AQEEL AHMED ABBASI, J.--- Since a common controversy has been agitated through the aforesaid three petitions, whereby the petitioners have challenged the levy and recovery of professional tax by the respondents i.e. Cantonment Board Clifton and Cantonment Board Faisal for being illegal, without any lawful authority and ultra vires to the Constitution of Islamic Republic of Pakistan, 1973 and the Cantonments Act, 1924, and whereas, the facts as stated in the memo. of petitions are not disputed, therefore, by consent of the learned counsel for the petitioners and respondents, instant petitions are being disposed of through this common judgment.
2. In C.P. No. D-3539 of 2016 the petitioner i.e. Habib Bank Limited, has expressed its grievance against the respondents i.e. Cantonment Board Clifton, Karachi, Cantonment Board Faisal and its contractor, namely, Sultan, who has issued Notices in respect of recovery and collection of professional tax to the petitioner, and has sought following reliefs: "It is, therefore, respectfully prayed that this Hon'ble Court may be pleased to:
1. Declare that the imposition of the impugned professional tax is without lawful authority, is ultra vires the powers of the Respondents Nos.1 and 2, is unconstitutional, and is without lawful effect;
2. Declare that collection of any tax by Respondents Nos.1 and 2 through a contractor such as Respondent No.3 is ultra vires qua the Cantonments Act, 1924;
3. Declare that the Impugned Challans are illegal, unjust and void ab initio and as such liable to be set aside;
4. Restrain the Respondents, their agents, servants, person or persons acting on their behalf from directly or indirectly, imposing, charging, claiming, demanding or recovering payment of the impugned Tax, by whatever name called, from the Petitioner as per the Impugned Challans and from taking any adverse or coercive measures against the Petitioner as threatened or otherwise including but not limited to taking off/removing the Petitioner's name boards from outside its branches and/or discontinuing utilities like water, sewerage etc.
5. Grant cost of the petition.
6. Grant any and all other relief(s) that this Hon'ble Court may deem just and proper in the circumstances of the present case."
3. In C.P. No.D-1136/2016 petitioner i.e. M/s. K&N (Pvt.) Limited, has expressed its grievance against respondents Cantonment Board Clifton and its contractor, namely, Sultan of M/s. SCG and has sought relief in the following terms: "It is, therefore, prayed that this Hon'ble Court may kindly be pleased to:
(a) Declare that the impugned SRO 1374(1)/2012 dated 13.1 L 2012 as published in Official gazette dated November 15, 2012, is ultra vires, illegal, unlawful and against the Article 163 of Constitution of Islamic Republic of Pakistan, 1973 and verdicts of Superior Courts.
(b) Declare that the impugned demand of professional tax by the Respondent Cantonment Board Clifton, Karachi (Respondent # 4) and issued by Respondent Contractor (Respondent # 5) through various challans as professional tax being illegal, unlawful and without jurisdiction.
(c) Declare that proposed professional tax on the vehicles of the petitioner company is illegal and unlawful as the petitioner is not a Transport Company, The vehicles which are delivery vans and motor cycles are part of poultry business and is not a separate business/occupation.
(d) Direct the Respondent Cantonment Board Clifton to refund the amount of tax/fee collected under the head professional tax of previous years as well having been imposed unauthorizedly and unlawfully.
(e) Declare that since the petitioner is registered and has obtained license under section 210 of the Cantonments Act, 1924 and have also paid the required fees for carrying on occupation as indicated at clause (a) of section 210 of the Act, does not have to pay any other tax in relation to carrying on trade / occupation or profession.
(f) Restrain the Respondent Cantonment Board Clifton and their purported authorized contractor or their servants, agents, from taking any coercive or repressive action including stoppage of their vehicles and sealing its branches or outlets in respect of alleged demands of professional tax.
(g) Grant any other appropriate relief which this Hon'ble Court may deem fit and proper.
(h) Grant cost of this petition."
