1989 PLP 4388 (MLD)

SAEEDUZZAMAN SIDDIQUI, J.--The petitioner has challenged in the above petition the validity of second proviso to Rule 3(3) of Sind Workers' Children (Education) Cess Rules 1974 framed under Workers' Children (Education) Ordinance 1972, hereinafter to be referred as 'the Rule' and 'the Ordinance' only respectively, and the consequent demand of education cess from the petitioner by the respondents on the basis of above rule. It is contended by the learned counsel for the petitioner that the calculation and demand of cess by the respondents on the basis of second proviso to rub-rule (3) of Rule 3 of the Rules is wholly without jurisdiction as the said proviso is in conflict with subsection (3) of Section 3 of the Ordinance. It is urged by the learned counsel that from the preamble of the Ordinance it is quite clear that it was promulgated to attain uniformity in relation to the economic and financial stability in all the four provinces of Pakistan and keeping in view the above object of the legislation the Government of Punjab, N.W.F.P., Baluchistan and Federal Territory of Islamabad, have framed rules to give effect to the provision of Section 3 of the Ordinance on a uniform basis by providing recovery of education cess from the employers quarterly on the basis of number of workers employed in each quarter @ Rs.25 per quarter. However, in the case of Sind, the rules framed for giving effect to Section 3 of the Ordinance made a departure from the above uniform basis, by providing in the second proviso to sub-rule (3) of Rule 3 of 'the Rules' that the return for the quarter ending 30th June shall be accompanied by a challan representing the difference of total cess calculated for the highest number of workers attained during the year. It is, accordingly, contended by the learned counsel for the petitioner that the 2nd proviso to rule 3(3) of 'the Rules be declared ultra vires and the demand of cess made by the respondents on the basis of said rule be declared without lawful authority. The learned counsel for the respondents on the other hand contended that the education cess recoverable under the Ordinance is an annual cess and as It such it is to be calculated on the basis of highest number of employees employed by an establishment during a year and as such the second proviso to Rule 3(3) of 'the Rules' rightly provided for payment of difference of total cess calculated for the highest number of workers attained during the year alongwith the last quarterly return of every year. After hearing the learned counsel for the parties we are of the view that the decision of the case depends solely a true construction of Section 3 of the Ordinance which is as follows? "

3. Levy of Education Cess:--(1) Every employer of an establishment in which the number of workers employed at any time during a year is ten or more shall pay to the Provincial Government an education cess at the rate of one hundred rupees per worker per annum. (2) Every employer shall, within every three months beginning from the first day of the calendar month following the commencement of the Workers' Children (Amendment) Act, 1973, prepare and deliver, or cause to be prepared and delivered, in the form and to the officer prescribed by the Provincial Government, a return showing the number of workers employed in the establishment during the preceding quarter and shall subscribe a declaration of the truth of the return at the foot thereof. (3) The levy of education cess shall be on the basis of the number of workers shown in the return referred to in subsection (2)." From a careful reading of the above provision it will emerge that under subsection (1) of Section 3 a liability is created on every establishment which employed ten or more workers at any time during an year, to pay education cess at the rate of Rs.100 per annum per worker. However, the charging provision in the Ordinance is not subsection (1) but it is subsection (3) of Section 3, which provides for levy of education cess on the basis of the number of workers whom in the return filed quarterly by an employer under Section 3(2) ibid. We are, therefore, of the view that education cess under Section 3 of the Ordinance, is levied quarterly on the basis of number of workers employed in each quarter. The basis for levy of education cess is clearly provided in Section 3(3) of the Ordinance and, as such we are unable to agree with the learned A.A.-G. that the cess under the Ordinance is to be recovered on the basis of highest number of workers employed at any time during the year on annual basis. It is a well-settled rule of interpretation that before a subject is brought under a taxing statute it must clearly fall within its letter. Subsection (3) of section 3 of the Ordinance having provided for levy of education cess on the basis of number of workers i shown in the return filed by the employer under subsection (2), the basis of taxation could not be changed by providing in the rules, framed under the Ordinance to give effect to the above provision, that the cess will be paid on the basis of highest number of workers employed by an establishment during the year, for the whole year. It is not disputed before us that the Rules framed under the Ordinance by the respective Governments of Punjab, N.W.F.P., Baluchistan and Federal Territory Islamabad, provide for recovery of education cess under Section 3 of the Ordinance on quarterly basis according to number of workers employed by the establishment during each quartet and in our view these rules harmonise with the object of the legislation. If the contention of learned counsel for the respondents is accepted, it will produce startling consequences in some cases. For instance, in cases of seasonal establishments like Sugar Mills etc. which do not work with full strength throughout the year, the number of worker may be very high during the peak of the crushing season but the number of workers decline substantially when the season is over. On the interpretation suggested by the learned counsel for the respondents, such establishment will have to pay education cess on the highest number of workers employed by them at any time during the year while such workers may be in the employment of the establishment for a very short period of the year. No such intention appears from the plain language of Section 3 of the Ordinance. We, accordingly, hold that 2nd proviso 10 sub-rule (3) of Rule 3 of the Rules is ultra vires of the Ordinance and accordingly, the petitioners are not liable to pay education cess calculated by the respondents on the basis of said second proviso to rule 3(3) of the Rules. There will be no order as to costs. M.Y.H./M-844/K Petition allowed.