ISLAMABAD:
In a decision with far-reaching implications for the province’s fiscal autonomy and cooperative federalism, the Federal Constitutional Court (FCC) has upheld the validity of legislation passed by the Balochistan Assembly authorizing the provincial government to levy excise duties on minerals to fund labor welfare in the mining sector.
The decision resolves a constitutional challenge to amendments brought in through the Balochistan Finance Act, 2020, confirming the province’s legislative competence to impose the levy and strengthening the post-18 framework. amendment extending provincial authority over remaining subjects.
A Division Bench of the FCC, headed by Justice Aamer Farooq, considered the issue of whether the Balochistan Assembly had the power to amend Section 3 of the Minerals Excise (Labor Welfare) Act, 1967, through Section 7 of the Balochistan Finance Act, 2020.
The petitioner in the case was Attock Cement Pakistan, a cement manufacturer operating in Pakistan with its manufacturing facility at Hub, Lasbela, Balochistan. As part of its operations, the company undertakes the extraction of raw materials, including limestone, slate and sand, which are essential for cement production.
On 15 January 2021, the petitioner received a notice from the Balochistan Mines Labor Welfare Department demanding payment of excise duties on minerals to the Labor Welfare Commissioner, Balochistan at rates revised under the Balochistan Finance Act, 2020.
In response, the petitioner submitted three separate submissions to the Department for revision of the applicable rates; however, each representation was rejected. The petitioner subsequently approached the Balochistan High Court, but its plea was rejected.
Before the FCC, the petitioner argued that the imposition of excise duty fell within the exclusive legislative domain of the federation and that the Balochistan Assembly therefore lacked the authority to amend the 1967 Act, particularly where such amendment changed the rate of excise duty or the nature of excise duty, a matter which it argued was beyond the jurisdiction of the province.
The FCC, however, rejected this contention and held that the Balochistan Finance Act, 2020 must be upheld by applying the settled doctrines of pith and substance and dual-aspect legislation, read in the light of post-18 of the Constitution. commitment to cooperative federalism.
“The impugned statute neither interferes with nor displaces federal legislative authority; rather, it operates within a constitutionally permissible overlap in furtherance of a legitimate provincial objective. Its taxing mechanism serves as an aid to realizing an essential purpose rooted in the welfare of workers. To strike down such legislation in relation to a constitutional approach would be to adopt a constitutional approach. The Act therefore represents a lawful and harmonious exercise of legislative power,” the court ruled in a 14-page judgment authored by Justice Aamer Farooq.
The judgment further observed that the courts must exercise restraint and avoid hastily invalidating legislation passed by the Majlis-e-Shoora or provincial assemblies, noting that such enactments reflect the democratic will and public trust reposed in elected representatives.
It also stated that the Eighteenth Amendment to the Constitution consciously embraced the ethos of cooperative federalism.
The court noted that under Pakistan’s constitutional framework, legislative authority is exercised by provincial assemblies in their respective provinces and by parliament at the federal level through duly elected representatives who enjoy public trust and legitimacy.
Explaining the constitutional developments, the judgment stated: “Prior to the enactment of the Constitution (Eighteenth Amendment) Act, 2010, Article 141 of the Constitution conferred legislative powers on these bodies and structured the distribution of legislative competence on a subject-wise basis. (comprising forty-seven subjects). Parliament was empowered to legislate on subjects enumerated in both lists, while subjects included in the concurrent list or was not part of any of the list (referred to as residual matters), fell within the legislative domain of the Provincial Assembly.”
“After the enactment of the Constitution (Eighteenth Amendment) Act, 2010, the Concurrent Legislative List contained in the Fourth Schedule of the 1973 Constitution was eliminated, substantially expanding the legislative authority of the provinces.”
Elaborating further, the Court held: “With only the Federal Legislative List remaining in the Fourth Schedule, all matters not specifically enumerated therein fell within the exclusive legislative jurisdiction of the Provincial Assemblies. Article 142(a) limits the legislative authority of the Federal Legislature to the subjects enumerated in the Federal Legislative List, (2) provides that matters not included in that list fall exclusively under provincial jurisdiction and is outside federal law.”
“Any area where concurrent legislative powers still exist is dealt with under Article 142(b) of the 1973 Constitution. Thus, all ‘residual powers’ not vested in the federal legislature rightfully belong to the provinces and form a constitutional landscape where provincial self-government is affirmed. It is impossible to state that every law is true. Ambiguity ever arises.”
The judgment further observed: “Our courts have repeatedly encountered cases where the limits of legislative competence required careful interpretation. Although the Constitution, 1973 strives to draw these lines with clarity, there are times when assessing whether authority lies with the Federation or the provinces becomes far from straightforward.”
