S M ATTIOUE SHAH, J. Petitioner has approached this Court through instant Writ Petition with the following prayers:- a. Declare that all waqf properties under the management and administration of the petitioner , including Auqaf Plaza Dabgari, Peshawar Cantt, are exempt from payment of property tax under section 99 (2) (f) of the Cantonment Act, 1924 and Article 165 of the Constitution of the Islamic Republic of Pakistan, 1973, and all other enabling provisions of law; and b. Quash and set aside the recovery / demand notices and proceedings issued by respondents 1-2 to the petitioner and its tenants for payment of property tax and rent to them, and declare the same to be illegal, without jurisdiction and ultra vires; c. Restrain the respondents from proceedings in any manner against the petitioner for recovering the illegal and uncalled for levy of property tax; and d. Grant any other relief considered just and appropriate in the given circumstances of the case but not specifically prayed for .
2. In essence, case of the petitioner is that, all of its properties, including property in question are exempt from payment of property tax, under the provisions of Article 165 of the Constitution of Islamic Republic of Pakistan, 1973 r/w Section 99 (2) (f) of the Cantonment Board Act, 1924 being a Waqf property and; its income/proceeds derived therefrom are used for religious, pious and charitable purposes and; as such, the same are exempted from property tax, in view of the ibid provisions.
3. Precise facts of the case are that, petitioner is an autonomous body created under Khyber Pakhtunkhwa Waqf Properties Ordinance, 1979 and its finan cial matters are being managed, controll ed and used for religious, pious and charitable purposes and; to maintain, control and administer the Waqf properties by generating the income so derived therefrom and; as such, the same are exempted from payment of tax under the provisions of Article-165 of the Constitution of Islamic Republic of Pakistan, 1973 r/w Section 99 (2) (f) of the Act, 1924 and; thus, the alleged demand of property tax by the respondents is not only illegal but, also void ab-initio and; hence, liable to be set at naught on acceptance of instant writ petition.
4. The respondents, in response to notice, appeared and filed their Para-wise comments, wherein, they resisted the petition on the ground that; property in question is being used for commercial purposes and; as such, petitioner is deriving benefit from the same, which falls outside the domain of provisions of Section 99 (2) (f) of the Cantonment Act, 1924 being; a purpose not covered therein and; thus, liable to payment of property tax, hence, prayed for dismissal of instant writ petition; being meritless.
5. Learned counsel for the parties heard and available record gone through.
6. Perusal of record suggests that petitioner is aggrieved of imposition and demand of property tax on its property levied under the provisions of Section 60 of the Cantonment Act, 1924 (the Act). For ready reference, the same is reproduced as under: - "60. General power of taxation . (1) The Board may, with the previous sanction of the [Central Government], impose in any cantonment any tax which, under any enactment for the time being in force, may be imposed in any municipality in the Province wherein such cantonment is situated.
(2) Any tax imposed under this section shall take effect from the date of its notification in the [official Gazette]."
The ibid provision; clearly empowers the Board to impose any tax in its jurisdiction; albeit, with previous sanction of Central Government, which shall take effect from the date of its notification so published in the official Gazette; pursuant to ibid provision, Board had levied the impugned tax on 30th July, 1978, which was published in Official Gazette on 31.7.1978 and; since then, the said tax is being regularly recovered by respondents within its limits and jurisdiction. Therefore, contention of petitioner that respondents could not levy and recover property tax in its jurisdiction, is misconceived and, hence, repelled.
7. Now coming to the contention of petitioner that, under Article 165 of the Constitution, property in question is exempted from levy of property tax being; the property of Provincial Government; therefore, demand of the respondents is illegal besides, void ab-init io and; being so, the same is liable to be struck down. In order to properly assess the ibid plea, provisions of Article-165 are reproduced below for ready reference:- "165. Exemption of certain public property from taxation.
(1) The Federal government shall not, in respect of its property or income, be liable to taxation under any Act of Provincial assembly and, subject to clause (2), a Provincial government shall not, in respect of its property or income, be liable to taxation under Act of [Majlis-e-Shoora (Parliament)] or under Act of the Provincial Assembly of any other province.
(2) If a trade or business of any kind is carried on by or on behalf of the Govern ment of a Province outside that Province, that Government may, in respect of any property used in connection with that trade or business or any income arising from that trade or business, be taxed under Act of [Majlis-e-Shoora (Parliament)] or under Act of the Provincial Assembly of the Province in which that trade or business is carried on.
(3) Nothing in this Article shall prevent the imposition of fees for services rendered".
