Law: Sales Tax Act, 1990

Section: 3

Law: Constitution of Pakistan, 1973

Section: 142c

The charging provision, Section 3 of the Act, as amended by Section 14 of the Finance Act, 2024, makes the cess payable on the transportation, carriage, or movement of goods within, into, out of, or through the Province. The rate of cess is to be determined either ad valorem or on prescribed basis, and its proceeds are credited to the Provincial Consolidated Fund to be utilized exclusively for the maintenance and development of infrastructure. A close reading of Section 3 reveals that the charging event is the movement of goods whether produced, traded, imported, or exported across the infrastructure of the Province. The measure of the levy, however, is linked to the value of the goods as determined under the Sales Tax Act or the Customs Act. This distinction between the event that attracts liability and the standard used for quantification is crucial. The adoption of a federal valuation standard is merely an administrative convenience; it does not define the constitutional character of the levy.In this backdrop, the determination of legislative competence must proceed by first identifying the true object and substance of the impugned IDC Act and then juxtaposing it against the fields expressly reserved to the Federation. The relevant entries of the Federal Legislative List: Entry 24 (Carriage of passengers and goods by sea or by air), Entry 27 (Import and export across customs frontiers, inter-provincial and international trade and commerce), and Entry 43 (Duties of customs, including export duties) define the outer boundaries of federal fiscal jurisdiction. Read together, these entries secure to Parliament the power to legislate on trade, transport, and taxation at the frontiers of the Federation and between Provinces.The jurisprudence on fiscal measures akin to the IDC Act reveals that levies imposed on the movement or entry of goods within a province or local area, even where assessed on an ad valorem basis and collected in a manner similar to customs duty, have consistently been upheld as constitutionally valid provincial impositions. In Universal Merchants, the levy of Octroi under the West Pakistan Municipal Committee Octroi Rules, 1964 charged on goods…