MALIK HAQ NAWAZ, C.J--- The above captioned eight writ petitions having same themes and identical natures arising out of a single notification, which we intend to dispose-of f through this single judgment.
2. The petitioners are registered firms, contractors and suppliers having licence of Pakistan Army Engineer Council to undertake different categories of working and supplies with Pak Army in the region of Gilgit-Baltistan. The petitioners have filed their respective writ petitions under Article 86(2) of Gilgit-Baltistan Order , 2018 with the prayer that the respondents may be restrained to deduct/collect income tax from the running/pending bills of the petitioners and they may also be directed to refund the amount of deducted income tax with ef fect from 01.04.2018.
3. The petitioners along with their writ petitions have also moved civil miscellaneous petitions under Order XXXIX, Rules 1 and 2 read with Section 151, C.P.C., for grant of ad-interim injunction to restrain the respondents from deduction of income tax from their bills till final disposal of the writ petitions.
4.. Brief facts of the matter as per record are that the Gilgit-Baltistan Council Incom e Tax (Adaption) Act, 2012 was promulgated in Gilgit-Baltistan on 21.03.2012, under which income tax was deduc ted from those who were falling under the domain the referred act and this act enjoyed the field till 04.01.2018. The Gilgit-Baltistan Council Secretariat Islamabad through Notificatio n No. F.No.3(5)/2014/F .II-GBC dated 4th January , 2018 restrained the concerned departments/agents of incom e tax collection till enforcement of amended act in the region. The respondents of writ petitions deducted income tax from the petitioners in disregard of referred notification, which was unexpected and the petitioners sought relief in this regard through writ jurisdiction of this Court.
5. Learned counsel appearing on behalf of petitioners of all writ petitions contended that the petitioners have been awarded different contracts for supplies/ services of HMT/HA T/Ration/MES etc. to Pak Army within the territory of Gilgit-Baltistan, where all taxes are exempted as per notification of Gilgit-Baltistan Council Secretariat dated 04.01.2018. They argued that despite the fact that no income tax laws exist in the region, respondents are bent upon to deduct income tax from the pending/running bills of the petitioners, which is illegal and without lawful authority . They further submitted that the respondents have committed misuse of authority and denied the rights of the petitioners as provided by law. Respondents are bound to act within the limits of law and law does not permit officials/of ficers to exercise authority on their own sweet wishes and whims. They further contended that the petitioners have repeatedly requested to respondents to honour the notification dated 04.01.2018, but the respondents insisted to deduct the income tax, which is against the settled principle of law and notification issued by competent authority .
6. On the other hand, Dy. Attorney General assisted by legal advisors and departmental representatives appearing on behalf of respondents opposed all the writ petitions by contending that the income tax is deducted from the petitioners under the Income Tax Ordinance, 2001, which is prevailing to the whole of Pakistan, therefore, any exemption granted under the Gilgit-Baltistan Income Tax (Adaption) Act, 2012 cannot suspend the operations to be carried out underany provision of Income Tax Ordinance, 2001. They further argued that the office of the Controller Military Accounts Jutial Gilgit falls under the administrative control of MAG offiCe/CCMA GHQ Rawalpindi and all matters of financial discipline and rules regulations are reproduced by MAG office, whereas notification dated 04.01.2018 referred herein above has not been reproduced by MAG/CCMA office till to date. They submitted that the income tax is exempted to the contractors belonging to Gilgit-Baltistan only. They submitted that under section 159 of Income Tax Ordinance, 2001, exemption of income tax will be granted by the Commissioner Income Tax by issuing exemption certificate, but the petitioners have not provided any exemptio n certificate to the respondents.
They requested to dismiss all the writ petitions having no legal ground and justification.
7. We considered the arguments of the parties and perused the record of the case.
8. The region of Gilgit-Baltistan is governed through Gilgit-Baltistan Order , 2018 which displays the role of constitution within the limits of this territory . Likewise, other matters relating to the region are managed through acts promulgated from time to time by the competent authorities. Having distinctive st4tus, the region enjoys certain privileges as compare to other parts of the country . One of these privileges is that the inhabitants of the territory are exempted from all kinds of taxes, although the burden of tax was imposed upon the region through Gilgit-Baltistan Council Income Tax (Adaptation) Act, 2012 and it became a burning issue for the time being, but through a subsequent notification, it was suspended till amendments in the referred Act.
9. The Notification No. F.No.3(5)/2014/F .II-GBC dated 4th January , 2018 of Gilgit-Baltistan Council Secretariat Islamabad, held the Gilgit-Baltistan Council Income Tax (Adaptation) Act, 2012 in abeyance and the same is reproduced for convenience as follows: "The Gilgit-Baltistan Council is pleased to restrain the Department of Inland Revenue Gilgit-Balti.stan and all withholding agents of Gilgit-Baltistan from collection of all taxes under the Gilgit-Baltistan Council Income Tax (Adaptation) Act, 2012, till amendments are made in the said Act by the Council."
It is manifested without any doubt that the region of Gilgit-Baltistan is tax free zone in terms of all taxes and no law regarding any kind of tax is still in field. Those who have properties or contracts or engaged in any fiscal activity , either local or non-local, within the territory of Gilgit-Baltistan enjoy exemption of all taxes.
10. The Revenue Division, Federal Board of Revenue through Circular No. 14 of 2016 with C.No.1(26)/Secy(ITP)/201- 126903-R dated 3rd October , 2016 further clarifies the matter . The referred circular is reproduced for ready reference as under: "Various representations have been received in the Board for grant of relief from double taxation to contractors who execute contracts in Gilgit-Baltistan but to whom payments are made in Pakistan. In partial modification of Board's Circular No.16 of 1954 the following instructions are being issued.
2. In such case, income shall be taxable with reference to the place where the contract is actually executed, irrespective of the place where the contract is made or payment is received. If a contract is executed exclusively within Gilgit-Baltistan, income shall not be taxed in Pakistan even if contract was made in Pakistan and payment was received in Pakistan and vice versa."
The contracts of the petitioners are executed in Gilgit-Baltistan, which are not taxable under the Notification No. F.No.3(5)/2014/F .II-GBC dated 4th January , 2018 of Gilgit-Baltistan Council Secretariat Islamabad.
11. Respondents' contention that the taxes are deducted from the petitioners under Income Tax Ordinance, 2001 which is prevailing throughout the country , does not carry enough weight. The status of Gilgit-Baltistan is entirely different from other parts of the country , and due to this very reason, the taxes were collected under the Gilgit- Baltistan Council Income Tax (Adaptation) Act, 2012, but this Act is dormant with effect from 4th January , 2018. In absence of any Act or express law pertain ing to collection/deduction of taxes, the act of respondents seems illegal and against the notification of the competent authorities referred herein above.
12. In view of above, we, by accepting all the writ petitions, restrain the respondents from deduction/collection of any tax(es) from the pending/running bills of the petitioners till enforcement of Gilgit-Baltistan Council Income Tax (Adaptation) Act, 2012 after necessary amendments.
13. On the above terms, W.P No.85/2020 along with C. Misc. No.170/2020, W.P No .121/2019 along with C. Misc.
No . 221/2019 , W.P No.93/2020 along with C. Misc. No.181/2020, W.P No.213/2019 along with C. Misc.
No.435/2019, W .P No.188/2019 along with C.
Misc. No.372/2019, W.P No.76/2020 along with C. Misc. No.155/2020, W.P No.266/2019 along with C. Misc.
No.542 /2019, W.P No.71 /2019 along with C. Misc. No.141/2019 and 456/2019 are allowed and disposed-of f accordingly . File.