MUHAMMAD AMIN BROTHERS (PVT.) LTD. and others vs FEDERATION OF PAKISTAN through Secretary (Finance), Islamabad and others
This matter involves petitions filed by holders of coal mining licenses in the Province of Punjab challenging the imposition of sales tax on the sale of coal by the Federal Government. The core legal question was whether sales tax on excavated coal constitutes a tax on mining activity beyond the legislative competence of the Federal Government under Entry No. 49 of the Fourth Schedule of the Constitution of Pakistan 1973, and whether the levy was discriminatory against Punjab miners compared to Balochistan. The Supreme Court held that the sales tax falls squarely under Entry No. 49 relating to the sale, production, and consumption of goods, and is constitutionally justified. The Court further held that no discrimination was established regarding the statutory levy, as the applicable notification levied the same specific rate across all provinces, and different administrative recovery arrangements in Balochistan did not alter the uniform legal levy. The petitions were accordingly dismissed.
- Whether sales tax on the sale of coal excavated through mining activity falls within the legislative competence of the Federal Government under Entry 49 of the Fourth Schedule of the Constitution of Pakistan 1973?
- Does the imposition of sales tax on locally produced coal constitute a tax on mining activity rather than a tax on the sale of goods?
- Whether differential administrative recovery methods by a provincial government establish a case of unconstitutional discrimination in the statutory levy of sales tax by the Federal Government?
- Section 3(2)(a), Sales Tax Act 1990
- Entry 49, Fourth Schedule, Constitution of Pakistan 1973
' MUNIR A. SHEIKH, J.---By this common judgment we propose to decide all the titled petitions involving identical questions of law and facts.
2. The petitioners in these petitions are holders of mining licence of coal in the Province of Punjab.
They objected to imposition of sales tax on the sale of coal by the Federal Government on the ground that it is a tax on mining activity and not the sale of goods, therefore, was not within the competency of the Federal Government to make law to levy such a tax as the same was out of purview of Entry No,49 of the Fourth Schedule of the Constitution.
3. The learned Judges of the High Court have come to the conclusion that the sales tax on the sale of coal excavated by the petitioners through mining activity was not a kind of tax on any mining activity but on sale, importation, exportation, production, manufacture and consumption of goods as envisaged by Entry No,49 of the said Schedule of the Constitution. Since levy of sales tax is constitutionally justified under this Entry of the said Schedule, therefore, this arguments has not force.
4. Learned counsel for the petitioners on the last date of hearing attempted to argue that the petitioners in Punjab had been discriminated as regards levy of sales tax inasmuch as the Coal Miners in the Province of Balochistan were being charged sales tax at fixed rate whereas the same law was being charged from the petitioner at ad valorem.
5. We have gone through the notification through which the sale tax has been levied. It reads as under:-- "Notification No,S.R.O. 1032(1)/94, dated 18th October, 1994. In exercise of the powers conferred by clause (a) of subsection (2) of section 3 of the Sales Tax Act, 1990, the Federal Government is pleased to declare that the supplies of locally produced coal shall be liable to sales tax at the specific rate of eighty-nine rupees per metric ton."
The Secretary, Sales Tax, who was directed to appear has brought the record and says that so far as this notification is concerned no discrimination has been made inasmuch as the sales tax is recoverable under the said Notification at the same rate from Coal Miners in all the four Provinces but on account of special circumstances prevailing in the Province of Balochistan, administratively, the recovery of sales tax was made in different manner in that the Provincial Government agreed to contribute towards the payment of sales tax on behalf of Coal Miners of the said Province whereas the remaining amount was to be paid by the Coal Miner therefore, there was no discrimination so far as the levy of tax at the same rate by the Federal Government is concerned.
6. In this view of the matter, no case of discrimination has been c made out on the part of the Federal Government.
7. For the foregoing reasons, these petitions have no merits which are accordingly dismissed and .