PHC declares cotton cess recovery from textile mills illegal

PESHAWAR: Declaring the recovery of cotton cess from the textile mills of Khyber Pakhtunkhwa as void and illegal, the Peshawar High Court (PHC) ruled on Wednesday that prime minister of Pakistan or the federal cabinet cannot impose tax without approval of the Parliament.

Justice Waqar Ahmad Seth and Justice Muhammad Ghazanfar Khan were on the two-member bench that gave the ruling. The bench allowed the writ petition filed by the Khyber Pakhtunkhwa chapter of All Pakistan Textile Mills Association against the imposition and recovery of the cotton cess. The petition was filed through lawyer Qazi Ghulam Dastageer.

During the hearing, the lawyer said the cotton cess was imposed on the pattern of excise duty and under the law there was no excise duty on the locally made goods, including raw materials.

He submitted that after 18Th Amendment to Constitution it had become a provincial subject and thus Central Cotton Committee and Research Centre did not exist in this province. The lawyer said imposition of the cotton cess by the federal government in this province was illegal and against the law.

He pointed out that the government imposed Cotton Rules in 1950, but no amendments were brought to the Section 3 of Cotton Cess Act 1913 and thus the government had to first bring amendments to the law through the Parliament.

The lawyer added that this had become now the provincial subject and thus under the law the federal government cannot impose such tax. The lawyer submitted that the textile industry in the province was playing an important role in the country's economy and was paying millions of income tax to the government.

He pointed out that the industry, especially in the Khyber Pakhtunkhwa, was already on the verge of collapse due to the worst law and order situation, adding the cess imposition would deteriorate the condition of the industry in the province.