ABID HUSSAIN CHATTHA, J. This Judgment shall dispose of the titled as well as thirty two (32) connected constitutional Petitions listed in Annexure-A which shall constitute an integral part of this Judgment since identical questions of law and facts are involved.
2. The Petitioner is aggrieved of the impugned notice bearing No. SR/RYK/195 dated 16.07.2020 (the "Notice") issued by Respondent No.5 (Sub-Registrar, Rahim Yar Khan) seeking payment of specified amount therein on the alleged ground that Capital Value Tax (the "CVT") payable under the prevalent and applicable law on the date of registration of Power of Attorney on 27.10.2010 in favour of the Petitioner could not be collected in full, as such, the Petitioner is liable to pay the deficient amount of the CVT. In the connected Petitions, similar notices are impugned which had been issued by the concerned Sub-Registrars on different dates seeking recovery of alleged short payment of the CVT.
3. The background of this case is that the CVT was introduced and levied under Section 6 of the Punjab Finance Act, 2010 (Act VI of 2010) (the "Act of 2010") published in the Punjab Gazette on 28.06.2010 and came into force on 01.071010. Section 6 of the Act of 2010 was substituted on 23.06.2012 through the Punjab Finance Act, 2012 (Act XLI of 2012) (the "Act of 2012") which came into force on 01.07.2012. Eventually, the CVT was abolished under Section 3 of the Punjab Finance Act, 2017 (Act XII of 2017) (the "Act of 2017"), whereby, Section 6 in the Act of 2010 was omitted with effect from 01.07.2017.
4. Report and parawise comments were filed by the Respondents in the titled Petition. Learned Law Officer under instructions submitted that the said report and parawise comments be considered regarding all the connected Petitions since the question. involved therein are identical. It was candidly submitted that the impugned Notice(s) was issued to recover payment of the outstanding CVT on the registration of Power of Attorney(s) which could not be duly calculated and collected at the time of registration. Inspector of Stamps conducted audit for the period from 01.08.2010 to 20.02.2012 and noticed deficiency under the head CVT as provided in Sections 6(3) &
(5) of the Act of 2012. The text of audit para is reproduced as under:- "During the course of audit, it was observed that capital value tax was not properly charged in some power of attorney, in this way; the Govt. suffered a loss of Rs. 3,059,972/- in payment of Capital Value Tax, for detail see Appendix-A."
After promulgation of the Act of 2012, Section 6(3) & (5) thereof were challenged by way of filing of a number of Petitions which' were eventually remanded to the learned Rawalpindi Bench of this Court by the Honourable Supreme Court of Pakistan and were decided through a single order in W.P. No. 1287 of 2016 vide order dated 14.10.2020, whereby, it was held that the CVT was chargeable on Power of Attorney(s) under Section 6(3) & (5) of the Act of 2012. The said order was circulated to all the Additional Deputy Commissioners (Revenue) and Sub-Registrars in the Punjab for compliance through letter dated 08.12.2020 which is still intact and in the light of that letter the - impugned Notice(s) Of deficiency was issued to the Petitioner(s).
5. Before proceeding further, it is noted that none of the Petitioner(s) in the titled or connected Petitions had impugned the validity of Section 6 of the Act of 2010 or Act of 2012. No injunctive order restraining the recovery of the CVT in rem passed by, any Court was produced before this Court, Therefore, the assertion of the Respondents that recovery of short levy of the CVT remained in abeyance on account of some Petitions before the learned Rawalpindi Bench of this Court which was remanded by the Honourable Supreme Court of Pakistan and ultimately decided on 14.10.2020 by the learned Rawalpindi Bench of this Court is untenable since the said decision was confined to the consideration of exemptions contained in Section 6(4)(c) of the Act of 2012 read with circulars issued by the Board of Revenue vide letters No. 87-2010/10-RC(III) dated 07,07.2010 and No. 200/2011-RC(III) dated 25.03.2011.
6. None of the Petitioner(s) herein were served with any notice regarding recovery of short levy of the CVT, The Notice(s) impugned herein were issued for the first time seeking recovery of short levy of the CVT in the year 2021 after more than 10 years in most cases. The main thrust of arguments of learned counsel for the Petitioner(s) was that recovery Notice(s) after 10 years of registration is time barred and unjustifiable. The levy as required was paid at the time of registration. Had they been apprised of the amount claimed at the relevant time, they may have opted not to register the Power of Attorney(s) at all. The Notice(s) is unilaterally issued without providing right of hearing and following due process of infringing the fundamental rights guaranteed under Articles 4, 10-A and 25 of the Constitution of the Islamic Republic of Pakistan, 1973.
