"As Justice Oliver Wendell Holmes put it: "We do not inquire what the legislature meant; we ask only what the statute means."[1] (Justice Antonin Scalia, Judge, US Supreme Court)
JAWAD HASSAN, J. The Petitioner/State Bank of Pakistan (the "SBP") has filed this Writ of Prohibition and Certiorari under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 (the "Constitution") to declare the act of Respondents No.1 to 4, including the issuance of notices/challan (by Respondent No.2) to the "SBP" and passing of order dated 26.02.2018 (by Respondent No.4), as illegal and without lawful authority.
I. CONTEXT
2. In this petition, the Petitioner has assailed the levy of property tax by the Respondent/Chaklala Cantonment Board, Rawalpindi (the "Cantonment Board") and has sought exemption under Section 99(2)(f) of the Cantonment Act, 1924 (the "Cantonment Act") by challenging the imposition of property tax in 2014 as it has been continuously requesting the Respondents to treat the property of the "SBP" as property of the Federal Government in a number of letters corresponded between the "SBP" and the Respondents. The Respondents have alleged that the Petitioner is a Corporation and has been paying the property tax since 1962, therefore, the "SBP" or its properties situated within the Cantonment Area are not liable to be exempted under the Act. The Petitioner has challenged levy of property tax under the instant writ petition in 2018 with the prayer that the properties of the "SBP" be declared properties of the Federal Government and be exempted from levy of property tax by virtue of Article 165 of the "Constitution" read with Section 99(2)(f) of the "Cantonment Act".
II. PETITIONER'S SUBMISSIONS
3. Mr. Salman Ajaib, Advocate submitted that the "SBP" is a Corporation constituted under the State Bank of Pakistan Act, 1956 (the "SBP Act") and performing sovereign functions of the Federal Government, therefore, it is entitled to property tax exemption on the touchstone of rationale rendered by the Hon'ble Supreme Court of Pakistan in the judgment reported as "UNION COUNCIL, ALI WAHAN, SUKKAR Versus Associated Cement (Pvt.) Limited" (1993 SCMR 468). He further submitted that even though the "SBP" is a Corporation, it is not a commercial entity, like National Bank of Pakistan or any other commercial/scheduled bank or financial institution; and by granting property tax exemption to the "SBP", no discrimination will be caused to any entity. He explained that over the years, there have been many amendments in the functions of "SBP" which justify its claim for grant of exemption from payment of property tax under Section 99(2)(f) of the "Cantonment Act". He next clarified that there are certain businesses which the "SBP" cannot transact and those are mentioned in the "SBP" Act. In this regard, he specifically referred to Section 20 of the SBP Act, which states that the "SBP" shall not engage in any commercial or trade activity.
He also referred to the provisions of Section 21 of the SBP Act, which empowers the "SBP" to carry out government business and no other bank in Pakistan is authorized to carry out the functions which the "SBP" is authorized under the law.
4. Mr. Salman Ajaib, Advocate contended that the "SBP", by virtue of its powers and functions, is wholly owned by the Federal Government and performs functions on behalf of the Federal Government and is also mentioned in the Fourth Schedule, Part I, Federal Legislative List at Item No.28 of Constitution and these functions have been given to the "SBP" through an amendment made in the SBP Act as well as other applicable laws. He also argued that the "SBP" has been given authority to issue Bank Notes and then denominations and form of the said Bank Notes [see Sections 24 and 27 of the SBP Act] which is essentially the function of the Federal Government. He submitted that as per Article 74 of the Constitution, a Bill pertaining to amendment in the Constitution or functions of the "SBP" can only be introduced by or with consent of the Federal Government. He stated that the "SBP" is mentioned at serial No.11(i) [Central Banking, State Bank of Pakistan] under heading No.12 (Finance Division) in Schedule II of the Federal Rules of Business, 1973 [as amended up to 27th May 2021] (the "Federal Rules") whereas other functions, which the "SBP" by law is authorized to perform, are also separately mentioned in the Federal Rules at serial No.8 and 10 under the heading of Finance Division. The attention of the Court was also drawn to the provisions of Article 98 of the Constitution, which provide that on recommendation of the Federal Government, the Parliament may, by law, confer functions upon officers or authorities subordinate to the Federal Government and such delegation of functions is apparent in the SBP Act.
