The revisional jurisdiction of this Court has been invoked to set aside the judgment and decree dated 14-12-1985 passed by the Senior Civil Judge, Rahimyar Khan, which was confirmed on appeal by the learned District Judge, Rahimyar Khan on 19-10-1986.
2. The facts of this case, in substance, are that the petitioner issued a notification dated 29-1-1980 under section 137, Schedule Second Part-II, Item 12 of the Punjab Local Government Ordinance, 1979 and imposed a professional tar of Rs.500 annually on each branch of the United Bank Limited in District Rahimyar Khan. Notices were issued to the branches of the respondent-bank for the recovery and collection of the professional tax. The respondent sought the assistance of the learned trial Court seeking the annulment of the aforementioned notification dated 29-1-1980 and the subsequent demand notices. By way of consequential relief, a perpetual injunction restraining the petitioner from realising the professional tax from the respondent and its respective branches was sought.
3. The petitioner contested the said suit and reiterated the validity of the impugned notification and the demand notices. The petitioner claimed compensatory costs under section 35-A of the C.P.C.
And also raised certain other objections which are apparent from the following issues:
(i) Whether the suit is not maintainable in view of preliminary objections Nos.l, 2 and 3 of the written statement? OPD.
(ii) Whether the defendants arc entitled to special costs under section 35-A of C.P.C. If so, to what extent? OPD.
(iii) Whether the notices dated 28-12-1981, 9-11-1981, 9-2-1982, 27-10-1982. 20-5-1982 and the notification dated 29-10-1980 are illegal, void and ineffective against the rights of the plaintiff? OPP.
(iv) Relief.
Issues Nos.l and 2 were not pressed before the learned lower Court and they were decided against the petitioner. Issue No.3 was, however, decided in favour of the respondent and the suit of the respondent was decreed by the learned lower Court. The petitioner lodged an unsuccessful appeal, which was dismissed by the learned District Judge, Rahimyar Khan on 19-10-1986, and now the petitioner has come up in revision.
4. Undoubtedly under section 137 Schedule II, Part II Item 12 of the Punjab Local Government Ordinance, 1979, the professional tax can be levied by the petitioner District Council. Articles 163 and 165 of the Constitution of Islamic Republic of Pakistan, 1973 (which shall hereinafter be referred to as the Constitution) are reproduced below for facility of reference:- "163 Provincial Taxes in respect of Professions, etc.- A Provincial Assembly may by Act impose taxes not exceeding such limits as may from time to time be fixed by Act of Majlis-i-Shoora (Parliament), on persons engaged in professions, trades, callings or employments, and no such Act of the Assembly shall be regarded as imposing a tax on income."
165.Exemption of certain Public Property from Taxation.--(I) The Federal Government shall not, in respect of its property or income, he liable to taxation under any Act 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-i-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 Government 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-i-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."
Under Article 163, a professional tax can be levied by the Provincial Assembly not exceeding such limits as may from time to time be fixed by the Parliament. Article 165 embodies an exemption clause and it exempts the Federal Government from the liability of taxation under any Act of the Provincial Assembly. All the banks including the respondent-bank were nationalised by Banks (Nationalizations) Act XIX of 1974 and section 5 of the said Act reads as under:- "5.Transfer and vesting of ownership of Banks.--(1) The ownership, management and control of all banks shall stand transferred to, and vest in the Federal Government on the commencing day.
(2) All shares in the capital of a bank held by persons other than the Federal Government, a Provincial Government, a Corporation owned or controlled by the Federal Government or the State Bank shall stand others PLD 1975 Kar. 128 and Central Board of Revenue and another v. S.I.T.E. PLD 1985 S.C. 97). Ref.
