This order shall decide the present writ petition as well as connected writ petitions No.26562 of 2015 and 26564 of 2015 as all the writ petitions make a similar challenge to the vires of Entry 52 of the Second Schedule to the Punjab Sales Tax on Services Act, 2012 (the Act).
2. These petitions have been filed by Lahore High Court Bar, Lahore Tax Bar and Lahore Bar Association by asserting that legal practitioners as defined by section 2 (e) of the Legal Practitioners & Bar Councils Act, 1973 (the Legal Practitioners Act) do not fall in the purview of the Act for the purpose of making payment of tax on services rendered by them.
3. Section 2(e) of the Legal Practitioners Act defines legal practitioner as an Advocate who has been entered in any roll under the provisions of said Act.
4. This Court on 19.12.2016 directed the petitioners to hold a meeting with the Chairman Punjab Revenue Authority (the Authority). Pursuant to this direction, the meeting was held between the parties, and the report thereof was placed on record which sets out the divergent point of view expressed by the parties. The relevant portion of the said report is reproduced as under: 3. the view of the learned participants on behalf of the petitioners was that legal practitioners or advocates as defined in clause (a) and (e) of section 2 of the Legal Practitioners and Bar Councils Act, 1973 were not included in the Entry 52 of the Second Schedule, and therefore, so Sales Tax was levied on services rendered by these persons in their status as legal practitioners or advocates. It was manifest from the fact that the phrase and the work "legal practitioners" and "Advocate" was not used in the concerned Entry. It was further contended that even otherwise the levy of Sales Tax on the services rendered by Corporate Law consultants (and also the Tax Consultants) was discriminatory.
4. Contrarily the view of the Chairman PRA was that the Entry 52 was to be interpreted in the light of a combined reading of Entries 9815.2000(Legal Practitioners and consultants) of the First Schedule to (3) of Entry 52 of the Second Schedule, and such the legal practitioner and advocates providing corporate law consultancy and tax consultancy were also covered under Entry 52 of the Second Schedule to the Act. However, despite detailed deliberations on the correct interpretation of the Entry 52 (whether legal practitioners/advocates providing corporate and tax law consultancy are included in Entry 52 or not) and no consensus could be reached.
(Emphasis supplied)
5. The views expressed, and the stance taken by the respective parties in the aforesaid meeting clearly bring out the fact that the expression legal practitioners though a service provider as per the First Schedule to the Act is not mentioned in the first column of Entry 52.
6. Entry 52 as contained in the Second Schedule of the Act at the relevant time is reproduced hereunder: Sr.
No.Description Classification, if applicable.Rate of Tax 52 Services provided by accountants (including practicing chartered or cost accountants), auditors, actuaries, tax consultants (by whatever name called), practicing company secretaries, receivers, liquidators, auctioneers and corporate law consultants, whether individual or otherwise.9815.20000 98153000 9850.0000 9851.0000 9855.0000 And respective headings.Sixteen percent The classification of services of the First Schedule are mentioned in the second column of Entry 52 in relation to the service providers which are mentioned in the first column. It is apparent from Entry 52 that the classifications in column 2 shall only become relevant for the purpose of levy of tax if it is applicable to the category of service providers indicated in the first column which is to say that the service providers to whom the classifications in the second column relate must be mentioned in the first column. Put another way, to attract the levy of tax the classification in the second column must have the corresponding service provider mentioned in the first column of Entry 52.
The second column no doubt mentions classification No. 9815.2000 which relates to legal practitioners and consultants, but these service providers are missing from the first column.
8. The issue involved in this case can be framed in many ways, but the most pertinent question is whether the omission of legal practitioners from Entry 52 is deliberate and/or whether legal practitioners would come within the meaning and ambit of other expressions, particularly corporate tax consultants mentioned in the first column.
9. It is accepted by the Authority that the term legal practitioners is missing from the first column of Entry 52. The Authority nevertheless invites this Court to hold that the term corporate law consultants would cover and bring within its fold the expression legal practitioners which, according to them, do provide the services of corporate law consultancy and tax consultancy.
10. The argument put forward by the respondents is tenuous at best for the reason that classification No.9850.0000 is mentioned in the second column of Entry 52 which is in respect of and directly relates to corporate law consultants which expression is mentioned in the first column.
