SYED ARSHAD ALI, J.--- The petitioner , seeks the Constitutional jurisdiction of this Court, praying that:- i. "Appropriate writ may kindle be issued declaring all unauthorized acts of the respondents Nos.1 to 5 including the notices/challans issued by respondent No. 4 to the petitioner organization and recovery proceedings initiated by respondent No.5 being illegal, without lawful authority and have no legal ef fect ii. The respondents may graciously be restrained from taking any further steps contrary to law with reference to issuing notices, imposing/collecting any sort of tax including property tax from the petitioner organization in respect of its properties or properties of its subsidiary being the property in occupation of the Federal Government for public purposes/service situated within the limits of cantonment throughout Pakistan. The respondent No.2 may graciously be also directed to refrain its sub-ordinate institutes/corporation/bodies throughout Pakistan from harassing the officials of the petitioner organization and issuing any notices/challans with reference to property tax and/or initiating an recovery proceedings against any property of the petitioner organization situated within limits of the cantonment throughout Pakistan. iii. The respondents may be directed not to illegally withhold the approval of building plan for a construction of Learning Resource Center and allied facilities being a separate and distinct matter from the matter of property tax. iv. Any other relief this Honourable Court deems appropriate may also be awarded.
2. Brief, but essential, facts of the case are that the State Bank of Pakistan has been constituted under The State Bank of Pakistan Act, 1956 (Act No. XXIII of 1956). Section 3 (2) of The State Bank of Pakistan Act, 1956 ("Act of 1956 ") envisages that the State Bank shall be a body corporate having perpetual succession and a common seal, and shall by the said name sue and be sued. Similarly , SBP- Banking Services Corporation, a wholly owned subsidiary of the State Bank of Pakistan, has been established under the SBP- Banking Services Corporation Ordinance, 2001. The petitioner has challenged the jurisdiction and the authority of Respondents Nos.1 to 5 in levying of property tax on the petitioner .
3. It is the case of the present petitioner that the petitioner organization being a creation of the Act, 1956 has been created for the purpose and objective of creating a central bank responsible for regulating and monitoring fiscal and monetary policy of the country and, as such, the functions being performed by the petitioner organization and/or its subsidiary are of a nature that no other organization can perform rather they fall within the domain of the Federal Government. Therefore, the refusal of the respondents whereby they have refused to extend the property tax exemption available under section 99 (2) (f) of the Cantonment Act 1924 ("Act 1924 ") to the petitioner organization is unlawful and beyond the mandate of law. The petitioner organization also seeks to its aid the provisions of Article 165 of the Constitution and thereby claims exemption under the said Article in respect of the tax which is sought to be imposed and demanded by the respondents.
4. Respondents in their comments have denied the assertions of the petitioner organization and stated that the petitioner organization is not entitled for exemption from property tax as provided under the section 99(2)(f) of the Act, 1924 as the petitioner organization is an autonomous body corporate and is not a department of the Federal Government and is a juristic person liable to pay tax. Moreover , the respondents also contended in their comments that State Bank Quetta and State Bank Hyderabad are paying tax to their respective Cantonment Boards without any reservations.
5. Arguments heard and record of the case was perused with the able assistance of the learned counsel for the parties.
6. Before proceeding any further it would be pertinent to dilate upon the Authority of Cantonment Board ("CB") to impose and collect taxes more particularly the property tax. The Cantonment Board(s), established under Section 11 of the Act, 1924 have been empowered under section 60 of the Act, 1924 that it may, with the previous sanction of the Federal 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. Similarly , Section 99 (2) of the Act, 1924 provides for exemption of certain buildings and lands from any tax on property other than a tax imposed to cover the cost of specific services rendered by the Board. The provisions of Section 99 (2) (f) of the Act, 1924 is reproduced for ease of 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 buildings 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 Federal or any Provincial Government.
7. However , we note that tax on immoveable property has always remained a provincial subject even prior to the creation of Pakistan whereas, the law relating to establishment of the Cantonment in various part of the country is a Federal subject. In this regard, we may refer to Entry No. 2 according to which, it rails within the federal legislative list under Article 70(4) of the Constitution whereas entry No. 50 excludes the power of Federation to tax immovable property . Thus the essential question whether the powers conferred upon the Cantonment Boards established under section 11 of the Act, 1924 to levy taxes under section 60 of the Act, 1924 is intra vires, does not require brainstorming because the Apex Court in the case of Pakistan through the Secretary , Ministry of Defence v.