4. In C.P. No. D-2892/2014 petitioner Venus Pakistan (Pvt.) Limited has expressed similar grievance against respondents i.e. Cantonment Board Clifton and M/s. Five Star Advisory Service, being the contractor of Cantonment Board Clifton in respect of recovery and collection of professional tax, and has prayed as under: "It is, therefore, very humbly prayed that this Hon'ble Court may be pleased to:
(a) To declare that the petitioner is already the professional tax to the Respondent No.3 (Annexures "B" to "D" hereto), therefore, the demand of double taxation i.e. professional tax by Respondents Nos.1 and 2, is illegal and without lawful authority and also in violation of Law of double jeopardy and the constitutional guarantee granted to the petitioner under the Constitution of Islamic Republic of Pakistan, 1973.
(b) Grant permanent injunction restraining the Respondents Nos.1 and 2, their representatives, staff, employees, contractors from harassing and threatening the petitioner and their staff by visiting Carlton Hotel located in DHA, Phase-VIII, Karachi and also restrain them from issuing Notices/letter by demanding the payment of double taxation i.e. professional tax which is already being paid to the Respondent No.2 (Annexures B to D hereto).
(c) Cost of the petition to the petitioner.
(d) Any other relief which this Hon'ble Court may deem fit and proper in the circumstances of the case."
5. Brief facts, relevant for the disposal of the instant petitions, are that the petitioners, having their respective establishments situated within the territorial limits of Cantonment Board Clifton and Cantonment Board Faisal, have been issued recovery Notices in respect of professional tax for the period 2015-2016; which were initially assailed by the petitioners by filing reply thereto and by sending legal Notices on various grounds, including challenge to the very imposition of such tax by the Cantonment Boards whereas, the quantum of such professional tax was also disputed for being exorbitant, arbitrary and contrary to law. Since the impugned Notices for recovery of professional tax were not withdrawn and the petitioners were threatened by respondents of penal consequences in case of non-payment of such amount of professional tax, the petitioners have approached this Court by filing instant Constitutional Petitions under Article 199 of the Constitution on various grounds, including challenge to the vires of such enactment and authority of the Cantonment Boards to levy and collect professional tax from the petitioners.
6. Ms. Saman Rafat Imtiaz, learned counsel for the petitioner in C.P. No.D-3539/2016 i.e. Habib Bank Limited, while leading the arguments on behalf of petitioners, has vehemently argued that the respondent Cantonment Boards have no legal authority to levy and impose professional tax whereas, imposition of professional tax falls within the legislative competence of Provincial Legislature only. According to the learned counsel, irrespective of the fact that the petitioner's establishments are situated within the Cantonment areas, however, authority to impose and collect professional tax is vested in the Provincial Legislature and not in the Cantonment Boards. It has been further contended by the learned counsel that respondents were repeatedly called upon to show as to under which law the impugned professional tax has been imposed and being collected from the petitioners, however, no response in this regard has been received from the respondents, who are bent upon to impose and collect the disputed amount of professional tax, without any legal and factual basis. It has been further argued by the learned counsel that the petitioner bank has number of branches all over the Country, however, the respondents intend to levy and collect professional tax in respect of all the branches as well as the ATMs and Money Grams of the petitioner bank in an arbitrary manner, without even intimating the schedule of rate of tax. Learned counsel for the petitioner has referred to provisions of Article 163 of the Constitution whereby, according to the learned counsel, professional tax can be levied through Provincial Legislature. Reference has also been made to provisions of section 60 of the Cantonment Act, 1924 as well as Professional Tax (Amendment) Act, 1.941, duly