The petitioner assails notice dated 15-6-2010 issued by Respondent No. 2 directing the petitioner to produce information within seven days for the assessment of professional tax under Section 3 of the Punjab Finance Act, 1977, as amended in 1999 and 2000.
2. Brief facts of the case are that petitioner is a Company, registered under the Companies Ordinance, 1984. Petitioner Company has set up an educational campus located at Main Rai Wind Road, Lahore which is leased out to the University of the Lahore. The Respondent No. 2 has issued a notice dated 15-6-2010 for assessm ent of professional tax.
3. The learned counsel for the petitioner argued that the aforesaid assessment of professional tax is ultra vires of Item No. 48 of the Federal Legislative List in fourth schedule of the Constitution of Islamic Republic of Pakistan (1973). It is further argued that the impugned notice dated 15-6-2010 is without the jurisdiction because petitioner being a company incorporated- inter-alia for development of Educational Campus by acquisition of additional immovable property and moveable assets through sale or lease does not fall under the second schedule of the Punjab Finance Act, 1977. He further submitted that the professional tax cannot be levied by the Province in view of the fact that the Federation by virtue of an entry in the Federal Legislative list has the exclusive jurisdiction to levy tax on corporations.
4. Conversely, the learned A.A.-G. argued that petition is not maintainable as there is alternate remedy available. He defended the aforesaid impugned notice as well as right of the Province of the Punjab to levy professional tax. In this regard he has relied upon the law laid down by the Honourable Supreme Court of Pakistan in the case of Province of Punjab Through Secretary, Excise and, Taxation, Government of Punjab and others v. Sargodha Textile Mills Ltd., Sargodha and others (PLD 2005 SC 988).
5. I have considered the contentions of the learned counsel for the parties with their able assistance and gone through the law on the issue in hand.
6. The provision of Section 3 of the second schedule of the Punjab Finance Act No. XV of 1977 through which the professional tax was imposed are reproduced for ready reference:-- "Tax on persons engaged in professions, trades, calling or employments.--(1) With effect from 1st of July, 1977, 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."
7. The provision of Article 163 of the Constitution of Islamic Republic of Pakistan, 1973 under which the Provincial Assembly is authorized to impose tax on a persons indicated profession, trade, calling or employment is reproduced here under:-- "163. professional 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 (Majlis-e. Shoora (Parliament), on persons engaged in professions, trades .callings or employment, and no such Act of the Assembly shall be regarded as imposing a tax on income."
8. In pursuance of Article 163 of the Constitution, the Parliament fixed the maximum limit under the professional tax -- Limitation No. XX Act, 1941, (hereinafter referred as Act of 1941). Initially, the Limit under Act of 1941 was Rs. 50 per annum, which was amended by Finance Act, 1999 and was further amended by Finance Act, 2000 fixing the maximum limit of provincial tax at Rs. 1,00,000 per Annum.
9. The said Finance Act of 1977 and Limitation Act had been subject of various challenges before this Court as well as the Honourable Supreme Court of Pakistan. A perusal of the judgment of the Honourable Supreme Court of Pakistan in the case of Province of Punjab Through Secretary, Excise and Taxation, Government of Punjab and others v. Sargodha Textile Mills Ltd., Sargodha and others (PLD 2005 SC 988), clearly establishes the right of the Province to impose and collect professional tax. It has categorically been stated that "There is no doubt that it falls within the legislative competence of the Provincial Assembly to levy professional tax". In this regard following Paragraphs of the judgment of the Honourable Supreme Court of Pakistan being relevant are reproduced below:-- "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 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. W of 1999."
10. The only restriction that existed on the competency of the Provincial Legislature to impose a professional tax is that its rate cannot exceed the limit, that may be fixed by Act of Parliament/Federal Legislature. It is not the case of the petitioner that the tax is being levied or recovered in an amount that exceeds the maximum limit fixed by the Parliament. The petitioner's grievance is that Provincial Legislature is not competent to impose professional tax and secondly the petitioner does not fall in the purview of second schedule of the Punjab Finance Act, 1977.
Admittedly the petitioner is a Company registered under the Companies Ordinance, 1984 and therefore, falls under clause-1 of the second schedule of the Punjab Finance Act, 1977, which is reproduced here under:-- Second Schedule (See Section 3) {{TABLE}} Sr. NoClass of Persons Rate of Tax per annum (Rupees)
1 Companies registered under Companies Ordinance, 1984 with paid up capital (i) Up to rupees 54nillion 5,000 , (ii) Exceeding rupees 5 million but not exceeding rupees 50 million20,000 i. Exceeding 'rupees 50 million but not exceeding rupees 100 million50,000 i. Exceeding rupees 100 million but not exceeding rupees 200 million75,000 i. Exceeding rupees 200 million 1,00,000 {{TABLE}}
11. Both in Pakistan and India the companies were made liable to pay the professional tax, by the provincial law, in the 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 provisions of the Companies Ordinance, 1984, possessed with certain legal rights and charged with certain legal duties. The word "person" has been defined in Article 260 of the Constitution of Islamic Republic of Pakistan, 1973, so as to include any body politic or corporate. The same is the definition of "persons" is found in Section 3(47) of the 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".
12.There is no bar against provincial Government of the Punjab to recover the professional tax from the petitioner. I am fortified in allowing at the aforesaid conclusion by the aforesaid judgments of the Honourable Supreme Court of Pakistan rendered in the case of Sargodha Textile Mills (Supra) as well as rendered by this Court in the case of Pakistan Steel Mills Corporation (Private) ,Limited, through Incharge Low v. Province of Punjab through Chief Secretary and others (PLD 2012 Lahore 103). It is also noticed that the petitioner is issued a show-cause notice against which constitutional petition is not maintainable as dictum laid down by the Honourable Supreme Court in the cases of Mir Nabi Bakhsh Khan Khoso v. Branch Manager, National Bank of Pakistan, Jhatpat (Dera Allah Yar) Branch and 3 others 2000 SCMR 1017), Khalid Mehmood Chaudhary and others v. Government of the Punjab through Secretary, Livestock and Dairy Development (2002 SCMR 805) and Virasat Ullah v. Bashir Ahmad, Settlement Commissioner (Industries) and another (1969 SCMR 154).
13. The petitioner has an alternate remedy by way of an appeal under Rule 3 of the Punjab Professions and Trade Taxes Rules, 1977, which is reproduced here as under:-- "(3) Any person aggrieved by an order of the District Excise and Taxation Officer made under sub- rule (1) may prefer an appeal within thirty days from the service of the order to the Director, Excise and Taxation, whose decision shall be final."
14.For what has been discussed above, the petition being devoid of any merit is dismissed.