YAHYA AFRIDI, C.J.---Muhammad Asif and others, petitioners, seek the constitutional jurisdiction of this Court praying that: "It is most humbly prayed that this Hon'ble High Court on acceptance of this writ petition, may kindly hold direct, declare and order; i. That deductions and collections of Income Tax, assessment and charging of tax against the Special Judicial Allowance and Judicial Allowance by the respondents is ab initio illegal and discriminator\ . therefore, deduction of Income Tax from the same, assessment and charging of Tax on these allowances may be stopped henceforth and the deducted, collected, assessed and recovered Tax against the said Allowances may be refunded to Petitioners since 1st July, 2009. ii. Any other remedy and relief considered just and appropriate in favour of the petitioners, not specifically prayed may also be granted, if deemed fit and appropriate in the circumstances of the case."
2. The petitioners are Judicial Officers of the District Judiciary of Khyber Pakhtunkhwa and Officers and Staff Members of the Establishment of the Peshawar High Court, Peshawar; and they contend that they are receiving Special Judicial Allowance vide Notification dated 27th July, 2010 which cannot be termed as salary, and thus not taxable under the enabling provisions of the Income Tax Ordinance, 2001 ("Ordinance").
3. The Notification dated 27 reads:-- "Government of Khyber Pakhtunkhwa Finance Department (Regulation Wing) Dated Peshawar, the 27th July, 2010.
No, FD (SOSR-II)8-43/2010. In pursuance of the judgment of Peshawar High Court, Peshawar, announced on 06.07.2010 in Writ Petition No,1098/2010 titled "Muhammad Sher Shah and others v.
Government of Khyber Pakhtunkhwa and others", and without prejudice or detriment to, or compromising on, or vitiating the claims, interests and administrative authority of this Provincial Government, inter-alia including its right to prefer an appeal before Supreme Court of Pakistan, the Government of Khyber Pakhtunkhwa has been pleased to sanction w.e.f 1/7/2010, Special Judicial Allowance to all the Judicial Officers of the District Judiciary, including those working on ex-cadre posts, and to the members of the Establishment of Peshawar High Court, Peshawar, equal to one initial basic pay in their respective pay scale, plus 50% of running basic pay, with arrears of only one initial basic pay from 1st July, 2009.
The arrears of one initial basic pay, from 1st July, 2009 to 30th June, 2010, shall be paid in two equal installments. First installment shall be paid along with salary for the month of August, 2010, in the first week of September, 2010, and the second installment shall be paid along with the salary for the month of December, 2010, in the 1st week of January, 2011.
The Ad-hoc Allowance-2010, sanctioned vide Finance Department, Government of Khyber Pakhtunkhwa Province letter No,FD(PRC)I-1/2010 dated 15/7/2010, shall not be admissible to the recipient of the above mentioned Special Judicial Allowance. Sd/-xxxxxxx Secretary to Government of Khyber Pakhtunkhwa Finance Department
4. The respondents were put to notice and the worthy Commissioner Inland Revenue, RTO, Peshawar, in his response has, inter alia, refuted the claim of the petitioners, contending that:-- "Preliminary Objections; The writ petition filed by the petitioners is not maintainable in view of the fact that from the petitioner, tax was deducted by their employer, while payment of salary and subsequently return was filed before the respondent. The respondents, till date, neither any objection upon the any return filed by the petitioners, nor issued any notice, nor any assessment have been made, hence on the one hand petitioner has no locus standi to file the petition and one the other hand petition is premature. This petition not being maintainable should be dismissed in limine. Reply to grounds.
A. Not admitted. The acts of the department/ respondents are not unconstitutional and mala fide because any income including salary and allowances is chargeable to tax unless it is specifically treated as exempt under the Second Schedule to the Income Tax Ordinance, 2001.
B. Not admitted. Special Judicial Allowance/ Judicial allowance is chargeable to tax and does not come under the ambit of exclusion mention in section 12(2)(c) and Clause (39) Part-II of the Second Schedule to the Income Tax Ordinance, 2001.
Section 12(2)(c) excludes those allowances from the chargeability of taxation which are solely expended in the performance of the employees duties of employment. Legislature has however, inserted clause (39) in Part I of the Second Schedule to the Income Tax Ordinance, 2001 to this effect out of abundant caution.
Clause (39) ibid allows exemption to any special allowance or benefit (not being entertainment or conveyance allowance) or other perquisites specially granted to meet expenses wholly or necessarily incurred in the performance of the duties of an office or employment of profit.
Plain reading of the above two provisions of the Ordinance reveal that the intent of the legislature is to treat only those allowance as exemption, the expenditure of which is incurred, claimed and reimbursed to the employee by the employer while discharging their official duties.
Special Judicial Allowance and Judicial Allowance are not the allowances, the expenditure of which is incurred and reimbursed to the petitioners rather this allowance is paid to all the judges across the board like other allowances being employees of the judiciary, hence, not exempt under the law."
