field while proviso excepts or takes or carries out from the field a particular portion and therefore, it is perfectly true that before a proviso can have any application the section itself must apply. If any reference is needed, the case of Jagdatt Singh and others v. State of Uttar Pradesh and another (AIR 1962 Allahabad 606) can be referred.
28. ' During the hearing, cases of (1) Messrs Agfa Gevaert Pakistan LTD v. Sindh (Provincial) Employees Social Security Institution 2000 PLD 62 and (2) Reckitt and Colman of Pakistan Limited, Karachi and others v. The Commissioner, Sindh Employees' Social Security Institution and others (2001 PLC 245) were referred.
29. ' In the first case, similar provision of section 2(8) of Social Security Ordinance amended by Ordinance, 1993, was interpreted and it was held that it is remedial legislation, it cannot be given retrospective effect as the legislature itself has not given retrospective effect. Whereas, in later case, the amendment was being declaratory in nature was taken to be retrospective.
30. ' The above two decisions came under scrutiny by apex Court in Commissioner, Sindh Employees'
31. Social Securities Institution and another v. Messrs E.M. Oil Mills and Industries Ltd. And 2 others (2002 SCM R 39). The view expressed was that scope of the unamended sections 2(8)(f) and 20(4)(a) of the Ordinance is comparatively limited and cannot be enlarged by giving retrospective effect to the amendments made therein on the grounds that the same are remedial, the proviso added to section 2(8)(0 being a part of definition section is declaratory and the Ordinance being a beneficial statute its provisions must be construed liberally. As a general rule every statute is deemed to be prospective unless by express provisions or necessary implication it is given retrospective effect. The acid test for ascertaining whether a statute or an amendment operates prospectively or retrospectively is the legislative intent. The language of the amending Ordinance and the Act and their terms neither make it manifest that the Legislature intended the amendments to operate retrospectively nor the intention can be gathered by necessary implication. The rationale is obvious inasmuch as the amendments have affected vested rights and created new obligations. It was further observed that according to Halsbury's Law of England.
32. Volume 44 (4th Edition), a declaratory statute is a statute which either resolves doubts on a particular point or restates the law on a particular subject. This definition of a declaratory statute leads to the irresistible conclusion that a declaratory provision does not purport to change the law.
33. Notwithstanding their placement the amendments in question cannot be termed as declaratory for the simple reason that they have created new obligations and changed the existing law considerably. It is true that the statutory increase in the wages was not incorporated in the Ordinance but the existing law did not suffer from any legal defect in view of the law laid down in the case of Dawood Cotton Mills (supra), therefore, the amendments are not purely remedial. Be that as it may, the amendments cannot be held to be retroactive in operation even if the same are presumed to be remedial because they tend to affect vested rights. In any event giving retrospective effect to the amendments would tantamount to nullifying the binding effect of the dictum laid down in Sindh Employees' Social Security Institution v. Dawood Cotton Mills Ltd. (PLD 1988 SC 1), which squarely applies to the facts and circumstances of the present cases.
34. ' The perusal of Rules 8 and 9 of the Rules, 1994 reveals that where an employee liable to pay the cess controls in a Province more branches than one of an establishment, he shall nominate one such branch as the "head office" for the purposes of these rules. If the head office of an Establishment is situated anywhere in the Province such return shall be filed by the head office and sub-rule (5) thereof requires the number of workers for the purpose of the cess shall be the aggregate Workers of all branches (in a Province) rule 9 thereof mandates that where a Social Security Officer has reasons to believe that an employer is likely to be liable to pay the cess, he may require him to produce books of accounts or other documents necessary for inspection and determination of the number of workers employed by him or furnish any other information in connection therewith and for that purpose such officer may Enter any Establishment during its working hours.
35. ' It is evident from the above rules that for the purpose of collection only one return is to be filed by the head office. In case, branches are in other Provinces, one of its branches shall be nominated as "head office" for the purpose of return.
36. ' On examination, the following are reflection of the impugned order.
(a) that the petitioner in spite of directions failed to produce the following information/documents.
(i) Personal file of 340 workers in respect of whom Education Cess was paid to the Excise Department.
(ii) The number of workers out of 340 alongwith names whose services have been terminated/Resigned.
(iii) The list of workers who have been appointed on contract basis on the salary up to Rs,3000
(iv) Payment of salary/Attendance Register for the year 1994-95 in order to ascertain salaries/wages have been paid to the workers.
(b) The plea of appellants for treating employees of Karachi and Balochistan as a separate unit has been repelled by stating that the plea is contrary to sub-rule (5) of rule 8. The reading of rule 8 would reveal that where branches of an Establishment are in more than one Province then the Head Office will submit the return in respect of all branches in the said Province and one of the branches in Province where there is no Head Office then one of the branches is to be nominated as Head Office for the purpose of filing of the feturn. Therefore, the view taken by the Appellate Authority is based on incorrect interpretation of sub-rule (5) of rule 8, that the petitioner was required to submit the return pertaining to Balochistan Province to respondent No,2
(c) That amendment made in section 2(c) of the Act is declaratory and clarificatory in nature thus was retrospective effect such view is contrary to the view expressed by the apex Court in Commissioner Sindh Employees Social Security Institutions case (supra).
(d) the Appellate Authority, the respondent No,2 has modified the demand confining it for 801 employees.
(e) That by impugned order, the demands have been reduced partially.
37. ' In view of the above discussions, the impugned order and the demands are not sustainable in law.
38. We set aside the same with following directions.
39. ' That the petitioner will submit the list of workers getting wages not less than Rs,3000 as on 25-9- 1993 and the respondent would be at liberty to call for any record in terms of rule 30 for determination of the number of workers for cess and once workers, fall within the net, they will remain in the Net, even if their wages exceed Rs,3000 or the number of workers is reduced to less than ten. The petitioner will submit the return as required under section 3 of the Act for subsequent period as well.
40. ' With the above observations, the ,petition is disposed of. accordingly.