amended by Finance Act, 2006, whereby, according to the learned counsel for the petitioner, the upper limit of such tax has been fixed at Rs.100,000/- whereas, the respondents are demanding such amount of arbitrary tax from petitioner in respect of its various branches, which exceeds the said prescribed upper limit. It has been further argued that fixation of such upper limit of tax is the domain of the Federal Legislature and, therefore, any arbitrary increase in respect of such upper limit is even otherwise without lawful authority. Learned counsel has also referred to provisions of Articles 163, 248 and 260 of the Constitution of Islamic Republic of Pakistan, 1973 and has contended that imposition of professional tax has always been the domain of Provincial Legislature, whereas, such authority is not even vested in Local Government. In support of her arguments, learned counsel has relied upon the following reported decisions of the Hon'ble Supreme Court as well as of the various High Courts, wherein, according to the learned counsel, above legal position has already been settled:
(1) Pakistan through Secretary, Ministry of Defence v. Province of Punjab and others (PLD 1975 SC 37),
(2) Province of Punjab and others v. Sargodha Textile Mills Limited and others (PLD 2005 SC 988),
(3) ICI Pakistan Limited v. Tehsil Council, Pind Dadan Khan and others (PLD 2007 SC 428),
(4) Olympia Textile Mills v. Province of Punjab and others (2004 MLD 814),
(5) Fauji Sugar Mills v. Zila Nazim and others (2007 MLD 302), and
(6) New Chaudh Fibre throe: h Sole Pro rietor v. Excise and Taxation Department and others (PLD 2015 Lahore 369).
7. While concluding her arguments, learned counsel for the petitioner has prayed that imposition of professional tax by the Cantonment Board Clifton and Cantonment Board Faisal, may be declared to be illegal, without lawful authority and ultra vices to the Constitution as well as the Cantonments Act,. 1924, and the impugned demand Notices/challans may be declared to be illegal, having been issued without lawful authority.
8. Mr. Asadullah Shaikh, Advocate appearing in C.P. No.D-1135/21016 on behalf of the petitioner --- M/s. K&N Food (Pvt.) Limited, while adopting the arguments advanced by Ms. Saman Rafat Imtiaz, Advocate, has, in addition, referred to the provisions of section 60 of the Cantonment Act, 1924 wherein, according to the learned counsel, no such authority has been vested in the Cantonment Boards to levy or charge professional tax. It has been further contended by the learned counsel, that without prejudice to hereinabove, while imposing the professional tax, the requirements of imposition of any tax, including, calling for objections from the public and issuance of gazette notification to this effect, have not been complied with by the respondents, who are charging exorbitant and arbitrary amount of professional tax from the petitioners without any lawful basis or proper schedule in this regard. According to the learned counsel for the petitioner, the reference to SRO 1374(1)/2012 dated 13.11.2012 is equally misconceived as it does not refer to any provision of law under which such Notification has been issued whereas, mere reference to previous Notification No.1871/1971 dated 28.8.1971 has been made, which has never been produced by the respondents for the purpose of verification and examining its legality on the touchstone of aforesaid Constitutional and legal provisions. Learned counsel for the petitioner has also referred to the provisions of section 210 of the Cantonments Act, 1924 whereby, according to the learned counsel, petitioners are required to obtain license for carrying on their business/occupation and to pay the required license fee whereas, the petitioners are not required to pay any other tax in relation to carrying on any trade, occupation or profession. Learned counsel submits that there can be no imposition of any professional tax on the vehicles of the petitioners, which are being arbitrarily stopped by the respondents in the garb of recovery of professional tax from the petitioners. It has been prayed that the impugned professional tax and the demand Notices/ challans issued by the respondents may be declared to be illegal, without lawful authority, un-Constitutional and ultra vires to Cantonments Act, 1924.
