2014 P T D 752


[Islamabad High Court]


Before Shaukat Aziz Siddiqui, J


WARID TELECOM (PVT.) LTD. and others






Writ Petition No.2957 of 2012, decided on 8th January, 2014.


Khalid Anwar, Sr. Advocate Supreme Court, Iftikhar Ahmed Bashir, M. Raza Qureshi and Muhammad Anas Makhdoom for Petitioners.


Qazi Rafi-ud-Din Babar, learned D.A.G., Shabbir Abbasi, Standing Counsel and Saeed Ahmad Zaidi for Respondents Nos. 1 and 2.


M. Bilal, Sr. A.S.C., Babber Bilal, Shazia Bilal, Sajid Ejaz Hotiana and Hafiz Munawar Iqbal for Respondents Nos.3 and 4.


Ch. Muhammad Tariq, Commission, LTU, Razzaq A. Mirza, Additional A.G. (Punjab) for Respondent No.6.


Afzal Hussain, Advocate for Punjab Revenue Authority.


Dates of hearing: 14th March and 7th November, 2013.




SHAUKAT AZIZ SIDDIQUI, J.—Petitioners invoked the Constitutional Jurisdiction of this Court by way of filing instant Writ Petition with the following prayer:–


“That on the basis of the facts and grounds stated hereinabove, it is humbly prayed that this Hon’ble Court may graciously be pleased to:


(a) Declare that section 3(1)(d) and Entry 6 of Table II of the First Schedule of the Federal Excise Act, 2005, Rule 43 of the Federal Excise Rules, 2005 and S.R.O.550(I)/2006 ultra vires of the Constitution from 1-7-2011 and hence of no legal effect, while annulling the same;


(b) Declare that with effect from the passing of the 18th Amendment it is the provinces alone which are entitled to recover sales tax/excise duty, howsoever described, for the provision of services;


(c) Declare that no double taxation of excise duty is possible on the basis of the law as it stands and hence any demands for the same are illegal and void;


(d) Declare that refusal/failure to issue the gazette notification regarding exemption is mala fide and illegal and direct the FBR to issue the same;


(e) Restrain the respondents from issuing notices or making demands on the basis of the alleged claim for excise duty;


(f) (i) without prejudice to the above, declare that the liability (if any, which is denied) of the petitioners is to be determined in accordance with the language of the Federal Excise Act, 2005 and all other applicable laws for payment of Federal Excise Duty on ‘interconnection services’ as interpreted and set out in the body of the main petition,




(ii) in consequence thereof, the liability of the petitioners in relation to the Federal Excise Duty on ‘interconnection services’ for the financial years 2007 to 2012 stands fully discharged;


(g) declare that the respondents have illegally recovered FED on interconnection charges from the calling party operators which is liable to be refunded/adjusted;


(h) permanently restrain the respondents, their officers and agents, from commencing any audit, issuing any notices or recovering any demand, penalty, default surcharge and/or additional tax arising out of the Federal Excise Act, 2005 in any manner whatsoever;


(i) award any other relief which this Hon’ble Court may deem fit;


(j) award costs.”


2. And presented the facts as under:–


That the petitioners are licensees telecommunication operators of the Pakistan Telecommunication Authority (hereinafter referred to as the “PTA”) under the Pakistan Telecommunication (Re-organization) Act, 1996 (hereinafter referred to as the “PTA Act”) and have filed the instant petition alleging that the Federal Board of Revenue (hereinafter referred to as the “FBR”) has sought to create a retroactive demand of a gigantic and excessive amount of approximately Rs.47 billion going back to the last five years for and in relation to the payment of excise duty despite the fact that the FBR at no earlier point in time raised such a demand, and in fact all payments of excise duty have been made by the petitioners strictly in accordance with the then prevailing view of the FBR and also taking into account the directions issued by PTA from time to time. The petitioners submit that the whole concept underlying excise duty as well as sales tax, is that these are indirect taxes, incidence of which is to be passed on to the ultimate consumer. By making a retroactive demand the burden will shift on to the telecommunication operators who are neither liable to make such payments as per the correct interpretation of the applicable laws, nor are they in a financial position to meet this colossal demand which threatens to shut down their business. Accordingly they have challenged the constitutionality and legality of various notifications issued and the refusal to issue a duly approved notification and other allied or related issues pertaining to chargeability and recovery of Federal Excise Duty (hereinafter referred to as the “FED”) on ‘interconnection charges’ from the petitioners on cross-network.


3. For the sake of clarity, contents of the impugned S.R.O. 550(I)/2006 are reproduced herein below:–




Notification No.S.R.O.550(I)/2006, dated 5th June, 2006.—In exercise of the powers conferred by section 7 of the Federal Excise Act, 2005, and in supersession of its Notification No.S.R.O. 648(I)/2005, dated 1st, July, 2005, the Federal Government is pleased to specify the services mentioned in the Table below on which excise duty shall be levied and collected as if it were a tax payable under section 3 of the Sales Tax Act, 1990, and all the provisions of the said Act and the rules made and notifications, orders and instructions issued thereunder shall, so far as may be with necessary modifications, apply, namely:–



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