FAQIR MUHAMMAD KHOKHAR, J.---These appeals, by leave of the Court, under Article 185(3) of the Constitution of Islamic Republic of Pakistan, 1973, involving common questions of law, are directed against judgments dated 5-12-1995, 27-3-2002, 27-11-2001, 21-10-1999 and 21-6-2000 passed by the Lahore High Court, Lahore in Writ Petitions Nos.1594/1979, 4210/2002, 4211/2002, 4213/2002, 20840/2002, 4209/2002, 4212/2002, 19713/1999 and 7164 of 2000).
2. The brief facts of the case (in Civil Appeal No,1013/1996) are that by section 3 of 'the Punjab Finance Act No XV of 1977, a tax hereinafter called the professional tax) was levied on certain persons, including companies engaged in a profession, trade, calling or employment as specified in the Second Schedule of the Act. The Excise and Taxation Officers issued demand notices to the respondent-Companies namely Sargodha Textile Mills and Nazir Cotton Mill Ltd., Sargodha for payment of professional tax. Therefore, the said companies instituted Writ Petition No,1594 of 1979 in the Lahore High Court, calling in question the validity of demand notices. They took the position that they were already paying the professional tax to the Cantonment Board, Sargodha, for the last several years and being companies could not be taxed by the provincial legislature. The Writ Petition was allowed by a learned Single Judge in Chambers of the High Court, by the impugned judgment dated 5-12-1995. It was held that the respondent companies could not be made liable for payment of professional tax under a provincial law which, by the provisions of the Constitution, could be levied and collected only by the Cantonment Board on behalf of the Federal Government.
3. In Civil Appeals Nos.1018 and 1019 of 2003, the appellant companies had preferred Writ Petitions Nos.19713 of 1999 and 7164 of 2000 respectively calling in question the validity of levy of professional tax under section 3 read with Second Schedule of the Punjab Finance Act, 1977, as amended by Punjab Finance Act, 1999. Their writ petitions were dismissed, by a learned Single Judge of the Lahore High Court, by the impugned judgments dated 21-10-1999 and 21-6-2000.
4. In Civil Appeals Nos.1230 to 1235 of 2002, the respondent companies filed Writ Petitions Nos. 4210, 4211, 4212, 4213, 4209 and 20840 of 2002, in the Lahore High Court, Lahore, calling in question the validity of the provisions of section 3 of -the Punjab Finance Act, 1977 (Act XV of 1977) and its Second Schedule, as amended by the Punjab Finance Act, 1999 (Act IX of 1999), and Punjab Finance Ordinance of 2000, where by the rates of professional tax were revised and enhanced. The writ petitions were allowed, by the impugned judgments dated 27-11-2001 and 27-3-2002. The High Court held that the respondent companies being bodies corporate were not liable to professional tax by or under a provincial law and that the Parliament was possessed with the exclusive power to impose a tax on the companies by virtue of Item No,48 (Federal Legislative List) of Fourth Schedule of the Constitution.
5. Mr. Aftab Iqbal Chaudhry, the learned Advocate-General, Punjab, argued that under the Second Schedule of the Punjab Act No,XV of 1977, certain categories of persons including the companies registered under the Companies Act, 1913, were required to pay the professional tax ranging from Rs,1,000 to Rs,5,000 per annum, calculated on the basis of paid-up capital. The learned Law Officer relied on the case of Tribal Textile Mills Ltd., Lahore v. The Province of Punjab, Lahore and another PLD 1979 Lah. 206 wherein the levy and collection of professional tax under the aforesaid Punjab Act of 1977 were upheld by the Lahore High Court. It was next contended that the subject-matter of the professional tax, was also covered by Entry No,43 of.The Concurrent Legislative List of Fourth Schedule of the 1973 Constitution. It was further submitted that Second Schedule of the Punjab Finance Act, 1977 was substituted by the Punjab Finance Act No,IX of 1999, whereby the professional tax was levied on the companies at the enhanced rates up to Rs,1,00,000 per annum on the basis of their paid-up capital. The constitutional validity of the provisions of the Punjab Finance Act, 1999, had also been upheld by the Lahore High Court, by the impugned judgments dated 21-10-1999 and 21-6-2000 passed in Writ Petitions Nos.19713 of 1999 and 7164 of 2000 which were the subject- matter of Civil Appeals Nos.1018 and 1019 of 2003. The learned Advocate General lastly argued that the levy and collection of the professional tax by the Cantonment Boards as well as by the Provincial Government was not prohibited as the cantonment areas were part of the province.