Province of Punjab and others (PLD 1975 SC 37) has laid this issue at rest. The Apex Court after analysing various provision of the Cantonment Act has laid that, section 60 gives the Cantonment Boards the power to 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 with the previous sanction of the Central Government. The Cantonment Boards, like other Municipal Authorities under other Municipal Acts, have been given the power to levy a rate on the annual value of buildings as well as octrois, terminal taxes, tolls, etc. It was further observed that the tax sought to be levied by the Urban Immovable Property Tax Act is a tax on the annual value of buildings and lands in a rating area spec ified by the Government by a notification. Taxes on lands and buildings come within item 75 of the Fifth Schedule to the Constitution of 1956, and with regard to these, the Provincial Legislatures had by reason of the provisions of clause (31) of Article 106 of the said Constitution exclusive power to make laws for the provinces or any part thereof. The taxation was accordingly validly imposed by a competent Legislature in the proper exercise of its powers.
Thus the authority of the Cantonment Board to impose levy and collect property tax has been affirmed by the apex Court in Pakistan through the Secretary , Ministry of Defence's case (PLD 1975 SC 37).
8. To further expand on the matter a perusal of the West Pakistan Urban Immovab le Property Tax Act, 1958 ("Act, 1958") becomes all the more necessary . Section 2(i) of the Act, 1958 defines (i) "urban area" as:- '(i) "Urban area" means an area within the boundaries of a Municipal Corporation, Municipal Committee, Cantonment Board, Small Town Committee, or other authority (not being a District Board) legally entitled to, or entrusted by Government with the control or management of a municipal or a local fund.'
While Section 3 of the Act, 1958 states that the Government may by notification specify urban areas where tax shall be levied under the Act, 1958, nowever , section 3- A of the Act, 1958 provid es that out of the tax collected under the Act, 1958 from within the limits of a Cantonment Board, the Provincial Government shall, after retaining five percent, thereto as collection charge s, pay fifty percent of the balance to such Cantonment Board. A further look at entry No. 50 of the Part-1 of the Fourth Schedule of the Constitution would reveal that while it is the domain of the Federal legislature to legislate on matters pertaining to taxes on the capital value of the assets, but the same does not include taxes on immovable property . Thus, the subject of taxation on immoveable property is a purely provincial subject with the provincial legislature being the competent body on legislate on the subject matter .
However , upon the perusal of the afore-said provisions coupled with the provisions of Article 165 it emerges that though it is only the Federal Legislature that has the power to legislate in respect of Cantonment Area(s), but in respect of collection of property tax a mechanism has been provided in section 3-A of the Act, 1958 and as such the Cantonment Board is empowered to collect such property tax.
9. Vide Presidential Order No. 13 of 1979, the then competent authority CMLA had promulgated the Cantonment (Urban Immoveable Property Tax and Entertainments Duty) Order , 1979 ("Order "). Under Section 3 of the Order , the immoveable property tax leviable under the West Pakistan Urban Immoveab le Property Tax Act, 1958 had ceased to be leviable in the cantonment and the Cantonment Board has been given the power and mandate to collect the said tax. However , this Order was issued during the time when the Constitution was under eclipse and on the restoration of Constitution and in view of entry No.50 of the Part-1 of the Fourth Schedule of the Constitution, which was later amended through 18th constitutional amendment, the Parliament has no power to impose any tax on immoveable property . Thus, this Order has to be read down as it cannot stand with the explicit mandate of the Constitution.
10. Moving on to the essential question before this Court that since the petition er is performing the sovereign function of the State therefore, the property which is ostensibly owned by the petitioner organization in the record of the cantonment Board vest in the Federal Government and thus, is exempt from payment of property tax in terms of Article 165 of the Constitution and section 99(f) of the Act, 1924 both granting exemption to the property of the Federal Government from taxation.
11. Article 173(2) of the Constitution deals with the acquisition and power of the Federal as well as Provincial Government to acquire property and to make contract etc. For ease reference Article 173 is reproduced as under:- "173. (1) The executive authority of the Federation of a Province shall extend, subject to any Act of the appropriate Legislature, to the grant, sale, disposition or mortgage of any property vested in, and to the purchase or acquisition of property on behalf of, the Federal Government or, as the case may be, the Provincial Government, and to the making of contracts.
