The Peshawar High Court (PHC) has set aside the Khyber Pakhtunkhwa government’s decision to impose excise duty on unmanufactured tobacco, declaring the levy under Section 15 of the KP Finance Act 2024 unconstitutional and beyond provincial authority.
According to a news report, the ruling came in response to a constitutional petition filed by Pakistan Tobacco Company Limited (PTC) and other stakeholders challenging the provincial excise duty.
The petitioners’ counsels argued that the provincial imposition violated the constitutional division of fiscal powers between the federation and the provinces.
They contended that “duties of excise” fall under the exclusive legislative competence of the Parliament as outlined in Entry No. 44 of the Federal Legislative List. Therefore, they said, the KP Assembly had overstepped its authority by imposing a provincial excise duty on unmanufactured tobacco.
The provincial government defended the measure, maintaining that the Finance Act 2024 had been enacted lawfully and that the Constitution did not explicitly prohibit provincial assemblies from imposing excise duties on specific goods, including tobacco.
After hearing arguments from both sides, the PHC ruled that the levy conflicted with constitutional provisions and was therefore invalid. “The legislation is in violation of the constitutional principles governing taxation powers,” the court stated, effectively rendering the provincial excise duty null and void.
The verdict is being seen as an important reaffirmation of constitutional boundaries defining taxation authority between the federation and provinces.
Legal and business experts said the decision provides clarity on fiscal jurisdiction and strengthens investor confidence in the consistency of tax laws across Pakistan.