Reliance was placed on the case of Pakistan through the Secretary, Ministry of Defence versus Province of Punjab and others PLD 1975 SC 37.
6. Mr. Muhammad Akram Khawaja, Senior Advocate Supreme Court, the learned counsel for the appellants in Civil Appeals Nos.1018 and 1019 of 2003, argued that the provisions of section 3 of the Punjab Finance Act, 1977, and its Second Schedule, as amended, were beyond the legislative competence of the Provincial Legislature as envisaged by Articles 141 and 142 of the Constitution read with Legislative Entries Nos.31, 47, 48, 50, 52 and 59 of the Federal Legislative List of the Fourth Schedule of the Constitution. It was next contended that maximum limit of professional tax as originally fixed by the Federal law i,e, the Professions Tax Limitation Act No,XX of 1941 was Rs,50 per annum. It was unilaterally increased to Rs,1,00,000 on 26-6-1999, by the Punjab Finance Act, 1999.
Therefore the Provincial Law was void and ultra vires the provisions of Articles 143 and 163 of the Constitution. The mere fact that the Parliament had also revised the maximum rate of professional tax to Rs,1,00,000 per annum subsequently on 30-9-1999 by the Finance Act No,IX of 1999 would cure the defect of unconstitutionality of the provincial law. It was argued that Second Schedule of the Act of 1977 providing for the rate of the professional tax with reference to the paid-up capital was violative of the Constitution and was also inconsistent with section 3 of the Punjab Finance Act, 1977.
7. Mr. Nasir Saeed Sheikh, the learned Deputy Attorney General for Pakistan, appearing on Court's notice submitted that, as a matter of principle, double taxation by a legislative act did not suffer from any vice of constitutional invalidity. He relied on the cases of Messrs I.C.C. Textile Ltd. And others v. Federation of Pakistan and others 2001 SCMR 1208; Pakistan Industrial Development Corporation v. Pakistan through the Secretary, Ministry of Finance 1992 SCMR 891; Avinder Singh and others v. State of Punjab and another (AIR 1979 SC 321); Messrs Jain Brothers and others v. The Union of India and others (AIR 1970 SC 778). It was next argued that a company or a corporation was included in the category of "persons" as defined by section 3(47) of the West Pakistan General Clauses Act, 1956. Reference was also made to the Black's Law Dictionary, Eighth Edition, 2004, page 1178, where the word "Person" was defined to include an artificial or juristic person such as a Corporation. The learned Law Officer contended that the Cantonment Board, which was under the control of Federal Government, had lawfully imposed the professional tax under a Federal statute i,e, Cantonment Act, 1924. Therefore, the Provincial Legislature was not empowered to impose the same tax in view of Article 143 of the Constitution of Islamic Republic of Pakistan. In case of a conflict between a Federal Law and a Provincial Law, it was the Federal Statute which would prevail in view of the ratio laid down in the case of Malhi Khan v. The Board of Revenue PLD 1991 SC 824.
Therefore, the Punjab Finance Act, 1977, as amended from time to time, was invalid and ultra vires the Constitution.
8. Raja Muhammad Akram, Senior Advocate Supreme Court submitted that by virtue of the restriction placed by the Professional Tax Limitation Act, 1941, a provincial legislature was not permitted to levy the professional tax exceeding Rs,50 per annum. Therefore, the Punjab Finance Acts, 1977, 1999 and Punjab Finance Ordinance, 2000, were ultra vires Articles 143 and 163 of the Constitution. It was further argued that the maximum limit of the professional tax was enhanced by the Parliament from Rs,50 to Rs,1,00,000 on 30-6-1999 by the Finance Act, No,IX of 1999. But the Punjab Finance Act, 1999, had already been enacted on 26-6-1999, thereby enhancing the limit of professional tax to Rs,1,00,000 which was beyond the legislative competence of the Provincial Legislature. He lastly raised an objection that the impugned judgments of the learned Single Judge in Chambers were appeal able before a Division Bench of the High Court under section 3 of the Law Reforms Ordinance, 1972 as amended. Therefore, the appeals by the Government of the Punjab etc. Were not maintainable before this Court.
9. Messrs Hafiz S.A. Rehman, Senior Advocate Supreme Court and Tariq Bilal, Advocate Supreme Court, the learned counsel for the-Cantonment Board, Sargodha, argued that by virtue of section 60 of the Cantonment Act, 1924, the Cantonment Boards had imposed the professional tax since 1966, after they were authorised by the Central Government. Therefore, the Provincial law could not impose the same tax in the presence of a federal law.
