KARACHI: While nullifying the imposition of the federal excise duty on the services, the Sindh High Court (SHC) ruled on Thursday that province had exclusive authority to levy such duties since 2011. The SHC announced its judgement on 43 constitutional petitions, including those which were filed by Indus Motors Company, M/s Maritime Agency, Ocean Express Agency, Universal Freight System, M.A.Z Shipping, Union Cargo, Ayhan Shipping and Logistic, Delta Transport, Pak Suzuki Motors Co, Shall Pakistan, Green Pak Shipping and others, in respect of federal excise duty and the sales tax on services in the provinces.
A two-member bench, comprising Justices Munib Akhtar and Abdul Maalik Gaddi, announced the judgment that was reserved in April this year.
The bench declared that the provisions of the Federal Excise Act, 2005, insofar as they relate to providing or rendering of services, were valid when enacted (July 1, 2005) since at that time the exclusive power to impose a levy on the rendering or providing of services vested in federation alone. However, on account of 18th amendment (and in particular by reason of the addition of the “exception” to No. 49 of the Federal Legislative List), the said provisions are declared to be ultra vires the constitution with effect from July 1, 2011 in relation to the province of Sindh, it added.
The judgment said: “It is declared that the Sindh Sales Tax Ordinance 2000 was ultra vires the constitution.”
It further declared that on account of 18th amendment to the constitution (which took effect from October 19, 2010) to provinces alone have the legislative power to levy a tax on the rendering or providing of services, but this is subject to the article 270AA(7) of the constitution (as substituted by the said amendment) and by reason thereof the legislative competence has manifested in province of Sindh from July 1, 2011 onwards, the date on which the Sales Tax on Services Act, 2011 came into force.
The court ruled that the provisions of the Sales Tax on Services Act, 2011 as relate to the shipping agents etc., are ultra vires constitution being a direct encroachment on the exclusive federal taxing power contained in the entry no. 53 of the Federal Legislative List.