Given, that ibid provision has exempted properties and income of Federal Government from imposition of tax, imposed under any Act of the provincial assembly and; subject to Clause 2, the properties and; income of the Provincial Government shall not be liable to any tax imposed under the Act of parliament.
Applicability of ibid Article came up for consideration before august Apex Court in case of Central Board of Revenue v. S.I.T.E reported in (PLD 1985 SC 97) decided on 29th August, 1984; The precise question before the august Apex Court was that; whether profit of Sindh Industrial Trading Estate Limited were to be regarded as income of the Provincial Government and; thus exempt from tax under the provision of Constitution. The august Apex Court after hearing the case, confirmed the judgment of Sindh High Court by applying the doctrine of "lifting of veil" . The relevant portion of the ibid judgment is reproduced below;- "The respondent-company was carrying on the function of Industrial Development and the trade and business connected therein for and on behalf of the Government. The truth is that the lifting of veil, has revealed that for the relevant purposes in this case it was doing so just like a department of the Government, notwithstanding the incorporation; which has explained earlier will not make any difference regarding the relevant constitutional provisions on exemption from federal taxation."
8. Subsequently , vide Constitutional Amendment order 1985, Article 165-A was inserted into Constitution; wherein, the power to make a law to provide for levy of and; recovery of a tax on income of a corporation, company or other body was provided to the Legislature. The provisions of Article 165-A are reproduced below for ready reference; "Article 165-A: (1) for the removal of doubt, it is hereby declared that [Majlis-e-Shoora (Parliament)] has, and shall be deemed always to have had, the power to make a law to provide for the levy and recovery of a tax on the income of a corporation, company or other body or institution established by or under a federal law or a provincial law or an existing law or a corporation, company or other body or institution owned or controlled either directly or indirectly by the federal Government or a provinc ial Government regardless of the ultimate destination of such income.
(2) All orders made, proceedings taken and acts done by any authority or person, which were made, taken or done, or purported to have been made, taken or done, before the commencement of the Constitution (Amendment) Order , 1985, in exercise of the powers derived from any law referred to in clause (1) or in execution of any orders made by any authority in the exercise or exercise purported powers as aforesaid shall, notwithstanding any judgment of any court or tribunal, including the Supreme Court or a High Court, be deemed to be and always to have been validly made taken or done and shall not be called in question in any court, including the Supreme Court and a High Court on any ground whatsoever .
(3) Every judgment or order of any court or tribunal including the Supreme Court and a High Court, which is repugnant to the provision of clause (1) or clause (2) shall be, and shall be deemed always to have been, vide and of no ef fect whatsoever ."
9. Indeed, with insertion of ibid Article, the legislature has reaffirmed its power of legislation to levy and recover a tax on income of a corporation, company or other body or institution established by or under a Federal law or a Provincial law or an existing law or a corporation, company or other body or institution owned or controlled, either directly or indirectly , by the Federal Government or a Provincial Government, regar dless of the ultimate destination of such income. Whereas, by virtue of Sub-Article 2, all those orders and proceedi ngs were protected, which were taken place before the commencement of the Constitutional (Amendment) order , 1985, in exercise of the powers derived from any law referred to in Clause (1) or in execution of any orders made by any authority in exercise of powers as aforesaid would be deemed to be validly made and; shall not be called in question before any Court, including the Supreme Court and a High Court on any ground whatsoever . While, Sub-Article 3, has rendered all judgments, orders of any Court or tribunal, including the Supreme Court and a high Court, which were repugnant to the provisions of clause (1) or Clause (2) void and of no ef fect whatsoever .
10. Later on, provisions of Article 165 & 165-A came up under consideration before the august Apex Court in case of Karachi Development Authority v. Central Board of Revenue and others reported in (2005 PTD 2131 ) and this time; benefit of Article 165 was not extended to the (KDA) in view of newly inserted Article 165-A of the Constitution, the relevant portion is reproduced below;- "6. We find that by statutory dispensation, a juristic personality is created which is distinct from that of the Government. Such a juristic personality is then entrusted with a statutory duties, some of which or all of which may partake of the function of the government both sovereign and not sovereign. In the case in hand, we are concerned with the welfare activity of the Government which has been passed on through the K.D.A. It is not wholly for the discharge of sovereign function, as such. Nevertheless, the distinction that was sought to be established on the strength of Article 165 of the Constitution for the purpose of taxability between the property and income of the Government under statutory veil and the property and income of the Government under no such veil has been brought to an end. The ultimate ownership of the property or the destination of the income has ceased to be the test. The statutory veil holds good for the purposes of determining the ownership of the property as well as its income.