7. Section 6 of the Act of 2010 came into force on 01.07 2010 and remained in the field till 30.06.2012.
It was substituted by the Act of 2012 which came into force on 01.07.2012 and, as such, remained operative till it was abolished on 01.07.2017 by Section 3 of the Act of 2017. Therefore, in order to determine the validity of the impugned Notice(s) in the titled and the connected Petitions, an analysis and interpretation of original Section 6 as introduced in the Act of 2010 and substituted Section 6 under the Act of 2012 is imperative since some of the Power of Attorney(s) were registered during the period from 01.07.2010 to 30.06.2012 while others were registered during the period from 01.07.2012 to 30.06.2017.
8. Section 6 of the Act of 2010 prescribed a comprehensive mechanism with respect to the levy and charge of the CVT, the rates at which the CVT was liable to be collected, the persons responsible for collection, the persons liable for its payment, the exemptions from the payments of the CVT and the remedies which could be availed by the persons liable to collect the CVT or the persons liable to pay the CVT.
9. The salient features encapsulated in Section 6 of the Act of 2010 are listed below:- i) Section 6(3) is the substantive charging Section which stipulates that the CVT shall be charged on the capital value of an immoveable property payable by every person who acquires by purchase, gift, exchange, Power of Attorney other than revocable and time-bound (not exceeding sixty days) executed between spouses, father and son or daughter, grand parents and grand children, brother and sister, surrender or relinquishment of rights by the owner (whether effected orally or by deed or obtained through Court decree) except by inheritance, or gift from spouse, parents, grand parents, brother or a sister, an immoveable property or a right to use an immoveable property for more than twenty years, such as is specified in subsection (4), at the rates specified in that subsection. It is explicitly clear that the CVT was payable on Power of Attorney subject to the exemptions listed therein, meaning thereby that any Power of Attorney which fell within the exemptions as aforesaid was not subject to payment of the CVT; ii) The rates at which the CVT was payable on Power of Attorney are stipulated under Section 6(4) of the Act of 2010 which specified three different categories of urban immoveable property in terms of urban area defined in Section 6(2)(g) classified into residential, commercial and residential flats. Two types of exemptions were provided. Any immovable property not falling in urban area was exempt. The second exemption was with respect to size or measurement of residential immovable property under Section 4(a). Urban Area is defined as "an area which is (i) rating area under the Punjab Urban Immovable Property Tax Act, 1958 (V of 1958) except where the rate under Section 117 of the Punjab Local Government Ordinance, 2001 (XIII of 2001) is zero; and (ii) the area notified by the Board of Revenue in the official Gazette."; iii) Section 6(5) stipulates that the CVT shall be collected by the person responsible for registering or attesting the transfer of the immoveable property regarding which the CVT was payable at the time of registering or attesting the transfer; iv) Section 6(6) provides that if the CVT is not collected from the person liable to pay it, the CVT may be collected by an officer designated by the Board of Revenue, from such person and in this behalf, the provisions of Punjab Land Revenue Act, 1967 (XVII of 1967) am made applicable for the collection of the CVT as applied for recovery of arrears of land revenue; v) Section 6(7) impose a personal responsibility upon the person liable to collect the CVT and fails to deposit the same into the Government Treasury and authorizes the Collector as defined under Section 6(2)(b) of the Act of 2010 to collect the CVT after giving him an opportunity of hearing; vi) Section 6(9) grants a right to the person liable to collect the CVT to recover the same from the person from whom the CVT ought to have been collected; vii) Sections 6(11) & (13) subsequently provide that the order passed by an officer shall be deemed to be an order passed by a Revenue Officer under the Punjab Land Revenue Act, 1967 and the remedies of appeal, review or revision were made available under the requisite Sections of the Punjab Land Revenue Act, 1967.
