The petitioner in this case is a joint stock company limited by share liability incorporated under the provisions of the Companies Act, 1913 with a paid-up capital of rupees fifteen lacs. The company is engaged in as the present case is concerned. The business and trade of manufacture and sale of textiles. The company feels aggrieved by the demand of rupees five thousand made against it on account of tax on "professions, trades, callings or employments" under section 3 of the Punjab Finance Act, 1977. The section reads as follows : "Tax on persons engaged for professions, trades, callings or employments.-(1) With effect from 1st July 1977; there shall be levied and collected from the persons or classes of persons mentioned in column 2 of the Second Schedule to 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."
Column 3 of the Second Schedule to the Punjab Finance Act, 1977, specifies that an annual tax of rupees five thousand shall be payable by every person being a company registered under the Companies Act, 1913 with its paid-up capital exceeding rupees ten lacs.
2. The Constitution of the Federation of Pakistan adopted in the year 1973, much like the earlier Constitutions, is based upon the well defined scheme of distribution of powers between the Federation and the Federating Units-the Provinces. The Federal and the concurrent Legislative lists in the Fourth Schedule to the Constitution read with clauses (a) and (b) of Article 142 of the Constitution specify the matters on which the Federal Legislature enjoy power to make laws.
Provincial Legislature is competent to make laws with respect to the matters in the concurrent Legislative list. Clause (2) of Article 142 invests the Provincial Legislature with exclusive Legislative authority to make laws with respect to any matter not enumerated in either the Federal List or the concurrent list in the Fourth Schedule to the 1973 Constitution.
Article 163 of the 1973 Constitution specifically empowers a Provincial Legislature to impose taxes on persons engaged in professions, trades, callings or employments. The Article reads as follows : Article 163: Provincial taxes in respect of professions, etc.-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."
3. Article 163, in fact, corresponds to Article 164 of the Interim Constitution of 1972 and Article 141 of the 1962 Constitution. There is hardly any difference in the substance or even the language of these provisions. The provisions of this Article, like the provisions of the earlier Constitutions, enable the Federal Legislature to fix the maximum limit of the Provincial taxes on persons engaged in professions, trades, callings or employments by enacting a law in this behalf. No Federal law was, however, enacted in pursuance of the provisions in the successive Constitutional instruments.
The learned counsel for the petitioner contends that the imposition of a Provincial tax in the absence of a Federal law fixing the limit of Provincial tax is ultra vines of Article 1163 of the Constitution. He contends that the power to levy tax on professions, trades, callings and employments is exerciseable by the Provincial Legislature only when a Federal law fixing the ceiling has been brought into force.
5. The learned counsel contends that the use of the expression "may" in regard to the powers of the Federal Legislature ought to be read as "shall". He contends that the intention of the framers of the Constitution was to bring the Federal Legislature under an obligation to fix the ceiling for Provincial taxes on professions, trades, callings and employments. No authority has, however, been cited in support of this proposition.
There is nothing in the language of Article 163 to warrant the conclusion that provisions relating to the powers of Parliament to fix the limit of Provincial taxes on professions are mandatory. There is nothing to suggest that any consequences would follow if the parliament were not to enact the law.
Powers conferred by Article 163 are exerciseable by the parliament a~ its option. Even if the provisions were calculated to cast an obligation on the Federal Legislature to fix a ceiling I would still be reluctant tc place such a construction on Article 163 of the Constitution as would enable the Federal Legislature to completely, frustrate the powers of the Provincial Legislature by omitting to perform the obligations or function! Which the Constitution enjoins it to perform.
6. 1 am afraid I am unable to agree with the learned counsel that the provisions of Article 163 in so far as they relate to the powers of the Federal Legislature are mandatory. Article 163 is an enabling provision and makes it permissible for the Parliament to enact a law fixing the ceiling for Provincial taxes on professions etc. And likewise enables the Parliament from time to time to alter any limit fixed by it in this behalf. In. Other words Article 163 is no more than the conferment of a power which the Federal Government may or may not choose to exercise. It is only when the Federal Legislature has exercised such powers and fixed the limit fog Provincial taxes on trades, callings etc. That the Provincial Legislature would come under an obligation not to impose taxes in excess of such limit.