5. Mr. Raza Mohsin Qazilbash, Director Legal, SBP made it clear that the functions, which the "SBP" performs, are functions which have been conferred on it by the SBP Act and other applicable laws for the purpose mentioned therein. He added that neither the "SBP" nor the SBP-Banking Services Corporation is carrying out any commercial business which other public or private entities are performing and the kind of services provided by them, are exclusive functions of the Federal Government and right to change the nature of business which the Petitioner can transact, is in the exclusive domain of the Federal Government, therefore, if exemption is granted or extended to the SPB from property tax, no discrimination (in terms of Article 25 of the Constitution) will be caused to any public or private entity and for the reasons/grounds stated above, this Court has to lift the veil of incorporation in order to determine the exact nature of control and management of the Petitioner Organization and its functions in respect thereto. In support of his arguments, he relied on the judgments reported as "SINDH REVENUE BOARD through Chairman Government of Sindh and another Versus THE CIVIL AVIATION AUTHORITY OF PAKISTAN through Airport Manager" (2017 SCMR 1344), "WATER AND POWER DEVELOPMENT AUTHORITY through Director Services and Estates Versus EXCISE AND TAXATION DEPARTMENT, Government of the Punjab through Director General and 4 others" (2017 CLC 716), "EXPO Lahore (Private) Limited Versus EXCISE AND TAXATION DEPARTMENT, Government of the Punjab and others" (2018 CLC 1602) and "ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD through its Registrar Versus MINISTRY OF INTERIOR, Government of Pakistan through its Secretary and 2 others" (2010 YLR 1339).
III. RESPONDENTS' SUBMISSIONS
6. Mr. Waqar-ul-Haq Sheikh, ASC submitted that the Petitioner has not availed the alternate remedy provided to it under the law, before approaching this Court in terms of the judgment reported as "STATE BANK OF PAKISTAN Versus THE DIRECTOR, MILITARY LANDS AND CANTONMENTS, Rawalpindi and others" (PLD 1990 SC 827), therefore, writ is not maintainable, being pre-mature. He further submitted that the "SBP" is a Corporation, hence, is not entitled to property tax exemption. Ch. Muhammad Yaqoob, ASC next contended that the Petitioner has estopped by its own conduct to claim exemption because payment of tax has already been made by its other office and moreover, the "SBP" has already moved to the Federal Government for grant of exemption under Section 99A of the "Cantonment Act". Reliance is placed on the judgments reported as "MUHAMMAD ZAMAN and others Versus GOVERNMENT OF PAKISTAN through Secretary, Finance Division (Regulation Wing), Islamabad and others" (2017 SCMR 571) and "NATIONAL BANK OF PAKISTAN Versus EXECUTIVE DISTRICT OFFICER (Revenue), Multan and another" (2015 CLC 1618).
7. Arguments heard. Record perused.
IV. MOOT POINTS
8. From divergent stance of the parties, the following moot points are framed: a. Whether the SBP is entitled to exemption from payment of property tax under Section 99(2)(f) of the Cantonment Act? b. Whether SBP, by paying the property tax in previous years, is estopped by its own conduct to claim such exemption? c. Whether the SBP should have availed the appropriate remedy before knocking the door of this Court?
V. DETERMINATION OF THE COURT Moot Point (a) (Whether the SBP is entitled to exemption from property tax)
9. At the outset, it may be significant to note here that the premises are occupied by the SBP- Banking Service Corporation, which is a wholly owned subsidiary of "SBP" and functions under the SBP Banking Service Corporation Ordinance, 2001 (the "SBP Ordinance"). The SBP-Banking Service Corporation (the "SBP Corporation") is transacting any business which the "SBP" delegates and its primary functions is to assist the "SBP" in performing its obligation under the SBP Act and other applicable laws in line with the "SBP Ordinance". From bare reading of Section 5 of the "SBP Ordinance", it would be clear that except for the functions mentioned in Section 5(2), all other functions of the "SBP" can be performed by the "SBP Corporation". The functions of the "SBP" mentioned in the SBP Act [from Section 17 and onwards] are the functions which can also be delegated to the "SBP Corporation". Therefore, it is appropriate to note that the "SBP Corporation" performs only those functions which are delegated by the "SBP" and the "SBP Corporation" is fully owned by the "SBP".