(b) Constitution of Pakistan (1973)-- ---Arts. 165 & 165-A [as added by the Constitution (Amendment) Order (11 of 1985)1--Civil Procedure Code (V of 1908), S.115--Scope and import of Arts. 165 & 165-A of the Constitution--- Provisions of Art. 165-A declare the power of Parliament to legislate law for the recovery of tax even from the institutions owned or controlled, either directly or indirectly, by the Federal Government or Provincial Government--- Provisions of Art. 165-A do not come in conflict with Art. 165 of the Constitution because exemption has been granted from the liability of taxes to the Federal Government, when the tax is imposed by the Provincial Government--Exemption clause contained in Art. 165 has thus safely been extended to the levying of tax by the District Council on banks being managed and controlled by the Federal Government--Lower Court having not committed any illegality or material irregularity in the exercise of their jurisdiction by declaring imposition of professional tax on nationalized banks by a Provincial Act as illegal, such finding did not call for interference in the revisional jurisdiction of High Court.
Sardar Muhammad Hussain Khan, for Petitioners.
Pervaiz Ahmad Bajwa for Respondent.
The revisional jurisdiction of this Court has been invoked to set aside the judgment and decree dated 14-12-1985 passed by the Senior Civil Judge, Rahimyar Khan, which was confirmed on appeal by the learned District Judge, Rahimyar Khan on 19-10-1986.
2. The facts of this case, in substance, are that the petitioner issued a notification dated 29-1-1980 under section 137, Schedule Second Part-II, Item 12 of the Punjab Local Government Ordinance, 1979 and imposed a professional tar of Rs.500 annually on each branch of the United Bank Limited in District Rahimyar Khan. Notices were issued to the branches of the respondent-bank for the recovery and collection of the professional tax. The respondent sought the assistance of the learned trial Court seeking the annulment of the aforementioned notification dated 29-1-1980 and the subsequent demand notices. By way of consequential relief, a perpetual injunction restraining the petitioner from realising the professional tax from the respondent and its respective branches was sought.
3. The petitioner contested the said suit and reiterated the validity of the impugned notification and the demand notices. The petitioner claimed compensatory costs under section 35-A of the C.P.C.
And also raised certain other objections which are apparent from the following issues:
(i) Whether the suit is not maintainable in view of preliminary objections Nos.l, 2 and 3 of the written statement? OPD.
(ii) Whether the defendants are entitled to special costs under section 35-A of C.P.C. If so, to what extent? OPD.
(iii) Whether the notices dated 28-12-1981, 9-11-1981, 9-2-1982, 27-10-1982. 20-5-1982 and the notification dated 29-10-1980 are illegal, void and ineffective against the rights of the plaintiff? OPP.
(iv)Relief.
Issues Nos.l and 2 were not pressed before the learned lower Court and they were decided against the petitioner. Issue No.3 was, however, decided in favour of the respondent and the suit of the respondent was decreed by the learned lower Court. The petitioner lodged an unsuccessful appeal, which was dismissed by the learned District Judge, Rahimyar Khan on 19-10-1986, and now the petitioner has come up in revision.
4. Undoubtedly under section 137 Schedule II, Part II Item 12 of the Punjab Local Government Ordinance, 1979, the professional tax can be levied by the petitioner District Council. Articles 163 and 165 of the Constitution of Islamic Republic of Pakistan, 1973 (which shall hereinafter be referred to as the Constitution) are reproduced below for facility of reference:- "
163. Provincial Taxes in respect of Professions, etc.- A Provincial Assembly may by Act impose taxes not exceeding such limits as may from time to time be fixed by Act of Majlis-i-Shoora (Parliament), on persons engaged in professions, trades, callings or employments, and no such Act of the Assembly shall be regarded as imposing a tax on income."
165.Exemption of certain Public Property from Taxation.--(I) The Federal Government shall not, in respect of its property or income, he liable to taxation under any Act 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-i-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 Government 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-i-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."
Under Article 163, a professional tax can be levied by the Provincial Assembly not exceeding such limits as may from time to time be fixed by the Parliament. Article 165 embodies an exemption clause and it exempts the Federal Government from the liability of taxation under any Act of the Provincial Assembly. All the banks including the respondent-bank were nationalised by Banks (Nationalizations) Act XIX of 1974 and section 5 of the said Act reads as under:- "5.Transfer and vestina of ownership of Banks.--(1) The ownership, management and control of all banks shall stand transferred to, and vest in the Federal Government on the commencing day.