9. Conversely, Mr. Abdullah Munshi, learned counsel for the contesting respondents i.e. Cantonment Board Clifton and Cantonment Board Faisal, has controverted the submissions made by learned counsel for the petitioners and submits that the impugned professional tax has been levied and being collected from the petitioners pursuant to section 60 of the Cantonments Act, 1924 read with SRO 1374(1)/2012 dated 13.11.2012 which was duly published in the official gazette on 26.3.2012. It has been contended by the learned counsel for the respondents that the amount of professional tax is being collected from the petitioners by the Cantonment Boards as a tax, which authority is vested in the Cantonment Boards in terms of section 60 of the Cantonments Act, 1924. Per learned counsel, all the other establishments within the local limits of the Cantonment Boards are making payment of such professional tax without any objection whereas, the grounds agitated by the petitioner against the imposition of such tax are misconceived and contrary to the facts. Per learned counsel, all the requirements of law have been complied with while imposing professional tax, as advertisement was published and objections were called whereafter SRO 1374(1)/2012 dated 13.11.2012 was duly published in the official gazette on 26.3.2012 which was never objected to by the petitioners, however, in order to wriggle out from their liability of professional tax, instant petitions have been filed on misconceived grounds, which are liable to be dismissed. In support of his contentions, learned counsel for respondents has placed reliance on the cast reported as Habib Jute Mills v. Province of Sindh and another (2012 PTD 901).
10.Learned Additional Advocate General, on the other hand, has supported the submissions of the learned counsel for the petitioners to the effect that in terms of Article 163 of the Constitution it is the domain of the Provincial Legislature to impose professional tax within the territorial limits of a province whereas, the Federation or any local government, including a Cantonment Board, cannot impose such tax. Learned AAG has also referred to Section 60 of the Cantonments Act, 1924 whereby, according to the learned AAG, only such municipality tax can be imposed by the Cantonment Board, subject to previous sanction of the Federal Government, which, under any enactment for the time being in force, may be imposed in any municipality in the province, where such cantonment board is situated. Whereas, according to the learned AAG, professional tax does not fall within the legislative competence of the Local Government, which can only impose the municipality tax, and not the professional tax. It has been further argued by learned AAG that, without prejudice to hereinabove, no such tax can be levied through a Notification unless, an enactment for the time being in force, provides for imposition of such tax in accordance with law. In support of his contention, the learned AAG has placed reliance in the case of ICI Pakistan Limited vs. Tehsil Council, Pind Dadan Khan and others (PLD 2007 SC 428) and Habib Jute Mills Limited v.
Province of Sindh and others (2012 PTD 901).
11.We have heard learned counsel for the parties as well as the learned Additional Advocate General, perused the record with their assistance, and have also examined the relevant legal and Court case law relied upon by the learned counsel during the course of arguments. Since a common legal controversy has been agitated by the petitioners through instant petitions, whereby, the imposition of professional tax by Cantonment Board Clifton and Cantonment Board Faisal, and its collection through private contractors for the year 2015-2016 has been challenged on various legal grounds, therefore, narration of facts, as stated in the respective Memo of petitions is not required, and we would directly address the legal grounds agitated by the petitioners relating to imposition and collection of professional tax by the Cantonment Board Clifton and Cantonment Board Faisal from the petitioners.
12. Constitutional Authority relating to imposition of tax in respect of professions, trades, callings or employm ents has been given in Article 163 of the Constitution of Islamic Republic Pakistan, 1973, which reads as follows: "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."
13. Perusal of hereinabove provisions of Article 163 of the Constitution reveals that imposition of tax on persons engaged in any profession, trade, calling or employment is the domain of Provincial Legislature, which is subject to limits as may from time to time be fixed by Act of Parliament.
14. It is the case of the Petitioners that they are regularly paying professional tax to the provincial government i.e. Department of Excise and Taxation, Government of Sindh in the aforesaid terms, whereas, according to petitioners, in addition to payment of professional tax, they have also obtained licenses from the respective Cantonment Boards and regularly pay the Annual license fee in terms of section 210 of the Cantonments Act, 1924, which is required to be obtained to carry on any trade, calling or occupation in the territorial limits of a Cantonment Board. Such assertion of the petitioners has not been disputed by the respondents in their Comments nor it has been controverted by the learned counsel for the respondents. However, respondents are charging professional tax from the petitioners through private contractors in respect of petitioners' establishment situated within the territorial limits of the Cantonment Board Clifton and Cantonment Board Faisal and also in respect of the vehicles of the petitioner in C.P. No. D-1135/2016, which authority, according to petitioners, is not vested in the Cantonment Board Clifton or Cantonment Board Faisal.
