The apex court passed these observations on the petition of secretary Khyber Pakhtunkhwa Local Government and Rural Development against the judgement of Peshawar High Court (PHC) dated 26.05.2016. A two-member bench comprising Justice Qazi Faez Isa and Justice Sajjad Ali Shah on 29-11-2018 had reserved the judgement after hearing the arguments.
The PHC had struck down the imposition of tax/cess/fee by the KP government levied through letter dated 8th January, 2015. M/s Lucky Cement Limited challenged that notification in the PHC. It was the contention of the KP secretary Local Governments before the High Court that the cess fees be affixed for the improvement of their financial sources to enable them for providing better services to the general public at large. "Affixing of such tax or taxes is the constitutional/legal right of the provincial government under the Section 116 of Local Government Ordinance, 2001, Section 177 Local Government Ordinance, 2012 and Section 42 of Local Government Act, 2013."
The cess fee has been imposed on transportation of cement, sand, and coal, etc, which will be recovered from the vehicles. The district administration is collecting the cess fee according to the approved Schedule from the vehicles that transport various kinds of elements i.e. cement, mud, bajri (gravel), shingle, etc, from District Lakki Marwat to other districts in the country.
The PHC had struck down the notification on the basis of the apex court judgement in Lucky Cement Factory Limited vs Government of NWFP, which said: "The levy of license fee on the manufacture of cement and the fee on loading and unloading of cement as well as the minerals was not within the powers of the Tehsil Councils, Lakki Marwart and Nowshera."
The Supreme Court judgement noted that the issue of levy has already been struck down by it, which the KPK government sought to be resurrected. It, therefore, declared the letter of 8th January, 2015 and imposing the said levy illegal and void.
The court noted that the public notice, which was published prior to the issuance of letter of 8th January, 2015, did not mention the proposed tax/cess/fee and referred to statutes which had already been repealed or replaced. The said publication did not comply with section 42 (2) of the Act of 2013 which mandates that, "the tax proposal" must be published and by "inviting and hearing public objection" thereto. To enable the public to meaningfully object to any tax proposal, it must first know what is proposed to be done.
The letter of 8th January, 2015 demonstrates that the petitioners did not know the difference between a tax, fee and cess. The letter of 8th January, 2015 is titled "Tax Cess Fee"; the heading of the table therein states, "Name of Tax" and thereunder "cess fee" is mentioned at serial No. 1 and "production cess" at serial No. 2. The second column of the said table mentions "cess fee on sand, shingle, bajri, mud, blocks, etc," and "production cess on cement" and in the third column mentions "name of vehicle" from which the levy is recoverable. The use of "etc" in the letter of 8th January, 2015 is yet another anomaly. The petitioners themselves are not clear whether they are imposing a tax, cess or fee. It is also standard drafting practice to identify the particular legal provision which has been invoked, but the letter of 8th January, 2015 does not mention any law and the particular provision thereunder which has been invoked. In this case the petitioners themselves do not seem to know whether they were imposing a tax, cess or fee.