ISLAMABAD:
In a ruling with far-reaching implications for provincial fiscal autonomy and cooperative federalism, the Federal Constitutional Court (FCC) upheld the validity of legislation enacted by the Balochistan Assembly empowering the provincial government to impose excise duty on minerals to fund labor welfare in the mining sector.
The decision resolves a constitutional challenge to amendments introduced through the Balochistan Finance Act, 2020, affirming the province’s legislative jurisdiction to impose the tax and reinforcing the post-18th Amendment framework that expands provincial authority over residual subjects.
An FCC division bench, headed by Justice Aamer Farooq, resolved the issue of whether the Balochistan Assembly had the authority to amend Section 3 of the Mineral Excise Duty (Labour Welfare) Act, 1967, through Section 7 of the Balochistan Finance Act, 2020.
The petitioner in the case was Attock Cement Pakistan, a cement manufacturer operating in Pakistan with its manufacturing facilities located at Hub, Lasbela, Balochistan. As part of its operations, the company is engaged in the extraction of raw materials, including limestone, shale and sand, which are essential for the production of cement.
On January 15, 2021, the petitioner received a notice from the Balochistan Mines Labor Welfare Department, requiring payment of excise duty on minerals to the commissioner of labor welfare, Balochistan, at revised rates in accordance with the Balochistan Finance Act, 2020.
In response, the petitioner submitted three separate representations to the department requesting review of the applicable rates; however, each representation was rejected. The petitioner subsequently approached the Balochistan High Court but his plea was rejected.
Before the FCC, the petitioner contended that the imposition of excise duty fell within the exclusive legislative domain of the federation and that, therefore, the Balochistan Assembly lacked the authority to amend the 1967 Act, particularly where such amendment altered the rate or nature of excise duty, a matter which it argued was beyond the provincial legislative competence.
However, the FCC rejected this argument, holding that the Balochistan Finance Act, 2020 must be sustained by applying the established doctrines of essence and substance and dual aspect legislation, read in the light of the post-18 constitution’s commitment to cooperative federalism.
“The impugned statute does not invade or displace federal legislative authority; rather, it operates within a constitutionally permissible overlay to promote a legitimate provincial objective. Its fiscal mechanism serves as an auxiliary means to realize a substantive purpose directly rooted in labor welfare. To strike down such legislation 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 held in a 14-page document. judgment written by Justice Aamer Farooq.
The judgment further observed that courts should exercise restraint and avoid hastily invalidating legislation enacted by the Majlis-e-Shoora or provincial assemblies, noting that such enactments reflect the democratic will and public trust reposed in elected representatives.
He also asserted that the Eighteenth Amendment to the Constitution consciously embraced the spirit of cooperative federalism.
The court noted that under Pakistan’s constitutional framework, legislative authority is exercised by provincial assemblies within their respective provinces and Parliament at the federal level, through duly elected representatives who enjoy public trust and legitimacy.
Explaining the constitutional evolution, the judgment said: “Prior to 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 power by subject. The Constitution contained both a Federal Legislative List and a Concurrent Legislative List (comprising forty-seven subjects). Parliament was authorized to legislate on the subjects enumerated in both lists, while the subjects included in the concurrent lists or that were not part of any of the lists (called residual matters), fell within the legislative scope of the Provincial Assemblies.”
“Following the enactment of the Constitution (Eighteenth Amendment) Act, 2010, the Concurrent Legislative List contained in the Fourth Schedule of the Constitution of 1973 was removed, thereby substantially expanding the legislative authority of the Provinces.”
Elaborating further, the court held: “Since only the Federal Legislative List remained in the Fourth Schedule, all matters not specifically enumerated therein fell within the exclusive legislative jurisdiction of the provincial assemblies. Article 142(a) limits the legislative authority of the Federal Legislature to the subjects enumerated in the Federal Legislative List, while Article 142(c) clearly states that matters not included in that list fall exclusively within the provincial jurisdiction and are further beyond the scope of federal legislation.”
“Any areas in which concurrent legislative powers may still exist are addressed in Article 142(b) of the 1973 Constitution. Therefore, all ‘residual powers’ not assigned to the Federal Legislature rightfully belong to the provinces, forming a constitutional landscape where provincial autonomy is affirmed. It is, indeed, impossible to delineate each legislative branch with such precision that ambiguity never arises.”
The judgment further observed: “Our courts have repeatedly encountered cases in which the limits of legislative jurisdiction required careful interpretation. Although the 1973 Constitution strives to draw these lines clearly, there are times when discerning whether authority lies with the Federation or the Provinces is far from simple.”