5. Let us first take the preliminary objections raised by the worthy counsel for the Revenue that the instant petition is hit by laches and that the petitioners have an alternative remedy to invoke the provisions of an appeal, as provided under section 127 of the Ordinance.
6. As far as the objection to the petition being hit by laches is concerned, this Court is not inconsonance with the contention of the worthy counsel for the Revenue, as the impugned deduction made from the petitioners is being carried out every month, thus, the same is a recurring cause of action, and can surely be raised at any stage, as has been done by the present petitioners.
7. Moving on to the second objection regarding the petitioners having an alternative remedy under section 127 of the Ordinance, this Court finds that the orders, which could be challenged under section 127 ibid has not been passed in the instant case, hence, it would not be appropriate for this Court to reject the claim of the petitioners on this ground alone. Moreover, the petitioners are simply seeking a declaration challenging the authority of the official respondents not to deduct income tax from the Special Judicial Allowance granted to them by orders of this Court. Seeking such a declaration would surely come within the domain of this Court exercising constitutional jurisdiction under Article 199 of the Constitution.
8. Now moving on to the merits of the case; the terms 'salary' has been defined under section 12 (2) of the Ordinance, in terms that:- "12. Salary.---(1) Any salary received by an employee in a tax year, other than salary that is exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head "Salary".
(2) Salary means any amount received by an employee from any employment, whether of a revenue or capital nature, including-- (a)................................
(b)................................
(c)the amount of any allowance provided by an employer to an employee including a cost of living, subsistence, rent, utilities, education, entertainment or travel allowance, but shall not include any allowance solely expended in the performance of the employee's duties of employment."
(emphasis provided)
9. The salary of a person, as defined in the Ordinance is clearly chargeable to Income Tax under subsection (1) of Section 12 of the Ordinance. However, the crucial issue to note is that the very definition of the salary expressly excludes from its purview and scope any allowance, which is solely "expended" in performance of the employee's duties of employment. The word expended has not been defined in the Ordinance, and so this Court following the cardinal principle of the interpretation of statutes, would render the said word its ordinary dictionary meanings. In doing so, it is noted that the word expended means; "Spend or Use up"
(Concise Oxford English Dictionary). To open up; UNFOLD, To increase the extent, number, volume, or scope of; ENLARGE To express at length or in greater detail; To write out in full; To subject to mathematical expansion; To open out; SPREAD To increase in extent, number, Volume, or scope.
To speak or write fully or in detail; To feel generous or optimistic.
(Webster's New Explorer Encyclopedic Dictionary)
To use or spend.
(Chambers 21st-century Dictionary)
Spend or Use up (The Australian Oxford Dictionary)
To use up time, Energy, Efforts, or Some other resource.
(Encarta Dictionary (North America)
To spend; To lay out; To disburse; To employ; To waste, (Gem Practical Dictionary)
10.On going through the above ordinary dictionary meaning of the word expend, one comes to the conclusion that it simply means to give or spend. Now, when we employ the said meaning to the word expended, the term 'salary', as explained in clause (c) of subsection (2) of section 12 of the Ordinance would not include any allowance, which is solely spent or given in furtherance of the performance of the employee's duties of employment.
11.In the present case, it is noted that the Special Judicial Allowance was allowed to the petitioners keeping in view the functions they were performing vide judgment of this Court dated 06.07.2010 in W.P.No,1098/2010 titled "Muhammad Sher Shah and others v. Government of Khyber Pakhtunkhwa and others". The relevant paras of the cited judgment, reads that:-- "It is the constitutional obligation of the Government to provide speedy and inexpensive justice to the people. All the Judges, like the petitioners and their colleagues, and establishment / staff of the High Court are matchlessly confronting the phenomena without any let and lose, however, they are not paid the emoluments/salaries and allowances according to the cumbersome job done and according to their duration of working hours, as stated above, therefore, the inaction on the part of the Provincial Government for the last more than one year, not enhancing the judicial allowance, it has now agreed to enhance, was a grave omission on its part and the petitioners and others alike were grossly discriminated as the same were enhanced in the other two Provinces, much earlier without the intervention of the High Court. The Asian Development Bank has highlighted on its website that under the Access to Justice Program the Peshawar High Court and the District Judiciary of the Khyber Pakhtunkhwa has excellently achieved the target by deciding huge number of old cases. This message with commendable remarks alone was enough for the Provincial Government to have taken timely steps much prior to the other Provinces, providing the incentives for infusing new spirit in the Judicial Officers and the Staff of the High Court to do more. Such action would have produced more positive effects by compensating these devoted hard workers on one hand and thwarting anyone in the cadre to indulge in corruption. In our view, the Executive limb more particularly the Financial Managers of the Province were jealously thwarting the process and was putting a wrong picture before the democratically elected Government. Probably, it was, for this reason that the matter was delayed. This fact was more perceivable during the hearing of this petition at different occasion, as we closely watched them and their antecedents in this regard.