The corporate law consultants and the services they provide are, therefore, independently catered for by Entry No.52. Classification Nos. 9815.2000 (legal practitioners and consultants) and 9850.0000 (corporate law consultants) are mutually exclusive and pertain to independent and distinct services. There is thus no doubt that omission of the term legal practitioners from the first column of Entry 52 is deliberate and the Provincial Assembly through Entry 52 did not intend to burden the legal practitioners with tax on the services rendered by them.
11. There was some suggestion in the arguments of the respondents that the term legal practitioners and consultants under classification 9815.2000 does not involve two independent professions/service providers but these two must be read together. The implication being that the term consultant can somehow be brought into the sphere of Corporate Tax Consultant. This argument cannot be accepted. The expression legal practitioners is not defined in the Punjab Sales Tax on Services (Definition) Rules, 2012. Its meaning, scope and ambit must be understood in the context of Legal Practitioners Act. The Provincial Assembly while enacting the Act consciously used the expression Legal Practitioners in the First Schedule to the Act and must be taken to have borrowed it from the Legal Practitioners Act. That being so, the terms legal practitioners and consultants as used in the First Schedule are separate and distinct categories of service providers having different attributes and characteristics. Even if the two were to be read as constituting a single service provider, the argument of the Authority must fail on the same premise on which its primary argument did not succeed which is that the term legal practitioners and consultants is consciously not included in Entry 52.
12. It is settled law that a charging provision most be construed strictly and that there must be clear words in the statute displaying an unequivocal intention to lay the burden of tax on the person or a class of person. And if a person does not fall within the ambit of the charging provision, he cannot he taxed on mere implication.
13. In A.M. Khan Leghari v. Government of Pakistan PLD 1967 Lahore 227, a hill I Bench of this Court observed that: It is but a corollary to the general rule of literal construction that nothing is to be added to or to be taken from a statute, unless there are similar adequate grounds to justify the inference that the Legislature intended something which it omitted to express. It is a strong thing to read into an Act of Parliament words which are not there and in the absence of clear necessity, it is a wrong thing to do. The Court is not entitled to read the words into an Act of the Parliament unless clear reason for it is to be found within the four corners of the Act itself.
In Federation of Pakistan v. Haji Muhammad Sadiq 2007 PTD 67, the Supreme Court of Pakistan held that language used in fiscal statute should be interpreted in literal and ordinary meanings in favour of the taxpayer.
14. Furthermore, in case of ambiguity arising in a provision creating tax liability the doubt must be resolved in favour of the taxpayer (see Messrs Pakistan Television Corporation Limited v.
Commissioner Inland Revenue (Legal), LTU, Islamabad and others 2017 PTD 1372, Commissioner Inland Revenue, (Legal), Islamabad v. Messrs WI-TRIBE Pakistan Ltd, Islamabad 2020 SCMR 420 and Pakistan through Secretary Finance and others v. Messrs Lucky Cement and another 2007 SCMR 1367).
15. Learned counsel for the respondents also placed reliance on section 3(6) of the Act which stipulates that the services mentioned in the First Schedule are not exhaustive and all the services mentioned in the Second Schedule, rules and circulars shall be taxable services. I do not see how this provision has any impact or bearing on the present case. Suffice it to state that the expression legal practitioners are service provider as per the First Schedule to the Act. The Provincial Assembly, however, did not include legal practitioners in the first column of Entry 52 and thus even if the services mentioned in the First Schedule are not exhaustive it does not change the outcome of the case.
16. From the above discussion, it becomes evident that the term legal practitioners admittedly did not come within the ambit of Entry 52 and thus this deliberate omission and exclusion by the Provincial Assembly from the charge of sales tax cannot be undone by recourse to the expression Corporate Tax Consultants which expression even otherwise cannot be stretched to include the persons who have deliberately been left out of the charge. Put another way, the levy of tax on selected persons or class of persons cannot be expanded to include others that were clearly not intended to be taxed by the legislature. The rationale of the rules of construction mentioned above dictate that the legislature would have made its intention unambiguously clear if it intended to bring legal practitioners subject to tax by incorporating them in the first column of Entry 52.
17. There is thus no need to render any findings on the challenge to the vires of Entry 52 as this Court has come to the conclusion that the legal practitioners do not fall within its ambit.
18. For what has been stated above, this writ petition is allowed to the extent that it is declared that legal practitioners as defined by Legal Practitioners Act do not come within the ambit and purview of Entry 52 of the Second Schedule to the Act. The connected writ petitions are also allowed on the same terms