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MURREE BREWERY COMPANY LIMITED versus PROVINCE OF PUNJAB

r Article 151 Provincial Inter-Provincial Trade - Scope The Article 151 of the Constitution mandates the restoration of all inter-provincial trade and commerce powers, and through it to trade and trade in Parliament. Freedom cannot be declared free. Substituted in any way by the provinces - Article 151 of the Constitution expresses this important concept of federalism. In the constitution, such power was to be in Parliament, which by law may be required in the public interest between one province and another province or any part of Pakistan, could impose such restrictions on freedom of track, trade or intercourse. ro- legislavinvinro rovinrovinvinvin vinvinttureureure ure aure aaa law a law law a law law law law law a law which is a law which is a law law which is aaaaaaaaaa and and and and 1515151 (1) emp emphaha ha empha emp emp emp emp emp The letter insists that trade, commerce and intercourse will be free nationwide [pp. 249, 251] B&D

P L D 2017 Lahore 230

Before Shahid Karim, J

MURREE BREWERY COMPANY LIMITED through Chief Executive—Petitioner

versus

PROVINCE OF PUNJAB through Chief Secretary and others—Respondents

Writ Petition No.24811 of 2015, decided on 27th June, 2016..

(a) Constitution of Pakistan —

—Art. 151—Constitution of the United States of America, Art.l, S.8--Inter-Provincial trade—Similarities and distinction between Art. 151 of the Constitution of Pakistan and S. 8 of Art. 1 of the Constitution of the United States of America. [pp. 247, 269] A

(b) Constitution of Pakistan—

—Art. 151—Inter-Provincial trade—Scope—Article 151 of the Constitution enjoined all Inter-Provincial trade and commerce to be free and resided all power to legislate, and thereby to regulate, in the Parliament lest the freedom to trade and carry out commerce be shackled by the Provinces in any manner—Article 151 of the Constitution gave expression to the important concept of Federalism-Said Article was repository of the powers that were to vest in the Federal Government with regard to trade, commerce and intercourse throughout the country—By virtue of of the Constitution such power had come to reside in the Parliament which, by law, could impose such restrictions on the freedom of tract, commerce or intercourse between one Province and another or within any part of Pakistan as may be required in the public interest—Provincial legislature was not empowered to enact a law which imposed such a restriction and it was with this intention that Art.151(1) stated in emphatic terins that the trade, commerce and intercourse throughout the country shall be free. [pp. 249, 251] B & D

(c) Constitution of Pakistan—

-—Art. 151—Inter-Provincial trade—Scope—Where there was

commerce which concerned more Provinces than one, the power to regulate the same laid with the Parliament and a Province could not regulate such activity—Commercial activities which were completely within a province, were the only ones immune from federal power; the rest must yield in favour of federal commerce power. [p. 250] C

Gibbons v Ogden, 22 U.S. (9 Wheat.) 1, 6 L.Ed.23 (1824)

(d) Interpretation of the Constitution—

—Legislative history was a worthwhile aid to ascertain the intention behind an enactment and in particular a constitutional document, [p. 251] E

(e) Punjab Excise Act (I of 1914) —

—Ss. 31 & 32—Constitution of* Pakistan, Arts. 151 & 199— Notification No.SO(E&M)/2-3/2011 dated 24.06.2015 issued by the Excise and Taxation Department, Government of the Punjab (“impugned notification ”)—Constitutional petition—Maintainability— ‘Still head duty’, levy of—Levy of ‘still head duty> had been extended by the impugned notification to Pakistan Made Foreign Liquor and Beer consumed outside the Province of Punjab—Petitioner-brewery was directly affected by the ‘still head duty’ as they contended that their liquor and beer was likely to become uncompetitive and, therefore, may not be purchased by the ultimate consumers outside the Province of Punjab to whom the duty was likely to be passed on—Constitutional petition filed by the petitioner-brewery challenging the impugned notification, whereby ‘still head duty’ was levied was held to be maintainable, [p. 258] I & J

Messrs Nishat Talkies and another v. The Director/Collector, Excise and Taxation, Karachi and another PLD 1976 Kar. 712 and Province of Balochistan through Secretary Excise and Taxation

Department, Quetta and 2 others v. Murree Brewery Company Ltd. through Secretary 2007 PTD 1195 distinguished.

(f) Constitution of Pakistan —

—Art. 151—Inter-Provincial trade—Scope—Any law which imposed financial burdens on the trade or impeded the flow of trade and commerce (between Provinces) was violative of Art. 151 of the Constitution, [p. 261] K

Pakistan Tobacco Company Ltd. v. Government of N.W.F.P PLD 2002 SC 460 rel.