(2) All property acquired for the purposes of the Federation or of a Province shall vest in the Federal Government or, as the case may be, in the Provincial Government.
(3) All contracts made in the exercise of the executive authority of the Federa tion or of a Province shall be expressed to be made in the name of the President or, as the case may be, the Governor of the Province, and all such contracts and all assurances of property made in the exercise of that authority shall be executed on behalf of the President or Governor by such persons and in such manner as he may direct or authorize.
(4) Neither the President, nor the Governor of a Province, shall be personally liable in respect of any contract or assurance made or executed in the exercise of the executive authority of the Federation or, as the case may be, the Province, nor shall any person making or executing any such contract or assurance on behalf of any of them be personally liable in respect thereof.
(5) Transfer of land by the Federal Government or a Provincial Government shall be regulated by law ".
Therefore, any property owned by the Federation, it is the authority of the Federal Government to deal with the same. The concept of Federal Government, extent of the Executive authority of the Federation and conferment of functions of federation on subordinate authority is provided in Articles 90, 97 and 98 of the Constitution. The said Articles of the Constitution are reproduced as under:- "90 (1) Subject to the Constitution, the executive authority of the Federation shall be exercised in the name of the President by the Federal Government, consisting of the Prime Minister and the Federal Ministers, which shall act through the Prime Minister , who shall be the chief executive of the Federation.
(2) In the performance of his functions under the Constitution, the Prime Minister may act either directly or through the Federal Ministers.
97. Subject to the Constitution, the executive authority of the Federation shall extend to the matters with respect to which [Majlis-e-Shoora (Parliament)] has power to make laws, including exercise of rights, authority and jurisdiction in and in relation to areas outside Pakistan: Provided that the said authority shall not, save as expressly provided in the Constitution or in any law made by [Majlis-e-Shoora (Parliament)], extend in any Province to a matter with respect to which the Provincial Assembly has also power to make laws.
98. On the recommendation of the Federal Government, [Majlis-e-Shoora (Parliament)] may by law confer functions upon officers or authorities subordinate to the Federal Government".
12. The concept that the Federal Government may work through institutions thus find its geneses from Articles 90, 97, 98 of the Constitution. In the case of Sindh Revenue Board through Chairman Government of Sindh and another v. The Civil Aviation Authority of Pakistan through Airport Manager (2017. SCMR 1344) , the Apex Court has held that the Federation exercises executive authority in respect of subject which could be legislated by the federal legislature (Article 97 of the Constitution) and the Federal Government executive authority could be conferred on authorities subordinate to the Federal Government (Article 98 of the Constitution) like Civil Aviation Authority of Pakistan.
13. Regarding the exemption of the property owned by the Federation or the Provinces from payment of property tax, its legislative history has been elaborately elucidated by the Apex Court in Pakistan through the Secretary , Ministry of Defence's case (PLD 1975 SC 37) , which is reproduced as under: - Under the Government of India Act of 1935, taxes on lands and buildings came within item 42 of the Provincial Legislative List in the Seventh Schedule, with regard to which the Provincial Legislatures had, under section 100, exclusive power to make laws for the Province or any part thereof. The only exemption granted under section 154 of the Government of India Act, 1935, was in these terms: - "Property vested in His Majesty for purposes of the Government of the Federation shall, save in so far as any Federal law may otherwise provide, be exempt from all taxes imposed by , or by any authority within, a Province."
This exemption was continued under the 1956 Constitution by clause (2) of Article 1 12 which provided: "Property vested in the Federal Government shall, save in so far as an Act of Parliament may otherwise provide, be exempt front all taxes imposed by , or by any authority within, a Province."
Similar exemption was given to the property of the Central Government by Article 137 of the 1962 Constitution .
In the Interim Constitution of 1972 , taxes on lands and buildings continued to be a subject in the Provincial Legislative List within the exclusive competence of the Provincial Legislature but Article 167 exempted the property of the Federal Government from Ovation under any Provincial Law .
In the Constitution of 1973 , however , taxes on lands and buildings are not enumerated in either of the two lists given in the Fourth Schedule and, therefore, by reason of the provisions of clause (c) of Article 142, the Provincial Assembly has exclusive power to make laws with respect to any matter not enumerated in either of the lists.
