Bench observes royalty typically applies to minerals, not finished goods, and seeks Punjab government response
ISLAMABAD, June 3, 2026 — The Federal Constitutional Court on Wednesday raised concerns over the Punjab government’s decision to impose royalty on cement production, questioning whether the levy amounts to a tax rather than a royalty.
A three-member bench headed by Justice Hassan Azhar Rizvi heard a petition challenging the imposition of royalty on cement bags. During the proceedings, the court observed that royalty is generally applicable to minerals extracted from the ground rather than finished products such as cement.
The bench noted that the provincial government’s move appeared, prima facie, to resemble a taxation measure and sought clarification on its legal basis.
Justice Rizvi questioned how royalty could be imposed on a processed industrial product and directed law officers to convey the court’s concerns to the Punjab government. The bench also sought details on the potential impact of the levy on cement prices.
The court further observed that any additional financial burden imposed on manufacturers would ultimately be passed on to consumers, leading to higher construction costs.
Justice Rozi Khan remarked that such measures tend to affect end-users rather than producers, particularly in essential sectors such as construction.
Representing the petitioners, senior lawyer Ahsan Bhoon argued that the government is legally empowered to collect royalty only on natural resources and minerals. He said the levy on cement bags effectively constitutes a tax and may amount to double charging, similar to imposing excise duty twice on the same product.
During the hearing, the Additional Advocate General Punjab requested time to seek fresh instructions from the provincial government.
The court accepted the request and granted time for a formal response, adjourning further proceedings.
The case is expected to have broader implications for provincial taxation powers and the regulatory framework governing the cement industry.