In the context of absence of any Federal Law fixing the limit o1 Provincial taxes on profession etc. The powers of the Provincial Legislature may be legitimately described as not circumscribed by any limitations whatsoever.
7. The next point raised by the learned counsel for the petitioner is that the power to levy taxes on professions etc. Under Article 163 is exerciseable only in relation to natural persons and that the Provincial Legislature is not competent to enact a law levying such taxes on joint stock companies which fall in the category of artificial persons or "corporations". He, therefore, contends that the provisions of section 3 of the Punjab Finance Act, 1977 read with the Second Schedule thereto in so far as they operate to subject a joint stock company to the Provincial tax on professions, trades, callings and employments are beyond the Legislative competence of a Provincial Legislature and are violative of Article 163 of the Constitution.
8. It is a well-settled principle of construction of Constitution that the Constitutional provisions must be interpreted as befits an organic instrument, in the- widest possible sense. In Abdul Aziz v.
Province of West Pakistan (1) the Supreme Court observed that it is not permissible to place Section 25-A of the Ordinance, referred to above, leaves no room for doubt that the function of the Labour Court is that of quasi-judicial nature.
It is not to act in a mechanical manner and I respectfully agree with the principles laid down in Imdad Ali v. Sind Labour Appellate Tribunal and another and Ahmad Hadi Shah and others v.
Rashid Textile Mills Ltd., Karachi and another.
Here I may also observe that the two preliminary objections raised by Mr. Minto are merely of technical nature and for the sake of those objections this constitutional petition is not likely to be thrown out, because it involves an important question of interpretation of law which is of public importance. Therefore, in this case I attach no importance to those preliminary objections. narrow construction upon provisions contained in a Constitution if the result be that thereby the validity of a statute is prejudiced. In all circumstances the full scope and extent of the Constitutional provisions must be determined and if the statute in question is capable of a construction which is conformable to the true meaning of the relevant constitutional provisions then that construction should be accepted.
Applying the well-settled rules of construction to the present case I feel that it is not open to restrict the operation of Article 163 to such an artificial and narrow sphere.
9. In the second place the learned counsel contends that the provisions of section 3 of the Punjab Finance Act, 1977 read with the Second Schedule thereto, in so far as they operate to subject a joint stock company to the Provincial tax on professions, trades, callings or employments are ultra vires of Item 48 of Part I of the Federal Legislative List which reads as under : "Taxes on corporations."
The learned counsel for the petitioner contends that by virtue of the aforesaid entry "taxes on corporations" are a Federal subject under the 1973 Constitution and the Provincial Legislature is not competent to impose any tax whatsoever against a joint stock company.
10. The learned counsel for the petitioner contends that the language of Item 48 of Part I of the Federal Legislative List shows a marked departure from the corresponding items of the 1962 Constitution which enable the Federal Legislature to impose "corporation taxes and taxes on income other than agricultural income". According to the learned counsel, the expression "corporation taxes" and "taxes on corporations" are expressions which are not inter-changeable and while "corporation taxes are akin to "taxes an income" the "taxes on corporations" would cover all taxes payable by a body corporate. He contends that in constructing Article 163 of the Constitution the expression "persons" should be so construed as to exclude body corporate from the purview of the Provincial law. If the argument was accepted it would entirely upset the Scheme of distribution of power between the Federal and Provincial Legislatures and would lead to the shocking result that although the particular matter falls in the Provincial domain yet the Provincial Legislature would be wholly incompetent to exact any tax whatsoever from a joint stock company.