Article 165 of this Constitution, however , repeats the exemption granted to the Federal Government in respect of its property or income from taxation under any Act of the Provincial Assembly .
The position, therefore, that emerges is that, under all the Constitutional provisions, the property of the Central Government is exempted from taxation, and it is the Federal Legislature which has the power to legislate, in respect of a cantonment area but with regard to certain matters only .
14. Admittedly , there is plethora of case law on the jurisprudence around Article 165 of the Constitution and the claim of exemption in terms thereof by various corporations and industries of the Federal Government wherein they have claimed their properties to be the properties of the Federal Government and thus entitled to the grant of exemption in terms of Article 165 of the Constitution on the property of these corporation and industries.
15. On the touch stone of the immunity to the State institution under Article 165 of the Constitution was elaborately laid down by the Apex Court in the case of Central Board of Revenue and anothe r v. S.I.T.E. (PLD 1985 Supreme Court 97), wherein the Apex Court has held that since Sind Industrial Trading Estate was an extension of the Provincial Government and Its income was also that of the Government, therefore, it was exempted from payment of income by virtue of Article 165 of the Constitution. Probably in this background to undo the aforesaid declaration of the Apex Court, Article 165-A was inserted in the Constitution. For ease reference Articles 165 and 165-A of the Constitution reads as under:- 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 Ad 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.
165A Power of Majlis-e-Shoora (Parliament) to impose tax on the income of certain corporations, etc.
(1) 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 Provincial 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 purported exercise of powers as aforesaid, shall, notwithstanding any judgment of any court or tribunal, including the Supreme Court and 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 provisions of clause (1) or clause (2) shall be, and shall be deemed always to have been, void and of no effect whatso-ever .
The exception created through Article 165-A of the constitution after the SITE judgment referred above, it appears that only the State established instrumentality is liable to pay all the taxes on its income whereas the exemption provided by Article 165 of the Constitution to the Federal as well as Provincial Government from payment of property tax shall also be available to its instrumentalities in view of the law laid down by the Apex court in SITE Judgment.
16. The issue in question has arisen owing to the fact that the petitioner organization is a body corporate having perpetual succession and a common seal, and can sue and be sued in its own name, thus, it is not clearly spelt out whether the petitioner organization.is in fact Federal Government or otherwise. However , as stated above, there is a rich jurisprudence which has been developed by the Supreme Court of Pakistan regarding the relation of Article 165 of the Constitution with Governme nt instrumentalities and corporation. The superior Court(s) have often adopted the doctrine of lifting the veil of incorporation to ascertain the true nature of the Government instrumentalities and corporation to examine the applicability of Article 165 of the Constitution.
17. The Apex Court in the case of Union Council, Ali Wahan, Sukkur v. Associated Cement (Pvt). Ltd. [1993 SCMR 468], has elucidated the various aspect and interpretation of Articles 165, 165-A of the Constitution viza-viz the judgment in the SITE case. The question for consideration in the aforesaid judgment before the Hon'ble Supreme Court was whether if the veil of incorporation is not lifted with regard to the Company , Article 165 of the Constitution could be made attracted to it. The Hon'ble Supreme Court held that the device of lifting the veil of incorporation cannot be pressed into service as a matter of course in every case, but there should be some justifiable reason which may warrant the lifting the veil of incorporation and that no hard and fast rule can be laid down to limit the cases in which the veil of incorporation can be lifted, thus, the lifting the veil of incorporation will entirely depend on particular facts of the cases and the principles which have been laid down by the decided cases for lifting the veil of incorporation will have to be read with particular reference to the facts of those cases. In the said judgment, his Lordship Saleem Akhtar , J. in his separate note has concluded the matter as following:-- "The sum and substance of the views of various authors is that no hard and fast rule can be laid to limit the cases in which veil of incorporation can be lifted. Some definite instances as stated above have attained universal acceptance but it would not be safe to limit them to these given cases alone. In view of the broad spectrum in which the commerce, business and industry are developing creating new situations, novel commercial relationships and innovative dealings unknown in the past, the piercing of the veil of incorporation will entirely depend on particular facts of each case. In the same manner in my humble view all cases which lay down the principles for lifting the veil have to be read with particular reference to the facts of that case. In Karachi Development Authority (K.D.A) v . Central Board of Revenue and another (C.A. No.284 of 1987) the observations quoted in the judgment of my learned brother reflect a particular situation and background. K.D.A was manufacturing pre-stressed cement pipes for its own use. It denied its liability to pay sales tax on the plea that it is a statutory corporation entirely financed by the Provincial Government and discharging the statutory and the ordinary functions of the Provincial Government. It was claimed that the commodity manufactured is government owned property and cannot be brought to tax under Article 165 of the Constitution. It was observed that K.D.A. is discharging welfare activity of the Government which is "not wholly for the discharge of sovereign functions as such". The observation quoted in the judgment proceeds on the interpretation of Articles 165 and 165-A(I) of the Constitution and applies to sales tax the principles which have been laid down for income-tax. It however does not mean that in fit cases and situations not relating to income-tax or sales tax the veil of incorporation cannot be pierced".