(i) Exemption of Property Tax
10. To better understand this moot point, it would be advantageous to first discuss the imposition of property tax by the Cantonment Board. The Cantonment Board, established under Section 11 of the "Cantonment Act", is authorized under Section 60 of the "Cantonment Act" 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. On the other hand, Section 99(2)(f) of the "Cantonment Act" provides for exemption of certain buildings and lands from any tax on property and reads as under: "99. Exemption in the case of buildings.
(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) ----------------- -; and
(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."
11. Accordingly, any building or land (a) which is used or acquired for the public service or for any public purpose and (b) which is property of the Government or in the occupation of the Federal or any Provincial Government, is by law exempt from any tax on property other than a tax imposed to cover the cost of specific services rendered by the Cantonment Board. For the first condition, it is significant to define what is meant by public service or public purpose. Since the "Cantonment Act" is silent about the definition of these terminologies, guidance can be sought from the dictionary meaning of these words. As per Black's Law Dictionary 9th Edition, "public service" means "(a) a service provided or facilitated by the government for the general public's convenience and benefit; (b) government employment, work performed for or on behalf of the government; and (c) broadly, any work that serves the public good, including government work and public-interest law."
(ii) Legal Anthropology of State Bank of Pakistan
12. For the purpose of second condition and to understand whether the subject property is in occupation of the Federal Government, it is essential to discuss the history of "SBP". It is to be noted that the State Bank of Pakistan Order 1948 (the "SBP Order") was issued by the first Governor General of Pakistan on 12th May of 1948 to take over functions of the Reserve Bank of India. At the time of opening ceremony of the "SBP", Quaid-e-Azam Muhammad Ali Jinnah said: "The opening of the State Bank of Pakistan symbolizes the sovereignty of our State in the financial sphere."
The Preamble of the SBP Order reads as follows: "Whereas in accordance with the provisions of the Pakistan (Monetary System and Reserve Bank)
Order, 1947 as amended by the Pakistan Monetary System and Reserve Bank (Amendment) Order 1948, the Reserve Bank of India constituted by the Reserve Bank of India Act, 1934 (II of 1934), shall cease to operate as Pakistan's currency authority and central bank after the thirteenth day of June, 1948. And whereas it is necessary to provide for the constitution of State Bank to regulate the issue of bank notes and the keeping of reserves, with a view to securing monetary stability in Pakistan and generally to operate the currency and credit system of the country to its advantage."
Section 3(1) of the SBP Order provides that as soon as possible steps shall be taken to establish, in accordance with the provisions of this Order, a bank to be called "State Bank of Pakistan", for the purposes of taking over, as from first day of July 1948, the management of the currency from the Reserve Bank of India and carrying on the business of Central Banking. Further, its Section 3(3) narrates that the Bank shall be a body corporate by the name of "State Bank of Pakistan".
Moreover, Section 5 of SBP Order provides that fifty one percent of share capital shall vest in the Central Government and remaining was to be offered for the public subscription.
13. However, there had been numerous amendments in the legislation under which the "SBP" is functioning. After the SBP Order, the SBP Act was introduced on 19th April, 1956 which till-date remained the principal legislation defining the functions being performed by the "SBP". The SBP Act retained the concept of private shareholding and has gone under many amendments over the period of time to accommodate the ever-evolving pace of Pakistani economy. The preambles of the SBP Act and the subsequent amendment made in it in 2022 are reproduced below: i. Preamble of the SBP Act "Whereas it is necessary to provide for the constitution of a State Bank of Pakistan to regulate the monetary and credit system of Pakistan and to foster its growth in the best national interests with a view to securing monetary stability and fuller utilization of the country's productive resources." ii. Amendment in the preamble brought in by State Bank of Pakistan (Amendment) Act, 2022 "Whereas it is necessary to provide for the constitution of State Bank to achieve domestic price stability by way of regulating the monetary and credit system of Pakistan and, without prejudice to said primary objective, contribute to the stability of the financial system of Pakistan and supporting the general economic policies of the Federal Government to foster development and fuller utilization of the country's productive resources"
14. It is to be noted that Sections 4B and 4C have been inserted in the SBP Act vide State Bank of Pakistan (Amendment), Act, 2022, which describe the primary objectives and functions of the "SBP" respectively, and are reproduced as follows: "4B. Objectives. -- (1) The primary objective of the Bank shall be to achieve and maintain domestic price stability.
