ISLAMABAD: The Federal Board of Revenue (FBR) challenged the Sindh High Court’s judgment regarding excise duty on telecom sector at the rate of 75 paisa per call, if it exceeds five minutes.

The FBR through advocate Hafiz Ahsaan Ahmad Khokhar, on Saturday, filed an appeal against the SHC verdict dated 18 October 2021. He contended that imposition of duties of excise on telecom companies was legal through Finance Act 2021-2022.

The counsel submitted that the Parliament under Article 73 read with entry no 44 of Part 1 of the 4th Schedule of the Constitution is competent to legislate on excise duties on telecom sector/mobile companies by inserting Clause 6A in Table 11 of the 1st Schedule of the Federal Excise Act 2005 through Finance Act 2021-2022.

Three telecom companies had challenged the imposition of duties of excise before the SHC, which declared duties of excise through entry 6A of First Schedule of the Federal Excise Act, 2005 on mobile phone call services as ultra vires of the constitution.

Khokhar submitted that the SHC has misconceived that the exception added through 18th constitutional amendment in entry no 49 is altogether different from the context and spirit of entry no 44 of Part 1 of the 4th Schedule of the Constitution, which clearly authorised the Parliament to levy duties of excise on services as federal subject of legislation.

He stated that the Federal Excise Act, 2005 has been specifically legislated by Parliament with reference to entry no 44 of the 4th schedule of the Constitution for specific services being mentioning in 1st schedule of Excise Act and the method of imposition and collection of duties and excise has also been discussed in various judgments of the apex court.

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Khokhar maintained that the SHC had failed to appreciate that this was not the case of the application of prospective situation of taxation arising after the 18th Constitutional amendment but it is a case where the duties of excise have been levied on telecom sector being Federal subject by Parliament under Article 73 of the Constitution read with entry no 44 Part 1 of the 4th Schedule of the Constitution.

He stated, therefore, the SHC had misconceived and narrowed down the scope and spirit of entry no 44 (duties of excise) of Part 1 of the 4th Schedule of the Constitution, while passing the impugned judgment, resultantly, the judgment impugned lacked legal backing.

The petition further stated that the SHC had failed to appreciate that duties of excise under the Federal Excise Act, 2005 and Sales Tax Act, 1990 are species of different nature and genus emanating from different legislative field and they have been independently prescribed as entry no 44 and entry no 49 of Part 1 of the 4th Schedule of the Constitution.

The petitioner further agitated that there is no restriction or limit on Parliament and Federal government to levy duty of excise on any subject with reference to entry no 44 (duties of excise) of Part 1 of the 4th Schedule of the Constitution and thus, the SHC had stepped into the jurisdiction of the Parliament by allowing such interpretation, which is never mentioned or intended by legislatures.

Khokhar submitted that the SHC was not legally justified to make redundant the provisions of amendment introduced through Finance Act 2021-2022 by solely relying on a judgment on of the SHC reported as (2017 PTD 1) where leave to appeal has already been granted against the said judgment and that operation of that has also been suspended by apex court.

The petition also pointed that the SHC failed to appreciate the admitted and established principle of interpretation of harmonious construction, while dealing with the statutes and legislation made by the parliament and that the law should be saved rather to be destroyed and the Court must lean in favour of upholding the constitutionality and that there is always presumption in favour of the constitutionality of the legislative enactments unless ex facie it is violative of a Constitutional provision.

Copyright Business Recorder, 2021