(underline is for emphasis)
18. The august Supreme Court of Pakistan in case of Water and Power Development Authority through General Manager and Project Director and another v. Administrator District Council Swabi and 5 others (2005 SCMR 487) had turned down the claim of WAPDA who sought refuge of Article 165 of the Constitution for the avoidance of export tax and educational tax on the production and transportation of its material for construction of Ghazi Brotha Hydropower Project. The August Supreme Court held that:- "11. Again this Court in case of Union Council v. Associated Cement (1993 SCMR 468 at page 480 para.12) has categorically held that the lifting of the corporate veil as such is no longer perm issible 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, this was with regard to previous remarks of this Court in case of Karachi Development Authority decided on 29-12-1991 but reported in (2000 Appeal Case s 53). In the circumstances, we are of the view the appellant cannot derive the benefit from either Article 165 or from Article 165-A of the Constitution."
Similarly , in the case of Central Board of Revenue Islamabad and another , v. WAPDA and another (PLD 2014 SC 766), the August Supreme Court declined the claim of WAPDA for exemption from the payment of excise duty on loans holding that:- "13. From the above analysis it is seen that although WAPDA's affairs to some extent are controlled by the government but for all practical purposes it is an independent entity and authorized to carry out the business of utilization of water and power resources of the country and to generate electricity and in this connection has been given a freehand.
14. In the light of the above analysis we have examined the impugned judgment and have seen that the learned Lahore High Court has strongly relied on the SITE's judgment quoted supra and the judgment of the WAPDA v.
Administrator , District Council and the judgment of Peshawar High Court in the case of Water and Power Development Corporation v. Administrator , District Council, Swabi, quoted supra. The learned High Court has relied on the judgment of SITE Limited quoted supra whereby this Court after lifting veil of the incorporation had held that SITE was thus exempted from levy of tax being agency or the authority of the government. What the learned High Court has failed to note is that this judgment was passed on 5th September 1984 and after passing of this judgment, Article 165A was incorporated in the Constitution of the Islamic Republic of Pakistan. which authorizes the Majlis-e-Shoora to impose tax on the income of certain corporations etc. and subsection (2) of this Article provides that all proceedings taken and acts done by any authority or persons including this Court or the High Court shall be deemed to be in exercise of the powers referred to in sub-clause (1) and shall notwithstanding any judgments of the Courts shall be deemed to have been made or taken in accord ance with law and shall not be called in question in any Court, this Court or the High Court on any ground whatsoever .
15. The learned High Court has also failed to notice that after the incorporation of Article 165-A, in a number of cases including the case of Union Council, Ali Wahan, Sukkur v. Associated Cement (Pvt.) Limited reported in 1993 SCMR 468, this Court has categorically held that unveiling of corporate veil is no longer admissible. This was also held in the case of KDA reported in 2005 PTD 2131 ."