10.. We have heard the learned Advocate-General, Punjab, the learned Deputy Attorney-General for Pakistan, the learned counsel for the Cantonment Board as well as the learned counsel for the companies. The subject-matter of professional tax has a chequered legislative history. The Government of India Act, 1915, by section 111, as also the Government of India Act, 1935, by Item No,46, List II (Provincial Legislative List) of the Seventh Schedule, empowered the Provincial Legislatures of India to levy the Professional Taxes. Certain provinces imposed the professional taxes on the basis of income which were considered to be quite unjust and inequitable as if they were in the nature of income tax in disguise. The Calcutta Municipal Corporation and other bodies in the State of West Bengal imposed the annual professional tax at a flat rate ranging from Rs,3 to Rs,50 for individuals and from Rs,20 to Rs,200 from companies calculated on the basis of their paid-up capital. The Government of United Provinces by taking advantage of the unlimited power imposed the employment tax on all salaried persons who were entitled to draw monthly emoluments of Rs,250 or above. The B Governor General of India took up the matter with the Secretary of State for India for the removal of anomalies with regard to the unfettered powers of the Provincial Governments to impose the professional taxes. Therefore, the British Parliament enacted the India and Burma (Miscellaneous Amendments) Act, 1940. Item No,46 List II (Provincial Legislative List) in the Seventh Schedule of Act of 1935 was amended. The professional tax was made subject to newly-inserted section 142-A which clearly laid down, inter alia, that a provincial law relating to professional taxes for the benefit of a Province or a municipality, district or local board or other local authority would not be invalid on the ground that it was with respect to a tax on income provided that the professional tax would not exceed Rs,50 per annum. The Constitution of India, by Article 276 had originally fixed a maximum limit of Rs,250 of the professional tax which was raised to Rs,2,500 by the Indian Constitution (Sixtieth Amendment) Act, 1988.
11. The Constitution of Islamic Republic of Pakistan, 1956, by Item No,86 (Provincial Legislative List), Fifth Schedule, empowered the provincial legislature to levy professional tax but subject to a maximum of Rs,50 per annum as fixed by Article 117. Subsequently, a departure was made by Article 141 of 1962 Constitution, Article 164 of Interim Constitution of 1972 read with its Item No,43, List II (Provincial Legislative List) Fourth Schedule and Article 163 of the Constitution of Islamic Republic of Pakistan, 1973, which provided that a professional tax imposed by a provincial law would not exceed such limits as might be fixed from time to time, by an Act of Parliament/Central Legislature.
Article 163 of 1973 Constitution reads as under:-- "A Provincial Assembly may by Act impose taxes, not exceeding such limits as may from time to time be fixed by Act of Parliament, on persons engaged in professions, trades, callings or employments, and no such Act of the Assembly shall be regarded as imposing a tax on income."
It is now left to the Parliament to, fix, by law, the total amount of professional taxes that can be levied and collected by or under an Act of the Provincial Assembly.
12. As mentioned above, the Central Legislature also enacted a law called the Professions Tax Limitation Act No,XX of 1941. Section 2 thereof laid down that notwithstanding the provisions of any law for the time being in force, the professional taxes payable would cease to be levied to the extent they exceeded Rs,50 per annum. The Act of 1941 continues to be in force as an existing law and is also protected by virtue D of Articles 268 and 279 of the Constitution of Islamic Republic of Pakistan, 1973. It was amended by the Federal Laws (Revision and Declaration) Ordinance No,XXVII of 1981. The Parliament enacted the Finance Act No,VI of 1999 on 30-6-1999, whereby the pre- existing maximum limit of Rs,50 of the professional tax, was enhanced to Rs,1,00,000 per annum.
13. The erstwhile Provincial Assembly of West Pakistan enacted the west Pakistan Finance Act No,XXXIV of 1964. By section H thereof, a professional tax at the uniform rate of thirty rupees per annum was levied, and collected from persons including companies (i) who were assessed to income tax under the Income Tax Act, 1922, in respect of earnings or income from any profession etc. (ii) or to agriculture income tax or had paid revenue in excess of Rs,250 (iii) legal practitioners
(iv) income tax practitioners (v) clearing agents (vi) contractors supplying E goods and commodities and providing services to the Central or Provincial Governments or any local authority and (vii) holders of a license under the Import and Export (Control) Act, 1950. The professional tax was in addition to any other tax or fee that might be payable under any other law.