(2) Without prejudice to the Bank's primary objective, the Bank shall contribute to the stability of the financial system of Pakistan.
(3) Subject to sub-sections (1) and (2), the Bank shall support the Government's general economic policies with a view to contributing to fostering the development and fuller utilization of Pakistan's productive resources.
4C. Functions of the Bank-- The functions of the Bank to achieve the objectives set forth in section 4B and as further described in this Act, shall be to --
(a) determine and implement monetary policy;
(b) formulate and implement the exchange rate policy;
(c) carry out and disseminate research relevant to Bank's objectives and functions;
(d) hold and manage all international reserves of Pakistan;
(e) issue and manage the currency of Pakistan, including regulating their denominations;
(f) collect and produce statistics relevant to the Bank's objectives and functions;
(g) operate and exercise oversight over payment systems;
(h) license, regulate and supervise scheduled banks and financial institutions that fall under the domain of the Bank as further specified in this Act or any other Act;
(i) resolve scheduled banks and other financial institutions that fall under the domain of the Bank as further specified in this Act or any other Act;
(j) adopt and implement macro-prudential policy measures for scheduled banks and financial institutions that fall under the domain of the Bank;
(k) act as the banker, financial adviser and fiscal agent to the Government, and its agencies, on the mutually agreed terms and conditions;
(l) promote financial inclusion in Pakistan;
(m) develop financial market infrastructures;
(n) participate in international councils and organizations, including multilateral, international financial institutions,
(o) cooperate with domestic and foreign public entities, concerning matters related to its objectives and functions; and
(p) carry out any ancillary activities incidental to the exercise of its objectives under this Act."
Section 4B explains that primary objective of the "SBP" is to achieve and maintain domestic price stability while Sub-Section (2) of this Section provides that without prejudice to the SBP's primary objective, the "SBP" shall contribute to the stability of the financial system of Pakistan. Sub-Section
(3) of Section 4B of the SBP Act states that subject to forgoing sub-sections, the "SBP" shall support the Government's general economic policies with a view to contributing to fostering the development and fuller utilization of Pakistan's productive resources. Similarly, functions of the "SBP" have been fully described in (newly inserted) Section 4C of the SBP Act, and its Sub-Section
(h) provides for regulating the scheduled banks and financial institutions; Sub-Section (i) narrates the resolution of the scheduled banks; and Sub-Section (j) allows the "SBP" to adopt and implement macro-prudential policy measures for scheduled banks and financial institution.
Further, Section 37 of the SBP Act empowers the "SBP" to declare any bank a scheduled bank which is carrying on business of banking in Pakistan.
15. In the case titled as STATE BANK OF PAKISTAN through Chief Manager, Peshawar Versus FEDERATION OF PAKISTAN through Secretary, Ministry of Defense, Rawalpindi and 5 others" (PLD 2022 Peshawar 46), the Division Bench of the Peshawar High Court has dealt with a question that whether the property which is ostensibly owned by the "SBP" in the record of the Cantonment Board vest in the Federal Government and thus, is exempted from payment of property tax in terms of Article 165 of the Constitution and Section 99(f) of the "Cantonment Act". It has been elaborated that 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., and it is the authority of the Federal Government to deal with any property owned by the Federation. 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.