In all .the aforesaid case-laws, the issue before the Apex Court was the exemption of State owned instrumentality /corporation from taxes on its income which, inter alia, include sales tax, income tax, octrio duty etc, however , the issue of exemption of the property tax on the aforesaid principles came up before the Apex Court in the case of Province of N. -W.F.P. through Secretary , Local Government And Rural Development, Peshawar v. Pakistan Telecommunication Corporation through Chairman and others ( PLD 2005 Supreme Court 670 ) held that:- Now in the light of the test laid down in this Article, it has to be seen whether the goods of respondent-Corporation can be treated to be the property or income of the Federal Government. It would be seen from various provisions of the Ordinance, 1990 and the Act, 1991 that, for all intents and purposes, PTC has been discharging its duties and functions, which were earlier performed by the erstwhile Telegraph and Teleph one Department of the Federal Government. For this purpose, we may pierce the veil of incorporation and notice that entire control, administration, management and all the affairs of the Corporation, no doubt, vests in the Board of Directors but all such Directors and the Managing Directors were required to be appointed by the Federal Government and none else. The properties of T & T Department, on establishment of the respondent-Corporation, vested in it and, legally speaking, all assets and liabilities of the said Department were acquired and incurred by the respondent-Corporation by operation of law. All officers working in Telegraph and Telephone Department stood transferred to the Corporation with total protection of terms and conditions of their service, including the right to enjoy the status of a public servant. Furthermore, the Corporation was bound in all matters to abide by the instructions and directives issued by the Federal Government from time to time and to follow the policy decisions of the Government, who was declared to be the best judge to decide as to which question would be a question of policy . Indeed, entire income from the proceeds of the Corporation went to the public exchequer and not to an individual or a juristic person."
In the said judgment the tool of incorporat ion was utilized in order to determine the relationship of the shareholders with regard to their true ownership and true nature of the company itself.
19. It can, therefore, be seen from the aforesaid judgments that for the Court(s) to make use of the doctrine of lifting the veil of incorporation, there must exist justifiable reasons to ascertain the real ownership and control of a corporation for the purpose of Article 165 of the Constitution. Moreover , a corporation or instrumentality of the Federal Government having a monopoly in the area of its operation being solely performing sovereign functions of the state , will be deemed a department of the Government and hence entitled to the exemption under Article 165 of the Constitution from payment of property tax. Similarly , the Court(s) would resort to the doctrine of lifting the veil of incorporation in the cases where a corporation whose entire shareholding is owned by Federal Government whereas a corporation which is not wholly owned by the Federal Government and part of the shareholding vests in other entities and persons as well, will not be extended the benefit of Article 165 of the Constitution. The Court(s) have extended E the benefit of Article 165 of the Constitution to property owned directly by the Federal Government but the said benefit has also been extended to properties owned by the Federal Government through its instrumentalities and body corporates, however , a Government Corporation conducting commercial activities in the normal course of business and competing with similar entities has not been given the benefit of Article 165 for seeking exemption from property tax. It must, however , be noted that The Associated Cement case (supra), has set the tone for future jurisprudence, therefore, principles laid down in it must be considered carefully in respect of the applicability of the exemption under Article 165 of the Constitution to instrumentalities and corporations claiming to be owned by the Federal Government.
20. Reverting back to the contentions of the petitioner organization wherein it claims to be eligible for the exemption so provided in Article 165 of the Constitution read with section 99(f) of the Cantonment Act, 1924 as it is performing functions of that of the Federal Government. It would be necessary to have a look at Act, 1956 and to apply the principles laid down in the judgments cited above.
21. The petitioner organization has been established under the State Bank of Pakistan Act, 1956 (Act No. XXXIII of 1956). The preamble of the Act, 1956 states that:- '"WHEREAS it is necessary to provide for the constit ution of a State Bank to regulate the monetary and credit system of Pakistan and to foster its growth in the best national interest with a view to securing monetary stability and fuller utilisation of the country's productive resources;"
Whereas Section 3 of the Act, 1956 provides that:-
3. Establishment and incorporation of the Bank.
(1) As soon as may be after the commencement of this Act, steps shall be taken to establish, in accordance with the provisions of this Act, a bank to be called the State Bank of Pakistan or Bank Daulat-e-Pakistan, for the purposes of taking over, as from the first day of July, 1948, the management of the currency from the Reserve Bank of India, and carrying on the business of Central Banking.
(2) The Bank shall be a body corporate by the name of State Bank of Pakistan or Bank Daulat-e-Pakistan, having perpetual succession and a common seal, and shall by the said name sue and be sued.
Section 4 of the Act, 1956 pertains to the Share Capital of the petitioner organizat ion and states that the capital of the Bank shall be one hundred million Rupees, which shall be fully subscribed, paid-up and held exclusively by the Federal Government and shall not be transferable or subject to encumbrance. Section 4(2) of the Act, 1956 envisages that the capital may be increased by a resolution of the Board subject to the approval of the Federal Government and no reduction of the capital shall be permitted at any time.