10. Section 6 of the Act of 2012 substituted Section 6 of the Act of 2010 which was an improved version of the original law with certain distinguishing features. The salient features of substituted Section 6 as stipulated in the Act of 2012 are listed below:- i) Section 6(3) is the substantive charging Section which ordains that the CVT shall be levied and payable on the capital value of an immoveable property by a person who acquires the same by purchase, gift, exchange or Power of Attorney, surrender or relinquishment of right by the owner or a right to use thereof for twenty years or more or renewal of lease so that the total period of lease in favour of the same lessee is twenty years or more at the rate specified in subsection (5); ii) Exemptions with respect to Power of Attorney are contained in Section 6(4)(c) which stipulates that the CVT shall not be parable when Power of Attorney is executed between spouses or from one wife or widow to another wife or widow of the same husband, or father, mother, son, daughter, grand parents, grand children and siblings; iii) The rate of the CVT in respect of immoveable property is listed in Section 6(5) of the Act of .2012.
Immoveable property is classified In various categories with certain exemptions with respect to the size and measurement of the same; iv) Collection of the CVT is the responsibility of the Registration Authority as defined in Section 6(2)
(h) and supervisory authority with respect to such collection is vested with the Collector defined in Section 6(2)(c); v) Conspicuously and importantly, the Collector is authorized to conduct the audit regarding the collection of the CVT by the Registration Authority and make an assessment of the CVT on the basis of such audit under Section 6(9) and is also empowered under Section 6(14) to make an assessm ent of the CVT on the basis of information or material available to him if the Registration Authority does not comply with the procedure regarding submission of requisite information prescribed under subsections (10) to (13); vi) The Collector under Section 6(15) was required to issue the assessment order to the Registration Authority or any other person, stating the amount of the CVT due and the time, place and manner of fibs of appeal against the assessment order; vii) Section 6(16) provides that the power of audit and assessm ent shall not be exercised after the expiry of five years from the conclusion of the financial year to which the assessment relates; viii) Section 6(17) subsequently provides that where the CVT could not be collected from the person liable to pay it, it can be collected by the designated officer of the Board of Revenue and provisions of the Punjab Land Revenue Act, 1967 are applicable, as they may apply to the recovery of arrears of land revenue; ix) As per Section 6(18), the persons liable to collect and deposit the CVT are made personally liable to pay the CVT; x) Section 6(20) entitles the person who has failed to collect the CVT and deposit the same on behalf of the person liable to pay it, to recover the same from the person from whom the CVT should have been collected or paid; xi) The order passed by the Officer under Section 6 of the Act of 2012 is deemed to be an order passed by a Revenue Officer under the Punjab Land Revenue Act, 1967 and the remedies of appeal, review or revision are made available to an aggrieved person under various provisions of the Punjab Land Revenue Act, 1967 uncle! Sections 6(22) and (23).
11. The original and substituted Sections 6 of the Act of 2010 and the Act of 2012 when placed in juxtaposition reveal that the main contrasting and conspicuous improvement was encapsulated in Sections 6(7) to 6(17) contained in the Act of 2012. Through the above referred provisions, a comprehensive machinery regarding due collection and payment of the CVT was put in place which unequivocally manifests a conscious attempt by the legislature to provide for the blatant omission in the original Section 6 of the Act of 2010, The mechanism so provided called for submission of monthly statement by the Registration Authority to the Collector regarding collection of the CVT in order to allow the Collector to be apprised with respect to the collection of the CVT.