Despite of these omissions, we are constrained to appreciate the elected Government of Khyber Pakhtunkhwa for agreeing to the negotiated formula, without much reluctance, initially exhibited by the Administrative Secretaries and their Advisors. In our view, probably, the Chief Executive of the Province, the head of elected government, was improperly briefed rather misguided by vested interest, however, when the ground realities were discovered, the agreed formula/settlement was thus materialized.
As the petitioners and others alike have worked hard day and night for more than two years for longer duration much beyond the office working hours required by the law, but they were not compensated, therefor, in the circumstances, it is highly justifiable to grant the petitioners and others alike, including the establishment / staff of the High Court one year arrears of the enhanced Special Judicial Allowance on the pattern and in the manner elaborately mentioned in our short order of the even date which shall be treated as part of this detailed judgment. The same is reproduced below for the sack of convenience:-- "For the detailed reasons to be recorded later, this petition is partially allowed. The respondents (Provincial Government of Khyber Pakhtunkhwa) is issued a writ, directing it to pay Special Judicial Allowance on the basis of one initial basic pay plus 50% of running basic pay with arrears of one initial pay but from 1st July, 2009 to all the Judicial Officers of the District Judiciary including those working on ex-cadre posts which shall include the District and Sessions Judges, Additional District and Sessions Judges, Senior Civil Judges/Special Magistrates and all Civil Judges/Magistrates working under the control and jurisdiction of the Peshawar High Court, Peshawar.
Similarly, the Establishment of the Peshawar High Court, Peshawar is also granted the same relief as is allowed through this order to the Judicial Officers referred to above and in the same manner/way.
Keeping in view the plea of financial constraints of the Provincial Government, we further direct that the arrears from 1st July, 2009 to 30th June, 2010 shall be paid in two installments, i,e, the 1st one shall be paid along with the monthly salary of August, 2010 in the first week of September, 2010 and the second half of the amount/installment be paid in the 1st week of January, 2011 with the monthly pay of December, 2010.
We further direct the respondents, particularly, the Establishment Department/Ministry, the Finance Department / Ministry, the Law Department/Ministry and the learned Advocate-General of Khyber Pakhtunkhwa to sit with the team of experts/Administrative Officers including the Registrar of the High Court to invent ways and means, to ascertain the areas where Court Fee on certain Petitions, Appeals, Revisions, Tax References, Review Petitions, Suits, Process Fee and on other alike matters can be reasonably levied and / or enhanced without burdening and taxing the poor litigants or the public-at-large. Further to raise the existing slab of Court Fee on different kind of cases/petitions to a reasonable extent not because the Province is suffering due to financial crises in view of the peculiar circumstances but also because that the local currency has constantly shown down trend due to depreciation and devaluation vis-a-vis foreign currency particularly, US $, the main source of exchange with it. No deviation from this order shall be made by the respondents in any manner whatsoever and on any pretext."
(emphasis provided)
12.The dicta of the above judgment clearly reflects that the Special Judicial Allowance granted to the petitioners was in appreciation of their performance of duties and thus would not fall within the scope of "Salary", and thereby not chargeable to Income Tax under the charging subsection (1) of section 12 of the Ordinance.
13. There is no cavil to the proposition that income chargeable to income tax can only be exempted from taxation if the same falls within the purview of the entries provided in the Second Schedule of the Ordinance. Much emphasis has been made by the worthy counsel for the Revenue that the Special Judicial Allowance does not fall within the Special Allowance or benefit provided under Item 39 of Part-I of the Second Schedule appended to the Ordinance, the same provides;- "Any special allowance or benefit (not being entertainment or conveyance allowance) or other perquisite within the meaning of section 12 specially granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit."
14. The bare reading of the aforementioned entry provides that the scope of allowances or benefit mentioned therein, supplements the clear exclusion provided under clause (c) of subsection (2) of Section 12 of the Ordinance. These are allowances, which are solely granted for the better performance of the duties of officers, as is in the case in hand.
15.In this view of the matter, the contention of the worthy counsel for the Revenue that the judicial allowances being not covered under Item 39 Part-I of the Second Schedule of the Ordinance would not be relevant to the case in hand. The issue of exemption would have been crucial and relevant, only if the Special Judicial Allowance granted to the petitioners was part of their salary, which is not the case in hand.
16.Accordingly, for the reasons stated hereinabove, this Court declares that Special Judicial Allowance granted to the Judicial Officers of the District Judiciary of Khyber Pakhtunkhwa, Officers of the Peshawar High Court, Peshawar and its employees are not liable to deduction of income tax at source within the contemplation of section 148 of the Ordinance. As far as the deductions already made from the petitioners, they may seek their appropriate remedy as provided under the enabling provisions of the Ordinance.
This writ petition is disposed of, in the above terms.