The Act, 1956 also allows the petitioner organization, by virtue of section 8-A, to establish and maintain a subsidiary or trust for the purposes provided in the afore-mentioned section of law .
Moreover , section 9 of the Act, 1956 relates to the constitution of the Board, whereas, section 9A of the Act, 1956 spells out the functions and responsibilities of the Board and Section 9B pertains to the Monetary and Fiscal Policies Co-ordination Board. The relevant portion of the afore-said sections are reproduced as under:- "9A. Functions and responsibilities of the Board.
(1) The Board, with the exception of the powers entrusted to the Monetary Policy Committee, shall perform the following functions, namely:-
(a) to define and determine policies of the. Bank regarding the execution of its functions, and approve internal rules for their implementation; and
(b) oversee foreign exchange reserve management and approve strategic investment and risk policy .
(2) The Board shall submit a quarterly report to the Majlis-e-Shoora (Parliament) on the state of the economy with special reference to economic growth, money supply , credit, balance of payment and price development.
9 B . Monetary and Fiscal Policies Coordination Board.
(1) There shall be a Board for the coordination of fiscal, monetary and exchange rate policies, hereinafter to be called [the Co-ordination Board], consisting of:-- (i). Federal Minister for Finance Chairman (ii). Federal Minister for Commerce or [Secretary , Ministry of Commerce] Member (iii). Deputy Chairman, Planning Commission Member (iv) The Governor Member (v). Secretary , Finance Division, Government of Pakistan Member
(vi) two eminent macro or monetary economists with proven record of research and teaching to be appointed by the Federal Government.
(2) The Co-ordination Board shall-
(a) coordinate fiscal, monetary and exchange-rate policies;
(b) ensure consistency among macroeconomic targets of growth, inflation and fiscal, monetary and external accounts;
(c) meet for the purposes of clauses (a) and (b) before the finalization of the budget to determine the extent of Government borrowing from commercial banks taking into account credit requirements of the private sector , liquidity expansion determined by the Board and expected changes in net foreign assets of the banking system];
(d) meet on a quarterly basis to review the consistency of macroeconomic policies and to revise limits and targets set at the time of the formulation of the budget, keeping in view the latest developments in the economy];
(e) consider limits of the Government borrowing as revised from time to time in the meetings to be held before and after passage of the annual budget; review the level of Government borrowing in relation to the predetermined or revised targets after every quarter; and
(g) review the expenditure incurred in connection with raising of loans and Government borrowing.".
22. The perusal of the afore-said sections coupled with the criteria laid down in Associated Cement case (supra) it would appear that the petitioner , indeed, has a monopoly in the filed for which it has been established. The case of the petitioner is further complimented by the provisions of Section 24 of the Act, 1956 which empowers the petitioner organization with the sole right to issue bank notes. Whereas Section 49 of the Act, 1956 relates to the exemption from taxes and provides that notwithstanding anything in the Wealth Tax Act, 1963 (XV of 1963), and Income Tax Ordinance, 1979 (XXXI of 1979), or any other law for the time being in force relating to wealth tax, income tax or super tax the Bank and any subsidiary , or trust, established by it shall not be liable to pay wealth tax, income tax or super-tax on their income or wealth. Section 50 of the Act, 1956 pertains to liquidation of the petitioner wherein the petitioner shall not be placed in liquidation save by order of the Federal Government and in such manner and on such terms and conditions as it may direct. Furthermore, under Section 42 of the State Bank of Pakistan Act, 1956, the allocation of surplus amount earned by the Bank after paying dividend of the share which too fixed by the Federal Government is payable to the Federal Government.
23. It may also be noted that in case any amendment in any function is of the petitioner organization is to be brought the same cannot be introduced or moved in [Majlis-e-Shoora (Parliament)] except by or with the consent of the Federal Government. The provisions of Article 74 of the Constitution of Pakistan clearly spells out that:- "74. Federal Government's consent required for financial measures.
