The division bench comprising Chief Justice Yahya Afridi and Justice Ghazanfar Khan directed the respondent officials to furnish reply within seven days. The court also asked the petitioner's lawyer to file a rejoinder to the respondents' replies before February 7, 2018 the next date of hearing.
The petitioner claimed that the price reduction would expose everyone including children to smoking and also affect the local tobacco industry. On previous hearing, the court had stopped the federal government from acting on an amendment made in Federal Excise Act, which had resulted into reduction of prices of locally manufactured cigarettes.
The writ petition was filed by a resident of Swabi, Hameed Khan through his lawyer Babar Khan Yousafzai. The petitioner has challenged amendments in the Federal Excise Act on multiple grounds including health factors.
Babar Khan Yousafzai, appearing for the petitioner, argued that worldwide the prices of cigarettes had been enhanced through taxation so as to curtail its use, but in Pakistan through the introduction of the impugned provision amendments were made in the Federal Excise Act, 2005, to reduce price of cigarettes.
He argued that due to cheap availability of locally manufactured cigarettes, its sale had further enhanced. He said that traditionally excise duty on cigarettes had been levied in two tiers. He added that the first tier was for the cigarettes, which were expensive and usually consumed by upper and upper-middle class of people, while the second tier was applied on cigarettes, which were consumed by the middle class and below.
He said that Finance Act, 2017 was introduced in the National Assembly through a money bill. He alleged that the multi-national cigarettes manufacturers had started lobbying through influential quarters including the British government for reduction of prices of cigarettes through introduction of a third tier for purpose of levy of excise duty.
He stated that through Section 9 (A) (i) of Finance Act amendment was made in the Federal Excise Act, 2005, and a new Column 10-A was included in Table 1 of the First Schedule. He added a third tier was introduced which provided that cigarettes with on-pack retail price of less than Rs 58.5, an excise duty at rate of Rs 16 per pack, shall be levied.
The counsel claimed that the amendment was made despite the ministry of national health services proposed increase on all taxes and rejected the proposal of a third tier. About another controversial change, he stated the government also introduced a restriction on lowering or bringing a change of price from one tier to another, but due to mala fide intentions the said restriction was only applicable to the cigarettes falling in the first tier and not the second tier. Similarly, he argued, multinational companies were given free hand to reduce the on-pack price of its brand to bring it in the third tier from the second one, so that lesser excise duty should be levied on it.