Accordingly, the concept that the Federal Government may work through institutions thus find its geneses from Articles 90, 97, 98 of the Constitution. The case of "SINDH REVENUE BOARD through Chairman Government of Sindh and another Versus THE CIVIL AVIATION AUTHORITY OF PAKISTAN through Airport Manager" (2017 SCMR 1344) has also been relied upon in which 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. It has been admitted that Article 165 of this Constitution grants exemption to the Federal Government in respect of its property or income from taxation under any Act of the Provincial Assembly and 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 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 another Versus S.I.T.E."
(PLD 1985 Supreme Court 97), wherein the Apex Court has held that since Sindh 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 tax 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. 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. It has been held in the case of STATE BANK OF PAKISTAN (PLD 2022 Peshawar 46) (supra) as follows: "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 Government 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.
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 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.
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 authorities 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 Aviation Authority of Pakistan through Airport Manager (2017 SCMR 1344) wherein the August Court held that Civil Aviation Authority was a 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 "authorities subordinate to the Federal Government" (Article 98(1) of the Constitution)."
(iii) State Bank of Pakistan being a Regulator
16. It is also essential to highlight that the "SBP" is empowered as a regulator of the scheduled banks under the Banking Companies Ordinance, 1962; the affairs relating to the financial institutions, development financial institutions and microfinance banks are controlled/run by the "SBP" under Section 2(g) of the Microfinance Institutions Ordinance, 2001 read with Section 3(1) of the Foreign Exchange Regulation Act, 1947; electronic fund transfer is regulated under Section 3 of the Payment System and Electronic Fund Transfer Act, 2007; and public debt also constitutes part of Federal Legislative List Part 1 at serial 10 while supervision and management of public debt is mentioned in Part-II of the Federal Legislative List. This Court has already elaborated and discussed the concept of a regulator in "Abwa Knowledge Village Pvt. Ltd. etc. Versus Federation of Pakistan etc" (PLD 2021 Lahore 436), "Chenab Flour and General Mills etc. Versus Federation of Pakistan through Secretary Revenue Division etc" (PLD 2021 Lahore 343), "Additional Registrar Company Versus Al-Qaim Textile Mills Limited" (2021 CLD 931) and "Ms Jet Green Pvt Ltd through Aftab Ahmad Versus Federation of Pakistan etc" (PLD 2021 Lahore 770) wherein roles and functions and duties of (i) the Pakistan Medical Commission; (ii) the Federal Board of Revenue; (iii) the Securities & Exchange Commission of Pakistan and (iv) Civil Aviation Authority, being regulatory bodies, have been vastly discussed and elaborated. Apart from the above, the "SBP" is also empowered to issue directives, instructions and regulations in whatsoever form as may be necessary for carrying out the functions of a bank and the regulatory powers are available to the "SBP" under Section 17H of the SBP Act and also mentioned at item No. 28 in the Federal Legislative List Part-I. The "SBP" also looks after the interest of the general public by keeping a control on banking practices within Pakistan and has a consumer protection department as well as Banking Policy and Research Department (the "BPRD") which provides guidelines for banking practices as well as redressal to grievances of general public in connection with the commercial banks in Pakistan. It has been time and again held by the superior Courts of the country that the circulars issued by "SBP" have the force of law and binding effect. In this regard, reference could be made to the judgments reported as "PAK LAND CORPORATION (PVT.) LTD. Versus KHADIM ALI SHAH BUKHARI (KASB) BANK LTD." (2020 CLD 310), "HABIB BANK LIMITED, DEIRA BRANCH, DEIRA DUBAI UAE Versus W.R.S.M. TRADING COMPANY, L.L.C." (2015 CLD 1644) "The ARMY WELFARE TRUST TRADING AS NIZAMPUR CEMENT PLANT Versus SONERI BANK LIMITED" (2014 CLD 440).
17. After discussing in detail, the regulatory regime of the "SBP" under provisions of the respective law, it can be safely concluded that the functions of the "SBP" are indeed functions of the Federal Government because the regulatory powers conferred on the "SBP", through the SBP Act as well as other enactment, covers a broad range of areas which play a vital role in the country's economy.
Since functions being performed by the "SBP" are in relation to affairs of the Federation, it is now important to look into ownership of share capital of the "SBP".