A Money Bill or a Bill or amendment which if enacted and brought into operation would involve expenditure from the Federal Consolidated Fund or withdrawal from the Public Account of the Federation or affect the coinage or currency of Pakistan or the constitution or functions of the State Bank of Pakistan shall not be introduced or moved in [Majlis-e-Shoora (Parliament)] except by or with the consent of the Federal Government."
24. Summing up the legal discourse, a look at Article 97 and Article 98 of the Constitution would clarify the matter .
Article 97 of the Constitution envisages that the executive authority of the Federation shall extend to the matters with respect to which [Majlis-e-Shoora (Parliament)] has power to make laws, including exercise of rights, authority and jurisdiction in and in relation, to areas outside Pakistan. Whereas Article 98 provides that Federal Government, [Majlis-e-Shoora (Parliament)] may by law confer functions upon officers or autho rities subordinate to the Federal Government. A perusal of Entries Nos. 8, 9 and 28 of, the Part 1 of the Fourth Schedule of the Constitution would also support the stance of the petitioner organization that it is indeed a Federal subject. At this point, reference is made to the judgment of the August Supreme Court of Pakistan in another case titled Sindh Revenue Board through Chairman Government of Sindh and another v. The Civil Aviat ion Authority of Pakistan throuRh Airport ManaRer (2017 SCMR 1344 ) wherein the August Court held that Civil Aviation Authority was regulatory authority which performed functions that were within the exclusive domain of the Federal Legislature and its functions were those which were listed in the Federal Legislative List, thus, the Federation exercised executive authority in respect of subject which could be legislated by the Federal Legislature (Article 97(1) of the Constitution and the Federal Government executive authority could be conferred on "authori ties subordinate to the Federal Government" (Article 98(1) of the Constitution).
25. The learned Counsel for the respondents also raised objections in respect of the alternate remedy being available under Section 277 of the Act, 1924. In this respect it may be pointed out that the petitioner has challenged the very authority of the respondents to issue challans to the petitioner pertaining to property tax, therefore, the rule that the High Court will not entertain writ petition when other appropriate remedy is available is not a rule of law barring jurisdiction but a rule by which the Court regulates its jurisdiction. If the impugned orders/actions were without lawful authority or violative of some law then the High Court could exercise its constitutional jurisdiction unless it could do so without any elaborate enquiry into complicated or disputed facts. Reliance in this regard is placed on case 'titled The Murree Brewery Co. Ltd v. Pakistan through Secretary to. Government of Pakistan and 2 others [PLD 1972 SCMR 279], Mrs. Rgia &RUM v. Cantonment Board Clift, and another [2000 YLR 2114) and Mst. Hussain Bibi v . Haji Muhammad Din and 3 others [ 1976 SCMR 395 ].
26. The respondents also contended in their comments as well during their arguments that the offices of the petitioner at Hyderabad and Quetta have been paying the impugned property tax without any reservation, thus, they are not entitled to the exemptions provided in section 99(2)(f) of the Act, 1924 and are also not entitled to the benefit of Article 165 of the Constitution does not hold ground before this Court because of the simple fact that mere depositing of the impugned property tax cannot take away the Constitutional right provided to an individual or an organization in the instant case. Moreover , we have before us a judgment of the Hon'ble Balochistan High Court, Quetta dated 31-8-2020 passed in C.P. No. 485/2020 whereby it has been held that State Bank of Pakistan is exempted from property tax in terms of section 99(2)(f) of the Act, 1924 and the demand notice issued by the Cantonment Board Quetta has been declared as illegal, unlawful and of no legal consequence.
Similarly , the petitioner organization has also challenged the levy of property tax on its properties before the Honourable Lahore High Court, Rawalpindi Bench, Rawalpindi. Thus, the contention of the respondents could not find any favour before this Court. Moreover , the Respondent No. 6 (Secretary Finance Division, Government of Pakistan) has also in its comments endorsed the point of view of the petitioner that it is neither a commercial entity nor is deriving any benefit from business.
27. In view of the above, we hold that the State Bank of Pakistan though established under Act, 1956 but performing the sovereign functions of the Federal Government and thus is only the ostensible owner of the disputed property and its title indeed vests in the Federal Government, therefore, the respondent-Cantonment Board as well as the provincial legislature have no authority to levy and demand property tax from the petitioner organization in view of the and resultantly , notices/challan forms laying a demand for payment of property tax from State Bank of Pakistan are held to be without lawful authority and of no legal ef fect.