A two-member bench comprising Justice Syed Arshad Ali and Dr Khurshid Iqbal announced the verdict after hearing 157 writ petitions challenging the cess. The petitioners had contended that the Khyber-Pakhtunkhwa Revenue Authority (KPRA) lacked the legal authority to impose the IDC and argued that it would burden the business community economically, calling for the levy to be struck down as unlawful.
Government counsel, however, maintained that the cess was imposed in accordance with the law and requested the court to dismiss the petitions.
In its detailed judgment, the court ruled that the development and maintenance of infrastructure fall within the legislative domain of the provincial assembly, as per Article 142(c) of the Constitution of Pakistan. The bench observed that the IDC is not a tax but a welfare levy aimed at generating funds for public welfare and development projects.
The judgment further stated that the cess does not require a direct service or compensation, as its purpose is to collect revenue in return for the use of provincial infrastructure. The court clarified that the levy does not constitute interference in federal jurisdiction, nor does it restrict interprovincial trade, as it merely serves as a compensatory charge for the use of provincial infrastructure.
It also noted that the differentiation between goods produced within the province and those entering from outside is based on reasonable grounds, linked to infrastructure usage, and therefore does not violate Article 25 of the Constitution concerning equality before law.
The K-P government had introduced the Infrastructure Development Cess Act in 2022, imposing a two per cent cess on the movement of goods manufactured, imported, or exported within the province. Several courier companies, exporters, and trade bodies had challenged the levy, terming it an encroachment upon federal powers.