18. Prior to enactment of the Banks (Nationalization) Act, 1974, share of the "SBP" were also possessed by public [see Section 4 of the SBP Act, 1956 before amendment]. Under Section 5(6) read with Section 5A of the SBP Act, the Federal Government or any other corporation owned or controlled by the Federal Government could sell shares in capital of the bank other than the "SBP".
Since after promulgation of the SBP Act, 49% shares of the "SBP" were vested in general public, therefore, no exemption was earlier claimed and practice of payment of property tax was continued. Thereafter, in the year 2015, certain amendments were made in the SBP Act, vide State Bank of Pakistan (Amendment) Act, 2015, and even as of now, the entire share capital of the "SBP" vests in the Federal Government and is also non-transferable. Recently, there has been a further amendment in Section 4 of the SBP Act, through the State Bank of Pakistan (Amendment) Act, 2022, whereby share capital of the "SBP" has been considerably increased but it still vests in the Federal Government and is nontransferable as per amendment in Section 4(3) of the SBP Act. The "SBP" is a statutory corporation under the control of Federal Government, since all its share now vests in the Federal Government, its income is actually income of the Federal Government and also exempted from income tax, super tax and wealth tax as provided in the SBP Act.
19. Plain reading of Section 60 of "Cantonment Act" read with the Punjab Urban Immovable Property Tax Act, 1958 in line with the principle settled in the judgments reported as "UNION COUNCIL, ALI WAHAN, SUKKUR Versus ASSOCIATED CEMENT (PVT.) LIMITED" (1993 SCMR 468) and "WATER AND POWER DEVELOPMENT AUTHORITY through Director Services and Estates Versus EXCISE AND TAXATION DEPARTMENT, Government of the Punjab through Director General and 4 others" (2017 CLC 716) provides that even under the provincial legislation property tax cannot be levied on properties of the "SBP" and if any tax cannot be levied under the provincial legislation then the same cannot be levied under Section 60 of the "Cantonment Act" as well. It is also important to mention here that tax on immovable properties is a provincial subject and Article 165 of the Constitution is relevant in context of determining the application of property tax on "SBP".
Most importantly, the contesting Respondents have nowhere denied or brought on record any law, rules or regulation that the Federal Government cannot own property through a corporation.
Accordingly, the above discussion and judgments, the exercise of sovereign powers by the Petitioner and performance of public service in the premises owned by it, makes out a perfect case for grant of exemption from payment of property tax.
Moot Point (b) (Whether SBP is estopped by its own conduct to claim exemption)
20. As regards the contention raised by learned counsel for the Respondents that the Petitioner is estopped by its conduct to claim exemption from payment of property tax, suffice to mention here that it is settled law that no estoppel operates against the law. The question that the "SBP" has been paying the property tax previously is immaterial and does not even arise because if a right originates by provision of a law then such right cannot be withheld simply on the basis of estoppel.
Moreover, if a mandatory provision of law is deliberately ignored, the same shall make the provision of law redundant and such scheme can never be allowed to operate. The word "shall" has been used in Section 99(2) of the "Cantonment Act" but it has been made redundant by actions of Respondents No. 1 to 4. When there is an express admission let alone the implied one, even that does not create an estoppel against an express provision of law. In the judgment cited as "JUSTICE MUHAMMAD FARRUKH IRFAN KHAN, Judge, Lahore High Court, Lahore Versus FEDERATION OF PAKISTAN through Secretary, Ministry of Law, Justice and Parliamentary Affairs Division Government of Pakistan, Islamabad and 4 others (PLD 2019 SC 509), the Hon'ble Supreme Court of Pakistan has again reiterated that no estoppel could exist against the law or the "Constitution".
Moot Point (c) (Whether SBP has availed appropriate remedy)
21. Through notice dated 27.07.2014, the Cantonment Board intimated the Petitioner about reassessm ent of the property tax for the years/period starting from 01.07.2014 to 30.06.2017 and demanded Rs.5,362,778/- in respect thereof. The Petitioner contested the said reassessment by raising certain objections which were not acceded to and after a lengthy correspondence, the concerned authority of the Cantonment Board raised demand of Rs.1,154,358/- and vide letter dated 25.06.2015, also demanded additional payment of Rs.3,610,602/- in lieu of the property tax.