The Collector of the district or any authority to whom he is subordinate may himself or through a person or agent appointed by him for the purpose was empowered to conduct audit of the CVT and examine the accounts of any Registration Authority liable to collect the CVT. The Collector was also empowered to call for an examination of information, accounts and documents. For this purpose, the Collector was also vested with the powers as are vested in a Court under the Code of Civil Procedure, 1908 to achieve the aforesaid objective. The Collector was also empowered under Section 6(14) to make an assessm ent of the CVT on the basis of information or material available to him and to issue the assessm ent order to the Registration Authority or any other person which included such persons as were liable to pay the CVT informing the amount of the CVT due and the time, place and manner of filing an appeal against the assessment order. Most importantly, Section 6(16) provides that the powers under Section 6(9) or Section 6(14) shall not be exercised after the expiry of five years from the conclusion of the financial year to which the assessment relates. It was thereafter that the person who was liable to pay it was made subject to recovery through an officer designated by the Board of Revenue in this behalf and the provisions of Punjab Land Revenue Act, 1967 were made applicable subject to remedies of appeal, review or revision as provided in the requisite Sections of the Punjab Land Revenue Act, 1967. It, therefore, follows that the aforesaid provisions were procedural in nature that provided a machinery for the determination of due assessm ent of the CVT and provision of information regarding the tax due from the taxpayer, which was prerequisite before notice of recovery could be served upon the taxpayer. Thereafter, the taxpayer was given a right of hearing to contest the claim of deficiency in the payment of the CVT. Since, the nature, substance and character of the aforesaid provisions are procedural, they shall be deemed to have retrospective effect and shall apply from the date of enforcement of the CVT, i.e. 01.07.2010. This view is further fortified from the fact that limitation of five years was provided under Section 6(16) of the Act of 2012 which validly covered the period from 01.07.2010 to 30.06.2012 when such machinery for the deficient collection and recovery of the CVT was not available in the original Section 6 of the Act of 2010. Procedural amendments providing a machinery to collect and recover a tax through due process are given A retrospective effect, especially when they are beneficial to the taxpayer. Absence of due process offends Articles 4, 10-A and 25 of the Constitution of Islamic Republic of Pakistan, 1973. Reliance is placed on cases titled, "Faisalabad Electric Supply Company Ltd. (FESCO) v. Federation of Pakistan through Secretary Finance, Islamabad and others" (2019 PTD 1780); "Commissioner Inland Revenue Zone-II, Regional Tax Office, Multan v. Mrs. Ambreen Fawad C/o Pak Arab Fertilizers Limited, Multan"
(PLD 2014 Lahore 72); "The Commissioner of Income Tax, Central Zone B, Karachi v. M/s Asbestos Cement Industries Limited, Karachi" (1993 SCMR 1276); and "Messrs Leather Connections (Pvt.)
Limited through its Chief Executive v. Central Board of Revenue, Government of Pakistan, Islamabad through Chairman and 2 others" (2000 PTD 3369).
12. From the above analysis and examination of original and substituted Section 6 in the Act of 2010 and Act of 2012 respectively, the following conclusions are drawn:- i) The CVT shall be levied and is payable on the Power of Attorney(s) registered from 01.07.2010 till 30.06.2012 under Sections 6(3) & (4) of the Act of 2010 subject to exemptions contained therein being substantive in nature and character; ii) The CVT shall be levied and is payable on the Power of Attorney(s) registered from 01.07.2012 till 30.06.2017 under Sections 6(3) & (5) of the Act of 2012 subject to exemptions contained therein being substantive in nature and character; iii) Sections 6(7) to 6(16) of the Act of 2012 being procedural in nature and necessary for due process to assess, calculate and recover deficient amount of the CVT shall apply with retrospective effect from 01.07.2010. iv) The Petitioner(s) are liable to pay deficiency in the CVT provided the same is calculated after providing opportunity of hearing and determined strictly in accordance with the provisions of Sections 6(3) & (4) of the Act of 2010 or Sections 6(3) & (5) of the Act of 2012, whichever is applicable, in a particular case subject to a valid assessment order issued by the Collector under Section 6(15) of the Act of 2012; v) The liability arising from deficiency in the payment of the CVT under Section 6 of the Act of 2010 or the Act of 2012 does not lapse with the efflux of time and is payable or recoverable under the provisions of the Punjab Land Revenue Act, 1967 provided an assessment has been done before the expiry of five years from the conclusion of the financial year to which the assessment relates under Section 6(16) of the Act of 2012; and vi) The determination of specific liability of the Petitioner(s) regarding payment of deficiency in the CVT is subject to the right of personal hearing and subsequent remedies provided under the Punjab Land Revenue Act, 1967.
13. The impugned Notice(s) in the titled and connected Petitions seeking payment of deficiency of the CVT are not sustainable in the eyes of law for the reason that the same have been issued without providing a right of personal hearing to the Petitioner(s), without determination of the amount due mentioned therein as stipulated under the law and without considering the exemptions contained in the applicable law as aforesaid. Hence, the impugned Notice(s) in the titled and connected Petitions mentioned in Annexure-A to this Judgment are declared illegal and of no legal effect as the same have been issued without lawful authority and in violation of due process of, law. However, fresh proceedings may be initiated against the Petitioner(s) for the recovery of deficient amount of the CVT in accordance with law provided there is a valid assessm ent order.
14. The instant as well as the connected Petitions are Allowed in the above terms.
Annexure-A Sr.
