FCC questions Punjab levy on cement bags

ISLAMABAD: The Federal Constitutional Court on Wednesday raised concerns over the Punjab government’s decision to impose royalty on cement bags, observing that royalty could be charged on minerals and that applying it to a finished product appeared, prima facie, to amount to a tax.

A three-member bench headed by Justice Hassan Azhar Rizvi heard the matter relating to the levy on cement production. During the proceedings, the bench expressed serious reservations about the provincial government’s move and asked law officers to convey to the government that the current method of imposing royalty did not seem appropriate.

Justice Rizvi remarked that royalty should be collected on minerals rather than on bags of cement, and questioned how the government could place such a charge on a finished product. The bench also sought details of the extent to which the levy would increase the price of a bag of cement.

During the hearing, Justice Rozi Khan observed that the financial burden created by the royalty on cement bags would eventually be shifted to buyers, as factory owners would recover the extra amount from consumers. He noted that such a step would affect the public rather than the manufacturers.

Counsel for the petitioners, Ahsan Bhoon, argued before the court that the government had the authority to collect royalty only on minerals. He maintained that imposing royalty on a finished product was effectively a tax and contended that the levy on cement bags was equivalent to charging excise duty twice.

At that stage, the Additional Advocate General Punjab sought time to obtain fresh instructions from the provincial government. The court accepted the request, granted time to the Punjab government for further directions, and adjourned the hearing.