15. The issue regarding jurisdiction of provincial legislature to impose professional tax came up for consideration before a Division Bench of the Peshawar High Court in the case of M/s. Bank Al Falah Limited v. Excise and Taxation Officer-1V, Peshawar and others (2010 PTD 1913) as well as before a Division Bench of this Court in the case of M/s. Habib Jute Mills Limited v. Province o Sindh and others (2012 PTD 901). The judgment in the case of Habib Jute Mills (supra) was authored by one of us, namely, Aqeel Ahmed Abbasi, J, wherein, while placing reliance on the judgment of the Hon'ble Supreme Court in the case of Province of Punjab v. Sargodha Textile Mills Limited and others (PLD 2005 SC 988), it has been held that tax on professions, trades, callings and employments, levied and collected under an Act of a provincial assembly on or after the first day of July, 1977, as is not in excess of the limit fixed by the Act of Parliament, shall be deemed to be validly levied and collected.
It will be advantageous to reproduce the relevant finding of the Division Bench of this Court in the case of Habib Jute Mills (supra), which reads as under as follows: "17. We do not find any error in the finding of the learned division bench of Peshawar High Court in the above cited judgment, which has laid down the correct legal position with regard to authority of a Provincial Government to levy professional tax, independently, if the activity of a company is expended from one Province to another. Learned counsel for the petitioner has not been able to point out any defect or legal error, nor could refer to any article of Constitution or provision of law, which may put any restriction on any Provincial Government to impose such tax on a person. On the contrary, Article 163 of the Constitution of Pakistan, 1973 postulates that the professional tax shall not be considered as a tax on income. Article 163 of the Constitution authorizes a provincial Government to impose professional tax on any person including any body politic or corporate, as defined in Article 260 of the Constitution of 1973. We are in respectful agreement with the finding of the learned Division Bench of Peshawar High Court, as referred to hereinabove, and hold that a Provincial Government has the authority to impose professional tax on companies having more than one establishment or offices in more than one province, if their work is expanded from one province to another. We do not find any force in the contention of the learned counsel for the petitioner, that the levy of professional tax amounts to double taxation as it is not a levy on income of person hence the question of double taxation does not arise. Accordingly, instant petition having no merit, is hereby dismissed, however, with no order as to costs."
16. However, in order to examine the validity of imposition of professional tax by a cantonment board in terms of Cantonment Act, 1924, it will be equally relevant to determine as to whether, professional tax can be imposed by the local government, in view of Article 163 of the Constitution of 1973 or not. It will be advantageous to refer to the decision of the Hon'ble Supreme Court in the case of ICI Pakistan Limited (supra) relied upon by the learned AAG in support of his contention, wherein such aspect of the matter has been elaborately decided in paragraphs 7 to 9 of the aforesaid Judgment in the following terms: "7. The submissions of the learned counsel have been considered. In fact the learned high Court, although referred to Article 163 of the Constitution, yet did not examine its effect as to the powers of a Local Council to impose the disputed tax. It will be appropriate to reproduce Article 163 for facility of reference:-- "A Provincial Assembly may by Act impose taxes, not exceeding such limits as may from time to time be fixed by Act of Majlis-eShoora (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."
The words underlined by us have reference to the Professional Tax Limitation Act, 1941.
