ISLAMABAD:
In a decision with far-reaching implications for provincial 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 welfare for workers in the mining sector.
The ruling settles a constitutional challenge to amendments introduced by the Balochistan Finance Act, 2020, affirming the province’s legislative jurisdiction to impose the levy and strengthening the post-18th Amendment framework that expands provincial authority over residual matters.
A division bench of the FCC, headed by Justice Aamer Farooq, ruled on whether the Balochistan Assembly had the power to amend Section 3 of the Minerals Excise (Labour Welfare) Act, 1967, through Section 7 of the Balochistan Finance Act, 2020.
The petitioner in this case was Attock Cement Pakistan, a cement manufacturer operating in Pakistan whose manufacturing plant is located at Hub, Lasbela, Balochistan. As part of its operations, the company exploits raw materials, including limestone, shale and sand, which are essential for the production of cement.
On January 15, 2021, the Balochistan Mines Labor Protection Department served a notice on the petitioner demanding payment of mineral excise duty to the Balochistan Labor Protection Commissioner, at revised rates in accordance with the Balochistan Finance Act, 2020.
In response, the petitioner submitted three separate representations to the ministry requesting a review of the applicable tariffs; however, each performance was refused. The petitioner then approached the Balochistan High Court, but his plea was rejected.
Before the FCC, the petitioner contended that the imposition of excise duty was within the exclusive legislative domain of the federation and therefore the Balochistan Assembly had no power to amend the 1967 Act, particularly where such amendments changed the rate or nature of excise duty, a matter which he claimed was beyond provincial legislative jurisdiction.
However, the FCC rejected this argument, holding that the Balochistan Finance Act, 2020 must be upheld by applying the established doctrines of pith and substance and dual aspect legislation, read in light of the post-18th constitution’s commitment to cooperative federalism.
“The challenged law does not encroach on or displace federal legislative authority; rather, it operates within a constitutionally permissible overlap to promote a legitimate provincial objective. Its fiscal mechanism serves as an incidental means to achieve a substantive objective directly rooted in the welfare of workers. To strike down such a law would be to adopt a rigid and formalistic approach, inconsistent with the constitutional design. The law therefore represents a lawful and harmonious exercise of legislative power,” the court said in a 14-page document. judgment written by Justice Aamer Farooq.
The judgment further observes that courts should exercise restraint and avoid hastily invalidating laws passed by the Majlis-e-Shoora or provincial assemblies, noting that such enactments reflect the democratic will and public confidence in elected representatives.
He also said that the Eighteenth Amendment to the Constitution consciously adopted the philosophy of cooperative federalism.
The Court noted that under the constitutional framework of Pakistan, legislative power is exercised by the provincial assemblies within their respective provinces and by Parliament at the federal level, through duly elected representatives who enjoy public trust and legitimacy.
Explaining the constitutional development, the judgment said: “Before 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 powers subject-wise. The Constitution contained both a federal legislative list and a concurrent legislative list (comprising forty-seven subjects). while subjects included in the concurrent list or not included in any of the lists (called residual issues) fell within the legislative domain of the provincial assemblies.
“Following the enactment of the Constitution (Eighteenth Amendment) Act, 2010, the concurrent legislative list contained in the Fourth Schedule to the Constitution, 1973 was removed, thereby significantly expanding the legislative authority of the provinces. »
Further, the Court held: “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. Section 142(a) limits the legislative authority of the Federal Legislature to matters listed in the Federal Legislative List, while Section 142(c) clearly provides that matters not included in that list are exclusively within provincial jurisdiction and are beyond the scope of federal legislation.
“All areas in which competing legislative powers may still exist are dealt with under section 142(b) of the 1973 Constitution. Thus, all ‘residual powers’ not allocated to the Federal Legislature belong by right to the provinces, thereby forming a constitutional landscape in which provincial autonomy is affirmed.
The judgment further observes: “Our courts have repeatedly encountered cases where the limits of legislative jurisdiction required careful interpretation. Although the 1973 Constitution strives to delineate these boundaries with clarity, there are times when discerning whether authority lies with the Federation or the provinces becomes far from simple. »