(g) Constitution of Pakistan —

—Art. 141—Extent of Federal and Provincial laws—Scope—Laws which had an extra-territorial or Inter-Provincial operation were beyond the competence of a Provincial Assembly and resided within the Parliament's remit, [p. 270] S

(li) Punjab Excise Act (I of 1914) —

—Ss. 31 & 32—Constitution of Pakistan, Arts. 141 & 151-Notification No.SO(E&M)/2-3/20ll dated 24.06.2015 issued by the Excise and Taxation Department, Government of the Punjab (“impugned notification”)—Freedom of trade, commerce and intercourse between different Provinces—Scope—'Still head duty) (excise duty), levy of—By way of impugned notification 'still head duty’ was extended to Pakistan Made Foreign Liquor and Beer consumed outside the Province of Punjab—Legality—No prohibition on inter-provincial trade and commerce could be imposed by a levy which had the effect of taking away the freedom of movement envisaged by Art. 151 of the Constitution—Constitution took away all powers from a Provincial Government to take any executive action which caused the prohibition or restriction on imports or exports— 'Still-head duty’ under challenge not only burdened the petitioner and commercially made them run out of competition but also impeded the flow of trade and commerce to their detriment and was tantamount to prohibition of the export from the Province of Punjab—'Still head duty * in question also ran counter to the doctrine of Federalism on which the Constitution was based—Impugned notification, whereby 'still head duty’ was imposed was thus declared ultra vires and without lawful authority and was set aside—Constitutional petition was allowed accordingly.

By way of Notification No.SO(E&M)/2-3/2011 dated

24.06.2015 issued by the Excise and Taxation Department, Government of the Punjab, “still head duty” was extended to Pakistan Made Foreign Liquor and Beer consumed outside the Province of Punjab. Petitioner-brewery which manufactured liquor and beer within the province of Punjab contended that levy of “still head duty” tantamount to export duty on liquor and beer being manufactured by the petitioner and consumed outside the Province of Punjab, which had the effect of rendering the petitioner as uncompetitive in the markets of other provinces.

Fundamental factor which prompted the framers of the Constitution to enact clauses (1) and (2) of Article 151 of the Constitution was to prevent goods manufactured in one Province from being put at disadvantage by imposition of taxes so as to destroy the market for those goods in a particular Province. Entire crux of petitioner’s challenge to the ‘still head duty’ was that their goods were put at a disadvantage by the imposition of the duty, which had the effect of virtually destroying the market of those goods in the other Provinces. If the intention of the framers of the Constitution was to obviate possibility of such a course of action to take place and to thwart any attempt by one Province to impose a tax or a duty without the regard for its consequences, then the ‘still head duty’ under challenge must be held to be ultra vires as it had precisely the same effect as was contemplated by the framers of the Constitution, [p. 251] F

No prohibition on inter-provincial trade and commerce could be imposed by a levy which had the effect of taking away the freedom of movement envisaged by Article 151 of the Constitution. Any restriction which directly and immediately affected the flow of trade, commerce or intercourse, must be held to offend the provisions of Article 151. [pp. 264, 266] M & N

Mirpurkhas Sugar Mills Limited v. District Council, Tharparkar through Chairman and 3 others 1991 MLD 715 ref.

Laws which had an operation across the territory of a Province were beyond the scope of Article 141 of the Constitution and, in case they impacted freedom of trade, commerce and intercourse, they impinged upon the right guaranteed by Article 151. [p. 270] T

Constitution took away all powers from a Provincial Assembly to make any law or a Provincial Government to take any executive action which caused the prohibition or restriction on imports or exports. There could not be a greater restriction than the imposition of a tax which placed a ‘discriminatory burden’ on certain go 'ds. Such discrimination in the present case was accentuated by the fact that similar goods being imported by other Provinces were not subject to the same tax and were thus at a clear advantage with regard to the ultimate price at which they were sold in the market, [p. 270] R

‘Still-head duty’ under challenge not only severally and fatally burdened the petitioner and financially and commercially made them run out of competition but also impeded the flow of trade and commerce to their detriment and was tantamount to prohibition of the export from the Province of Punjab, [p. 261] L

Pakistan Tobacco Company Ltd. v. Government of N.W.F.P PLD 2002 SC 460; Mirpurkhas Sugar Mills Ltd. v. District Council, Tharparkar and 2 others 1990 MLD 317 and Mirpurkhas Sugar Mills Limited v. District Council, Tharparkar through Chairman and 3 others 1991 MLD 715 ref.

‘Still-head duty’ was, in fact, an excise duty as per the Provincial Government’s own showing and was not for the purposes of regulation or for providing services which in fact benefited the petitioner. Absent such element, the levy was a prohibition and restriction which directly and immediately affected the free flow of trade, commerce and intercourse and must be held to be invalid. Ip. 266] O

Entire concept of Article 151 of the Constitution would he rendered nugatory and facile if the levy under challenge was allowed to stand. Levy in question also ran counter to the doctrine of Federalism on which the Constitution was based, [p. 252] G

Progress of a country as a whole also required free flow of commerce and intercourse as between different parts, without any barrier so that the economic resources of the various parts may be exploited to the common advantage of the entire nation. This was particularly essential in a federal system, [p. 257] H

Impugned notification trampled upon the mandate of Article 151(3)(a) of the Constitution and must be held to be void to such extent. Notification in question ran counter to the freedom of trade rule embodied in Article 151 of the Constitution and was thus declared ultra vires and without lawful authority and was set aside as a consequence, [pp. 269, 271] Q & U

Shahid Hamid and Mrs. Ayesha Hamid for Petitioners (in W.P. No.24811 of 2015).

Syed Irteza Ali Naqvi for Petitioner (in W.P.No.21927 of 2015).

Nasar Ahmad, D.A.G., Sarnia Khalid, A.A.G, for Respondents.*'

Rizwan Ahmad Sherwani, Director E&T.

Mian Abid Zia, Law Officer, E&T Deptt. Lahore

Date of hearing: 9th June, 2016.

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