11. It is interesting to note that the expression "corporation taxes" was not only used in regard to Legislative authority but was also defined by successive constitutional instruments. In the Government of India Act, 1935 the definition of "corporation taxes" was to be found in section 311, which reads as under : "Corporation tax" means any tax on so much of the income of companies as does not represent agricultural income, being a tax to which the enactments requiring or authorising companies to make deductions in respect of income-tax from payments of interest or dividends, or from other payments representing a distribution of profits, have no application."
The power to levy "corporation taxes" was a Federal subject under Item 46 of the Federal subject Legislative List in the Seventh Schedule to the Constitution read with section 100 of the Government of India Act, 1935.
12. In the 1956 Constitution the power to levy "corporation taxes and tax on income other than agricultural income" were lumped up with other duties and taxes in Item 26 of the Federal Legislative List in the Fifth Schedule. 'The definition of "corporation taxes" was redrafted but without substantial change in its scope. This definition was found in Article 218 of that Constitution.
In the 1962 Constitution the scheme for distribution of Legislative powers was materially altered, inasmuch as only the Federal Legislative Authority was specified in the Third Schedule and the residuary Legislative authority vested in the Provincial Legislatures. Clause (c) of entry 43 of the Federal Legislative List in the Third Schedule to the 1962 Constitution empowered the Federal Legislature to levy "corporation taxes and taxes on income other than agricultural income". The expression "corporation taxes" was defined by Article 242. This definition is identical with the definition given by Article 218 of the 1956 Constitution.
The framers of the Interim Constitution of 1.972 chose to revive the Scheme of Government of India Act, 1935 with regard to the distribution of Legislative powers and the Federal, Provincial and concurrent lists were drawn up which appear in the Fourth Schedule to the Interim Constitution, It is in this Constitution that the expression "taxes on corporations" for the first time appears at Items 47 and 48 of Part I of the Fourth Schedule which read as follows : "47. Taxes on income other than agricultural income.
48. Taxes on corporations."
The framers of the Interim Constitution of 1972 altered the phraseology in relation to the powers of the Federal Legislature. Clause (c) of Item 43 of the Federal Legislative List in the Third Schedule to the (962 Constitution which, enabled the Federal Legislature to levy "corporation taxes and taxes on income other than agricultural income" was bifurcated into two new entries as Items 47 and 48 of Part 1 of the Fourth Schedule to the Interim Constitution. The language of Item 48 used the expression "taxes on corporations" in substitution for the expression "corporation taxes".
Interestingly enough Article 290(i) of the Interim Constitution 1972 defines "corporation taxes" and this definition is an exact reproduction of the definition of "corporation taxes" as given by Article 242 of the 1962 Constitution. The definition of "corporation taxes" as given by the Interim Constitution has again been incorporated in Article 260(1) of the 1973 Constitution without even a comma being changed. The present definition of "corporation taxes" is the same as given by Article 290(1) of the 1962 Constitution, Article 218 of the 1956 Constitution and section 311 of the Government of India Act, 1935.
13. To my mind the provisions of Items 39 to 48 of the List .II of Provincial Legislative List in the Fourth Schedule to the Interim Constitution of 1972 furnish a valuable guidance as to the scope of the Legislative powers of the Provincial Legislature. Such power was conferred in express language and in the context of the altered phraseology employed in relation to Federal powers, viz. "taxes on corporations" in substitution for the expression "corporation taxes" used in the earlier constitutional instruments because the 197? Constitution has simply retained the phraseology adopted by the Constitution of 1972. The entries 39 to 48 of List 11 of the Provincial List in the Fourth Schedule to the Interim Constitution of 1972 read as under : "39. Taxes on agricultural income.
40. Taxes on lands and buildings, hearths and windows.
41. Taxes on mineral rights, subject to the provisions of List I.
42. Capitation taxes.
43. Taxes on professions, trades, callings, and employments, subject, however, to the provisions of Article 162.
44. Taxes on animals and boats.
45. Taxes on vehicles suitable for use on roads, whether, mechanically propelled or not, including tramcars.
46. Taxes on the consumption or sale of electricity.
47, Cessea on the entry of goods into a local area for consumption, use or sale therein.
48. Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling."
The conferment of powers of the nature mentioned in items 39 to 48 of the Provincial List contemporaneously with the changed phraseology from "corporation taxes" to "taxes on corporations" appearing in the interim Constitution serves to clarify and explain that the expression "taxes on corporations" is not to be regarded as absolute power to levy all taxes payable by corporations to the disregard of the scheme of distribution of subjects.
There is hardly any rational basis for the suggestion that while a particular subject is within the Provincial sphere and the Provincial Legislature is competent to levy that tax, the matter will at once become a Federal subject the moment one has to deal with a corporation. It would not stop here. If the argument advanced by the learned counsel is taken to the logical conclusion, it would mean that all taxes 'levied under any Provincial law for the time being in force including those falling under items 39 to 48 reproduced above would cease to be payable the moment the' constituents of a business, trade or industry get themselves converted into a joint stock company.
It may be remembered that there is no law requiring the prior consent of the Provincial Government before conversion of any business or trade into a body corporate. It is the discretion of the parties owning a business trade or industry at any ties to choose to have themselves incorporated into a joint stock company by complying with the formalities envisaged by the Companies Act, 1913.
14. It is interesting to note that taxes on agricultural income are within the exclusive domain of the Provincial Legislature. And according to entry 47 of the Federal List the Federal Legislature has no power to levy tax on agricultural income. In fact, under Item 47 of the Federal Legislative List in the Fourth Schedule to the 1973 Constitution the power to levy taxes on agricultural income has bean specifically puled out from the Federal domain. Yet if the arguments advanced by the ,learned counsel for the petitioner were accepted, it would lead to the conclusion that by virtue of Item 48 such taxes in relation to "corporation" would be leviable by a Federal Legislature alone which is negatived by the language of Item 47 of the Federal List itself. An examination of Item 41 of the Provincial Legislative List of the Interim Constitution of 1972 would suggest that whenever the framers intended to limit the Provincial Legislative authority they have expressly laid down and circumscribed the provincial power in this behalf. There is nothing in the 1973 Constitution which could persuade me to come to the conclusion that the scope of the Provincial legislative authority could be whittled down in the manner suggested.
I have asked the learned counsel for the petitioner whether the definition given by Article 260(1) of the present Constitution which defines the expression "corporation taxes" would not render completely redundant if the expression "taxes on corporation" and "corporation taxes" are not considered inter-changeable. He concedes that he has not come across the defined phraseology of "corporation taxes" being used anywhere in the Constitution.
An elementary rule of construction is that if possible effect should given to every part and every word of a Constitution and unless there is some clear reason to the contrary, no portion of the fundamental la should be treated as superfluous. A Court should avoid a construction E which renders any constitutional provision meaningless or inoperative and must lean in favour of a construction which will render every word operative, rather than one which may make some words idle and nugatory. (16 Am. Jur. 2d 245).
15. Having carefully considered the scheme of distribution of Legislative powers with special reference to the Interim Constitution of 1972 where altered phraseology of "taxes on corporations" was first used, I am led to the conclusion that the expression is used as inter-changeable for "corporation taxes" and that the altered phraseology was not calculated to confer a blanket immunity on the "corporations" from all Provincial taxes including those in relation to matters falling under the various heads mentioned in the Provincial List of the Interim Constitution of 1972 and fall in the Provincial sphere under the 1973 Constitution.
In the second place it is equally settled that a constitutional provision( should not be interpreted in isolation and any attempt to discover themeanings of "taxes on corporations" alone to the disregard of the underlying scheme of distribution of legislative authority would be against settled canons of construction of Constitution. T may here refer to the following passage from American Jurisprudence : "The fundamental principle of Constitutional construction is that effect must be given to the intent of the framers of the organic law and of the people adopting it. This is the polestar in the construction of Constitutions. A Constitutional clause must be construed reasonably to carry out the intention of the framers, and should not be construed so as to defeat the obvious intent if another construction .Equally in accordance with the words and sense may be adopted which will enforce and carry out the intent. The intent must be gathered from both the letter and spirit of the document, the rule being that a written constitution is to be interpreted in the same spirit in which it was produced. The Court should put itself as nearly as possible in the position Of the men who framed the instrument." (16 Am. Jur. 2d 239-40).