It would be seen that the imposition of professional tax of Rs,30 for a financial year was within the maximum limit of 50 rupee'. Per annum permitted by the Central Act of 1941.
14. Thereafter, the Punjab Finance Act No,XV of 1977 was enacted whereby section 11 of West Pakistan Act of 1964, was repealed. The professional tax, ranging from Rs,100 to Rs,5,000 was imposed. The provisions of section 3 and Second Schedule of 1977 Act are reproduced below:-- "Tax on persons engaged in professions, trades, calling or employments.--(1) With effect from 1st July, 4.977, there shall be levied and collected from the persons or classes of persons mentioned in column 2 of the Second Schedule of this Act engaged in a profession, trade, calling or employment in the province of the Punjab a tax for each financial year at the rates mentioned in column 3 of the said Schedule."
SECOND SCHEDULE S.No,Class of persons Rate of tax per annum
1. Companies registered under the Companies Act, 1913 with paid-up capital(i) Exceeding Rs.2 lacs but not exceeding Rs. 10 lacs.(ii) Exceeding Rs. 10 lacs.Rs. 1,000 Rs.5,000
2. Persons other than Companies owning Factories (as defined under the Factories Act, 1934) and having 10 or more employees.Rs.500
3. Persons, other than Companies, owning commercial establishments having 10 or more employees.Rs.500
4. Persons holding licence under Import and Export (Control) Act, 1950, who during the preceding financial year have imported/exported goods of the value:-- (i) Not exceeding Rs.50,000(ii) Exceeding Rs.50,0004Rs.500 Rs. 1,000
5. Contractors enlisted for supply to the Federal or any Provincial Government or any Local Authority goods, commodities and services of the value:-- (i) Exceeding Rs.25 lacs(ii) Exceeding Rs.10 lacs but not exceeding Rs.25 Lacs.(iii) Not exceeding Rs. 10 Lacs.Rs.5,000 Rs. 1,000 Rs.500.00 Persons who are engaged in a profession, trade, calling or employment either wholly or in part within the province of the Punjab except those who were not assessed during the preceding financial year to income-tax under the Income-Tax Act, 1922.Rs. 100 The professional tax levied by the Punjab Finance Act, 1977, transgressed the maximum limit of Rs,50 as fixed by the existing law namely the Professions Tax Limitation Act, 1941. Subsequently, by section 4 of the Punjab Finance Act, No,VI of 1995, the Second Schedule of 1977 Act was substituted where by the Companies were made liable to pay professional tax from minimum of Rs,2,000 to maximum of Rs,10,000 per annum depending on their paid-up capital. The Act of 1977 was further amended by the Punjab Finance Act No,V of 1996 adding certain other categories of persons liable to pay professional tax. Subsequently, the Punjab Act No,IX of 1997, was amended whereby the companies registered under the Companies Ordinance, 1984, were made liable for the payment of the professional tax at the rate of 1% the net income tax payable but subject to a minimum of Rs,200.
15. There is no doubt that it falls within the legislative competence of the Provincial Assembly to levy the professional tax. However, by virtue of the controlling provisions of Article 163 of 1973 Constitution, a Provincial Assembly is not empowered to impose a professional tax at a rate exceeding such limits as may be fixed, from time to time, by an Act of Parliament. The provisions of Second Schedule of the Punjab Finance Act No,XV of 1977 as originally enacted and as amended by Acts of '1995, 1996 and 1997 are inconsistent with the existing federal statute i,e, the Professions Tax Limitation Act No,XV of 1941, amended. Therefore, the same ultra vires the provisions of Article 163 of the Constitution of Pakistan. The imposition, demand or/and collection of professional tax from the Companies, by the Punjab Government or any of its functionaries, in pursuance of the provisions of the Punjab Finance Act, 1977, as originally enacted or as amended by the Acts of 1995, 1996 and 1997, are without, lawful- authority and are of no legal effect. The judgment of the Lahore high Court in the case of Tribal Textile Mills Ltd. (supra) is per incuriam as the provisions of the Professions tax Limitation Act No,XX of 1941 were not taken into consideration. We do not consider it necessary, in these cases, to examine further the question of double taxation or the scope or validity of the provisions of section 60 of the Cantonments Act, 1924.
16. However, amendments brought about by the Punjab Finance Act No,IX of 1999 and the Punjab Finance Ordinance, 2000, stand on a different footing. The Serials Nos.1 and 1-A of the Second Schedule of Act of 1977, fixing the scale of professional tax were substituted by the Punjab Finance Act No,IX of 1999 as under:--- SECOND SCHEDULE S. No,Class of persons Rate of tax per annum 1 Companies registered under the Companies Ordinance, 1984, with paid-up capital.