(2) All shares in the capital of a bank held by persons other than the Federal Government, a Provincial Government, a Corporation owned or controlled by the Federal Government or the State Bank shall stand transferred to, and vest in, the Federal Government on the commencing day, free of all trusts, liabilities and encumbrances.
(3)The vesting of any shares in the Federal Government under subsection (2) shall not affect the rights inter se of a shareholder and any other person who may have an interest in such shares and such other r : person shall be entitled to enforce his interest against the compensation awarded to the shareholder under section 6.
(4) The safety of all deposits in Banks shall stand guaranteed by the Federal Government.
(5) The provisions of this Act and the vesting of the shares of the banks, in the Federal - Government there under shall not in any way affect the status of the banks as bodies corporate under the Companies Act,' 1913 (VII of 1913)."It deals with the ownership, management and control of all banks, which have been transferred to, and vest in, the Federal Government from 1-1-1974. Since the ownership, management and control of banks vests in the Federa1 Government and the professional tax has been levied by the Act of the Provincial Assembly under the Punjab Local Government Ordinance, 1979. So the exemption clause embodied under Article 165 of the Constitution positively applies to the case of the respondent.
5.With reference to section 16 of the Banks (Nationalization) Act, 1974, it has been contended that all assets, rights, powers, authorities and privileges and all other rights and interests arising out of such property as were immediately before the commencing day in the ownership, possession, power or control of a bank, whether within or outside Pakistan, shall, unless otherwise provided, continue to vest in that bank, and in this manner the vesting of such properties in the bank, make the bank liable to the payment of professional tax. This provision of law does not help the petitioner because as stated supra, the management and control of the banks vest in the Federal Government since 1-1-1974 and the property of the Federal Government is immune from taxation under Article 165 of the Constitution. When the tax is imposed by the Provincial Government.
6.The learned counsel for the petitioner has cited 1980 PTD (Trib.) 873. Which lays down that the Overseas Pakistanis Foundation set up as a Limited company in pursuance of a Federal Statute could not claim exemption from tax under provisions of Article 165 of the Constitution.
7.Conversely, the learned counsel for the respondent has cited M/s. West Pakistan Road Transport Board, Lahore v. The Commissioner of Income Tax, Lahore (PLD 1974 Note-9 Lahore 39), Sind Industrial Trading Estate Ltd, Karachi v. Central Board of Revenue and 3 others (PLD 1975 Kar. 128) and Central Board of Revenue and another v. S.I.T.E. (PLD 1985 S.C. 97). All these precedents deal with the property of the Provincial Government, which was exempt from the imposition of taxation.
Suffice to say that in the instant case, the professional tax, was imposed by act of the Provincial Government and ownership, management and control of all the banks vests in the Federal Government from 1-1-1974 and they are immune from taxation under Article 165 of the Constitution.
7.The learned counsel for the petitioner has referred to Article 165-A of the Constitution and has represented that even the institutions established by or under a Federal or the Provincial law could be taxed by an Act of the Parliament Article 165-A ofhe Constitution is reproduced below:- "165-A.Power of Majlis-i-Shoora (Parliament) to impose tax on the income of certain corporation &. --(l) For the removal of doubt, it is hereby declared that Majlis-i-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 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 whichere 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 am 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, not withstanding any judgment of any Court or Tribunal including the Supreme Court and a High Court, be deemed to 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 whatsoever." This Article was added by the Constitutional (Amendment) Order II, 1985. It simply declares the power of the Parliament to legislate law for the recovery of the tax even from the institutions owned or controlled, either directly or indirectly, by the Federal Government or a Provincial Government. Article 165-A does not come in conflict with Article 165 of the Constitution because exemption F has been granted from the liability of taxes to the Federal Government, when the tax is imposed by the Provincial Government. In this manner, the exemption clause contained in Article 165 has safely been extended to the instant case and the learned lower Courts have not committed any illegality or material irregularity in exercise of their jurisdiction.
8.I, therefore, see no merit in this revision petition and dismiss the same in limine.