8. A bare perusal of the aforesaid Article shows that the repository of the power to impose professional/trade tax is only the Provincial Assembly and that too by an Act. The Article neither empowers the Provincial Assembly to delegate its authority to impose such a tax in favour of the Punjab Government or a Local Council nor it permits imposition of such tax by subordinate legislation i.e. the notifications which were impugned in the two constitutional petitions filed by the appellant company. The argument of the learned counsel appearing for the Local Council based on sections 137 and 138 is totally misplaced because Article 163 stands in the way and any provision in any statute to the contrary will have to yield in favour of the said Article. Since the impugned tax is defended on the basis of sections 137 and 138 of the Local Government Ordinance, 1979, it will be appropriate to reproduce the extracts from the said sections:-- "S.137. Taxes to be levied-- A local council subject to the provisions of any other law may, and if directed by Government shall levy all or any of the taxes enumerated in the Second Schedule.
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6. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx S. 138. Notification and enforcement of taxes.-- (1) All taxes levied by a local council shall be notified and shall, unless otherwise directed by Government, be subject to previous publications.
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9. Perusal of section 137 shows that power of a Local Council to levy impugned tax was subject to any other provision of law. The limitation on the powers of Local Government to impose tax is inbuilt in the said provision. Article 163 places a complete embargo to levy profession/trade tax except by an Act of a Provincial Assembly. It may also be noted that Provincial Government in accordance with provisions of Article 163, had already imposed by way of Punjab Finance Act (No.XV) of 1977, tax on professions/trade etc. which according to learned counsel for appellant, being regularly paid since its imposition in 1977. It may also be noted that in the Local Government Ordinance, 2001, the second schedule to forms parts III and IV and the clause authorizing a Local Council to impose professional / trade tax (which existed under the 1979 Local Government Ordinance) has been omitted which clearly demonstrates the legislative intent that its retention in Local Government Ordinance, 2001 was not considered appropriate or found redundant in view of Punjab Finance Act (No.XV) of 1977.
10. In view of the above, we allow Civil Appeals Nos.1902 of 2002 and 1381 of 2005 of the ICI Pakistan Limited and declare that the Tehsil Council, Pind Dadan (Now Tehsil Municipal Administration) is not lawfully empowered to levy any professional / trade tax. In view of the conclusion reached by us, Civil Appeal No.1382 of 2005 filed by the Local Council is dismissed."
17.From perusal of hereinabove decision of the Hon'ble Supreme Court it is clear that local government is not empowered to levy or impose any tax on professions, trades, callings or employments, whereas, it is the exclusive domain of the Provincial Legislature, in terms of Article 163 of the Constitution, to levy or impose such tax. Similar view has been adopted and followed by the High Courts in the case of Olympia Textile Mills v. Province of the Punjab and others (2004 MLD 814) and New Chaudury Fibre v. Excise and Taxation Department and others (PLD 2015 Lah. 369).
18.From perusal of hereinabove provisions of Cantonments Act, 1924, with particular reference to section 60 and section 210 of the said Act, Article 163 of the Constitution of Islamic Republic of Pakistan, 1973, and also the dicta as laid down by the Hon'ble Supreme Court and the Division Bench of this Court as well as of the Peshawar High Court in the aforementioned cases, the legal position which has emerged is, that jurisdiction and authority to impose and collect professional tax is vested in the Provincial Legislature in terms of Article 163 of the Constitution of 1973, and not in a local government or any Cantonment Board (i.e. Cantonment Board Clifton and Cantonment Board Faisal), therefore, the imposition and collection of professional tax from the petitioners by the respondents i.e. Cantonment Board Clifton and Cantonment Board Faisal pursuant to impugned Notifications and the demand Notices/challans issued by the respondents to the petitioners in this regard, are without lawful authority and legal basis, hence could not be given effect.
19.In view of hereinabove facts and circumstances of the above cases, the aforesaid petitions were allowed and imposition and collection of impugned professional tax by Cantonment Board Clifton and Cantonment Board Faisal was declared to be illegal and without lawful authority as well as ultra vires to the Constitution, vide our short dated 25-4-2017, and above are the reasons for such short order.