ISLAMABAD: The top court on Friday dismissed the review petition of federal government and maintained its earlier order that the prime minister cannot take any decision relating to fiscal matters without the prior approval of cabinet.
A three-member bench, headed by Justice Saqib Nisar, after hearing the review petition, ruled that only the federal government has exercising powers for tax exemption and levy related matters, and the federal government is an entity comprising the prime minister and his cabinet under the Constitution. The top court also ruled that budgetary expenditure or discretionary governmental expenditure could only be authorised by the federal government, that is, the Cabinet, and not the prime minister on his own.
Appearing on behalf of the federal government, Additional Advocate General Rana Waqar argued that it requires a strong prime minister to run state functions smoothly. However, the senior judge of the top court observed that Prime Minister could not bypass the Cabinet adding that constitution does not allow him to take solo flight in making decisions adding that the PM is the chief executive of the country, but can’t serve as a substitute for the federal government.
Justice Saqib further said that nowhere was it written in the constitution that the prime minister or any minister or advisor is the federal government, adding that the Rules of Business 1973 could not be superior to the constitution.
The importers of cellular phones and textile goods had challenged the notifications before the Islamabad High Court, claiming those were not in accordance with the Section 3 of the Sales Tax Act. The high court, however, dismissed their petitions. The importers had filed appeals against the IHC verdict in the apex court, which had set it aside.
On August 18, the top court had ruled that the government was the collective entity described as the Cabinet constituting the Prime Minister and Federal Ministers. “Neither a secretary, nor a minister or prime minister were the Federal Government and the exercise, or purported exercise, of a statutory power exercise-able by the Federal Government by any of them, especially, in relation to fiscal matters, is constitutionally invalid and null and void in the eyes of the law,” the top court ruled.
The top court in its 75 page judgment also ruled that similarly, budgetary expenditure or discretionary governmental expenditure can only be authorised by the Federal Government i.e. the Cabinet, and not the Prime Minister on his own.
The judgment said that Rule 16(2), which apparently enables the prime minister to bypass the Cabinet, is ultra vires adding that any Act, or statutory instrument (e.g. the Telecommunication Act, 1996) purporting to describe any entity or organization other than the Cabinet as the Federal Government is ultra vires and a nullity.
“The ordinance making power can only be exercised after a prior consideration by the Cabinet. An ordinance issued without the prior approval of the Cabinet is not valid,” the judgment said. Similarly, no bill can be moved in Parliament on behalf of the Federal Government without having been approved in advance by the Cabinet. The Cabinet has to be given a reasonable opportunity to consider, deliberate on and take decisions in relation to all proposed legislation, including the Finance Bill or Ordinance or Act. Actions by the Prime Minister on his own, in this regard, are not valid and are declared ultra vires. The top court further declared that fiscal notifications enhancing the levy of tax issued by the secretary, revenue division, or the minister, are ultra vires.
Earlier, the appellants enjoyed certain exemptions from sales tax granted by the Federal Government. Subsequently the exemptions were either withdrawn or the tax rates were modified for cellular phones pursuant to Sections 3(2)(b), 3(6), 8(1)(b), 13(2)(a) and 71 of the Sales Tax Act, 1990.
The ruling is a substantial setback for the prime minister, who had contended that he did not need to go through the Cabinet for financial decisions. The court, however, appears to see it differently.