7. It is true that what is mention in Article 165 (A) of the Constitution is limited to the levy of income tax.
Nevertheless, the purpose, the object and the field of Article 165-A of the Constitution is to fix the legal ownership of the property and the identity of the receipt of the income. This has been achieved by reinforcing the statutory corporate veil for all fiscal purposes. The lifting of the corporate veil as such is no longer permissible and the distinct juristic personality of the incorporated or statutory body has been recognized notwithstanding the control, the destination and the functioning of such bodies. Such a declaratory law would certainly stand in the way of the appellant because the same distinction which was sought to be created by lifting the veil in the matter of income tax is sought to be achieved in the matter of sales tax."
11. In view of above, the argument of worthy counsel representing the petitioner does not hold ground being; misconceived. As earlier discussed, petitioner 's department is an autonomous body being; created under the provisions of Khyber Pakhtunkhwa Waqf Properties Ordinance, 1979 and; as such, governed under the provisions of ibid Ordinance; wherein, role of the Provincial Government is limited to the extent of appointment of Chief Administrator , appointed under Section 3 of ibid Ordinance. Whereas, Section 17 of the said Ordinance has explicitly provided that Waqf Property could only be used for the purpose it is so dedicated or has been used or for any purpose recognized by Islam as religious, pious or charitable, as the Chief Administrator may deem fit. The status of petitioner has further been clarified by the very definition of term Waqf property as provided by Section 2
(e) of the Ordinance, 1979;- Waqf property means property of any kind permanently dedicated by a person professing Islam for any purpose recognized by Islam as religious, pious or charitable; but does not include property of any Waqf such as is described in Section 3 of the Musalman Waqf validating Act, 1913 (VI of 1913) under which any benefit, is for the time being claimable for himself the person by whom the Waqf was created or by any member of his descendants. The ibid definition manifestly provided that the dedication must be of permanent nature and; for religious, pious and charitable purpose; which clearly indicates that the petitioner 's department is an autonomous body , which is quite distant from that of the definition of Government property and; as such, covered by provision of Article 165-A and; therefore, the same does not qualify for exemption, hence, the purported stance of the petitioner qua exemption of property in question is misconceived.
12. Coming to the next contention of learned counsel of petitioner that, property in question is exempted from levy of property tax in view of provisions of Section 99 (2) (f) of the Act, 1924 being; used for religious, pious and, charitable purpose. Granted, that property in question (Auqaf Plaza) is Waqf Property; nonetheless, admittedly , the same has been rented out to private persons (tenants) for use of Commercial and Business activities and; petitioner used to receive rents therefrom, which is indeed a profitable activity . Section 99 of the ibid Act, is reproduced for ready reference: - "99. Exemption in the case of buildings.- (1) When, in pursuance of section 98, a Board has fixed a special rate for the cleansing of any factory , hotel, club or group of buildings or lands, such premises shall be exempted from the payment of any conservancy or scavenging tax imposed in the cantonment.
(2) The following buildings and lands shall be exempt from any tax on property [other than a tax imposed to cover the cost of specific services rendered by the Board], namely:
(a) --------.
(b) --------.
(c) --------.
(d) --------.
(e) --------.
(f) any building or lands, used or acquired for the public service or for any public purpose, which are the property of [the Government], or in the occupation of [the Central or any Provincial Government]".
From above, it becomes clear that only those properties are exempt from recovery of property tax; which are properties of Government or in its occupation and; being, used for Public Service or Public Purpose. As earlier discussed, the property in question has been rented out to private individuals (tenants) for Commercial and, business purposes; which clearly indicates that petitioner is deriving income and profit therefrom and; as such, the same does not fall within the definition of "Public Service" and "Public Purpose" and; therefore, the ibid provision could not be extended to the property in question. An identical matter came up for hearing in case of "Cantonment Board, Karachi through Chief Executive and another" reported in 2014 PTD 136, wherein, it was held that only those properties are exempted from payment of property tax which are being used for Public Service or Public Purpose and, no income or profit is derived therefrom.
13. Certainly , property tax is imposed, collected and; being used for Public Service and, Public Purpose like constructing and repairing roads, schools, colleges, hospitals etc, which are undoubtedly being; used for the interest, benefit and welfare of Public at Large and; its negation and non-recovery would certainly affect none but, Public at Large, which is, neither , the intention of Legislature nor , is the object of the law applicable thereto.
14. In view of what has been discussed above, the petitioner could not make out a case for interference of this Court, in its Constitutional Jurisdiction, under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, hence, the instant writ petition is dismissed; being meritless.