Thereafter, the Petitioner filed appeal under Section 84 of the "Cantonment Act", which was decided on 16.02.2016 by the Appellate Authority/Forum but in spite of having explained the functions and role of the "SBP" as well as its subsidiary, claim for exemption was turned down on the pretext that the "SBP" has been paying the same previously, hence, this petition.
22. According to Mr. Salman Ajaib, Advocate, the case law relied upon by learned counsel for the Respondents is on the principle that revision under Section 277 of the "Cantonment Act", where appeal has been dismissed by a District Magistrate, would lie to the Federal Government or its appointee; and Military Lands and the Cantonment Department (the "MLC Department") is appointee of the Federal Government. The said judgment does not specify if the authority to levy tax has been questioned then the MLC Department has jurisdiction to determine the authority of the Cantonment Board to levy property tax or not. It has been held by the Hon'ble Supreme Court of Pakistan in the case of "THE MURREE BREWERY CO. LTD. Versus PAKISTAN through the Secretary to Government of Pakistan, Works Division and 2 others" (1979 PLD SC 279) that merely entertaining a writ petition in the presence of other appropriate remedy, will not oust jurisdiction of the High Court when order of the statutory body is without lawful authority, partial, unjust and based on malafide. In the said case, it has been further held that the High Court in exercise of its writ jurisdiction, has power to grant relief to the aggrieved party. Even otherwise, not exhausting the remedy of revision is non-fatal for constitutional petition before this Court is maintainable as already discussed by the Hon'ble Supreme Court of Pakistan in another judgment reported as Mst.
Hussain Bibi versus Haji Muhammad Din and 3 others (1976 SCMR 395). Reference can also be made to the judgment reported as "MRS. RAZIA BEGUM Versus CANTONMENT BOARD, CLIFTON through Executive Officer, having office at 2-B, East Street, Defence Housing Authority, Karachi and another" (2000 YLR 2114). Section 99(2)(f) of the "Cantonment Act" also restricts jurisdiction of the MLC Department on the issue of exemption from payment of property tax. Moreover, the Petitioner has not questioned the assessment of property tax in this writ petition rather the authority to levy property tax, which falls within the jurisdiction of this Court.
23. For the purpose of this issue, reliance can be placed on "STATE BANK OF PAKISTAN through Chief Manager, Peshawar Versus FEDERATION OF PAKISTAN through Secretary, Ministry of Defense, Rawalpindi and 5 others (PLD 2022 Peshawar 46), in which it has been held by the Division Bench of the Peshawar High Courts as follows: "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. Razia Begum 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."
24. For what has been discussed above and seeking guidance from the binding judgments of the Hon'ble Supreme Court of Pakistan under Article 189 of the Constitution and the observation given in the case of STATE BANK OF PAKISTAN (PLD 2022 Peshawar 46) supra, it is held that the title of the subject property in occupation of the State Bank of Pakistan indeed vests in the Federal Government and the Cantonment Board has no authority to levy and demand property tax from the Petitioner organization. Resultantly, notices/challan forms laying a demand for payment of property tax from the State Bank of Pakistan are held to be without lawful authority and of no legal effect. This writ petition is accordingly, allowed.
[1]Justice Antonin Scalia and Bryana A Garner, Reading Law: The Interpretation of Legal Texts, Thomson/West Publications, USA (May 2012) [In this Book, Justice Antonin Scalia and Bryan A.
Garner have explained all the most important principles of constitutional, statutory, and contractual interpretation are systematically in an engaging and informative style-including several hundred illustrations from actual cases. Never before has legal interpretation been so fascinatingly explained. Both authors are individually renowned for their scintillating prose styles, and together they make even the seemingly dry subject of legal interpretation riveting. Though intended primarily for judges and the lawyers who appear before them to argue the meaning of texts, Reading Law is sound educational reading for anyone who seeks to understand how judges decide cases-or should decide cases]