(i) Not exceeding rupees 10 million Rs. 10,000
(ii) Exceeding rupees 10 million but not exceeding rupees 25 million. Rs.30,000
(iii) Exceeding rupees 25 million but not exceeding rupees 50 million Rs.70,000
(iv) Exceeding rupees 50 million Rs. 1,00,000 The Serial No,1 of Second Schedule was again substituted by the Punjab Finance Ordinance No,3 of 2000 as follows:-- SECOND SCHEDULE S. No,Class of persons Rate of tax per annum 1 Companies registered under the Companies Ordinance, 1984, with paid-up capital.(i) up to rupees 5 million;(ii) exceeding rupees 5 million but not exceeding rupees 50 million;(i) exceeding rupees 50 million but not exceeding rupees 100 million;(ii) exceeding rupees 100 million but not exceeding rupees 200 million;(iii) exceeding rupees 200 million.Rs.5,000 Rs.20,000Rs.50,000 Rs.75,000 Rs.
1,00,000
17. It is clear that a maximum limit of Rs,1,00,000 of professional tax on the companies fixed by the Punjab Act of 1999 and the Ordinance of 2000 adhered to the ceiling fixed by the Parliament through the Finance Act No,VI of 1999. The federal law of 1999 as well as the I covincial law of 1999 raising the upper limit of professional tax, which same into force from the financial year, 1999, were in conformity with each other. Therefore, it would hardly make any difference whether or of the enactment of the provincial law had preceded the federal law. Needless to. Observe that under the Punjab Act of 1999 and also the Ordinance, 2000, the value of the paid-up capital of companies was made the basis for calculating the professional tax. It was only a measure or yardstick for taxation which would not affect the subject-matter of professional tax falling within the 'legislative competence of the Provincial Assembly.
18. In our view, exception can be taken to the validity of levy and collection of the professional tax on companies under the Second Schedule of 1977 Act as substituted by the Punjab Finance Act No,IX of J 1999 and the Punjab Finance Ordinance, 2000, which is quite consistent with the provisions of the professions Tax Limitation Act No,XX of 1941, as amended, by the Finance Act No,VI of 1999.
19. Both in Pakistan and India the companies were made liable to pay the professional tax, by the provincial law, in take past as well. Even by the West Pakistan Finance Act, 1964, the companies were made liable to pay the professional tax. Generally speaking, a company is considered to be a body of persons associated for the purpose of business. It is a juristic and artificial person created under the provision is of the Companies Ordinance, 1984, possessed with certain legal rights and charged with certain legal duties. The word "person has been defined in K Article 260 of the 1973 Constitution so as "to include any body politic or corporate". The same is the definition of "person" is found in section 3(47) of West Pakistan General Clauses Act, 1956. Therefore, the companies cannot be considered as falling outside the purview of the provincial law in the matter of imposition of professional taxes. Article 163 of the Constitution clearly postulates that the professional taxes shall not be considered as a tax on income. It was with a view to remove the doubt that all the Constitutional dispensations had made it clear that a provincial law imposing professional taxes would not be regarded as imposing a tax on income.
20. Now, the question of bypassing the remedy of intra-Court appeal remains to be considered. We may observe that no such objection was taken at any earlier stage of the proceedings. 1 he learned law officers were taken by surprise. We find that some of the companies have also directly approached this Court against the impugned judgments passed by a learned Single Judge of the High Court. Therefore, it would not be appropriate to examine the question at the belated stage, in view of the L peculiar facts and circumstances of these cases. Some important points of law as to the interpretation of Constitution and validity of province statutes are also involved. A somewhat similar view was taken in the case of Commissioner Punjab Employees Social Security Institution Manzoor Hussain Khan 1992 SCMR 441.
21. For the foregoing reasons, Civil Appeal No,1013 of 1996 filed by the Province of Punjab etc. As also Civil Appeals Nos.1018 and 1019 of 2003 filed by M/s. Regal Ceramics, Gujranwala and Pakistan Agricultural Storage and Services Corporation respectively are dismissed. However, Civil Appeals Nos. 1230 to 1235 filed by the Province of Punjab and others are allowed. The impugned judgments dated 27-11-2001 and 27-3-2002 passed by a learned Single Judge in Chambers of the Lahore High Court are set aside. Consequently, the Writ Petitions Nos.20840 of 2001 and 4209 to 4213 of 2002 shall stand dismissed. The parties are left to bear their own costs.