No.Writ Petition # Title Date of Impugned Notice Registration date of Power of Attorney 1.5960 / 2021 / BWPMuhammad Nadeem v. Government of the Punjab and six others 13.01.2021 27.11.2010 2.5316 / 2021 / BWPShoukat Ali v. Govt. of Punjab and six others 14.01.2021 18.10.2010 3.1240 / 2021 / BWPKhalid Mehmood v. Government of the Punjab and seven others 14.01.2021 11.12.2010 4.4253 / 2021 / BWPNaimat Ali v. Government of the Punjab and seven others 13.01.2021 15.12.2010 5.4254 / 2021 / BWPMuhammad Janisar v. Government of the Punjab Seven others 13.01.2021 24.01.2011 6.4703 / 2021 / BWPMuhammad Zahid v. Government of the Punjab and ten others 13.01.2021 14.01.2011 7.1242 / 2021 / BWPAbid Hussain v. Government of the Punjab and seven others 14.01.2021 19.08.2010 8.4300 / 2021 / BWPSaeed Ahmad Anjum v. Government of the Punjab and eight others 14.01.2021 20.08.2010 9.5015 / 2021 / BWPAbrar Ahmad v. Government of the Punjab and eight others 14.01.2021 12.01.2011 10.5016 / 2021 / BWPMuhammad Asad Arif v. Government of the Punjab and seven others 14.01.2021 19.08.2010 11.4815 / 2021 / BWPRiaz Qadeer Siddique v. Government of the Punjab and seven others 14.01.2021 22.01.2011 12.5099 / 2021 / BWPNishan Ali and two others v.
Government of the Punjab and five others 19.02.2021 & 10.06.202119.06.2013 13.4252 / 2021 / BWPAbdul Latif v. Government of the Punjab nine others 13.01.2021 14.01.2011 14.5275 / 2021 / BWPAhsan Ahmad v. Government of the Punjab and seven others 13.01.2021 15.01.2011 15.4965 / 2021 / BWPAneeqa Shehnaz v. Government of the Punjab and eight others 14.01.2021 11.03.2011 16.1246 / 2021 / BWPGhulam Murtaza Shad v.
Government of the Punjab and seven others 14.01.2021 07.12.2010 17.1245 / 2021 / BWPMatloob Hussain v. Government of the Punjab and seven others 14.01.2021 28.12.2010 18.1244 / 2021 / BWPRiaz Hussain v. Government of the Punjab and seven others 14.01.2021 20.01.2010 19.1243 / 2021 / BWPMuhammad Hafeez v. Government of the Punjab and seven others 14.01.2021 20.01.2010 20.1318 / 2021 / BWPMuhammad Boota v. Government of the Punjab and four others 08.01.2021 20.09.2010 21.5005 / 2021 / BWPAbdul Rasheed v. Government of the Punjab and six others NIL 01.07.2010 22.4798 / 2021 / BWPSyed Abdul Hadi Shah v. Government of the Punjab and seven others 14.01.2021 03.01.2011 23.7557 / 2021 / BWPEhsaan Bari v. Government of the Punjab and seven others 14.01.2021 23.09.2010 24.7546 / 2021 / BWPMuhammad Naveed v. Government of the Punjab and seven others 14.01.2021 23.09.2010 25.1241 / 2021 / BWPMuhammad Riaz v. Government of the Punjab and seven others 14.01.2021 19.08.2010 26.3103 / 2021 / BWPMuhammad Ashraf v. Province of Punjab and four others 24.01.2021 17.07.2013 27.4964 / 2021 / BWPMuhammad Rafique v. Government of the Punjab and seven others 14.01.2021 17.03.2011 28.5406 / 2021 / BWPMuhammad Ilyas v. Government of the Punjab and four others 25.01.2021 04.12.2010 29.5407 / 2021 / BWPPervaiz Ilyas v. Government of the Punjab and four others 25.01.2021 30.12.2010 30.5508 / 2021 / BWPKhaliq Ahmad v. Government of the Punjab and four others 25.01.2021 20.09.2010 31.6260 / 2021 / BWPDawood Sardar v. Government of the Punjab and seven others 14.01.2021 27.09.2010 32.951 / 2021 / BWPMuhammad Younis v. Government of the Punjab and four others 08.01.2021 11.10.2010