If the terms of a Constitutional provision a not entirely free from doubt, they must be interpreted as nearly as possible in consonance with the objects and purposes in contemplation at the time of their adoption because in construing a Constitutional provision, its general scope and object should be considered.
In construing a Constitutional provision, it is tile duty of the Court to have recourse to the whole instrument, if necessary to ascertain the true intent and meaning of any particular provision. Every statement in a Constitution must be interpreted in the light of the entire document. Rather than as a sequestered pronouncement; and because fundamental Constitutional principles are of equal dignity and none must be so enforced as to nullify or substantially impair the other, if there is an apparent repugnancy between different provisions the Court should harmonise them if possible "It is an established canon of Constitutional construment that no one provision of the Constitution is to be separated from all the others, to be considered alone, but that all the provisions bearing upon a particular subject are to he brought into view and to be so interpreted as to effectuate the great purposes of the instrument. Frequently, the meaning of one provision of a Constitution standing by itself may be obscure or uncertain but is readily apparent when resort is had to other portions of the same instrument." (16 Am, Jur. 2d.243-244).
16. In any case, the expression "taxes on corporations" is not an expression of art and even if .It be assumed that it is not interchangeable with "corporation taxes" it is difficult to assume how the conferment of powers to levy "taxes on corporations" could subtract from the powers expressly conferred by the entries in the Provincial Legislative List in the Interim Constitution of 1972 which the 1973 Constitution has adopted without any modification whatsoever. The expression "taxes on corporations" might at best mean taxes which the Federal Government might in its discretion choose to impose on body corporate in relation to its corporate existence. Substance or related functions performed by the Federal Government.I am unable to agree that the expression ."taxes on corporations" could be equated with powers to levy all conceivable taxes including those in relation to alt ;tatters and subjects which tinder the Constitution are assigned to Provinces.
17. I-or the aforesaid reasons, I am unable to agree that Item 48 of the Federal Legislative List could b; taken as exhaustive of the sum total of the taxes leviable against a corporation and that the Provincial Legislature has no power whatsoever to levy any tax against a corporation. I feel no hesitation in holding that the Provincial law imposing a tax on persons, including companies registered 'under the Companies Act, 1913 does not, suffer front any Constitutional infirmity.
18. In the end the learned counsel for the petitioner objected to the assumption of jurisdiction by respondent No. 2 to demand the impugned tax on the ground that since section 11 of the Punjab Finance Act, 1964 imposing a similar lax has been repealed; no tax is exigible. He asserted that the rules framed under that section are no longer in force and have. At any rate, not been saved by the Punjab Finance Act, 1977 and no new rules having been framed, respondent No. 2 he contends, has no authority to impose a tax. The argument is misconceived and overlooks the fact that the present tax is not a new tax but a re-enactment of a similar tax imposed under section 1 I of the Punjab Finance Act, 1964. 1 have no doubt that the situation is fully covered by section 23 of the West Pakistan General Clauses Act, 1956 which lays down that where any enactment is repealed and reenacted with or without modification the rules framed under the repealed enactment shall be deemed to have been made under the re-enacted provisions. It is well settled that a principle which governs the repeal of enactment as a whole would also cover the repeal and re-enactment of provisions in an Act like the Finance Act. I have no hesitation in holding that the rules framed under the West Pakistan Finance Act, 1964 shall be applicable for the purpose . Of administration of the Punjab Finance Act, 1977 in relation to the levy of the Provincial tax under section 3 of the Punjab Finance Act, 1977. The objection of the absence of jurisdiction of the respondent No. 2 has no merit.
19. In the end, I find no merit in this petition which is dismissed in limine.