' This judgment shall dispose of Writ Petitions Nos.5501 of 1996, 5862 of 1996, 8225 of 1996, 7747 of 1996, 8411 of 1996, 7746 of 1996, 6169 of 1996, 6174 of 1996, 6172 of 1996, 6170 of 1996, 6168 of 1996, 5861 of 1996, 5739 of 1996, 7132 of 1996, 2848 of 1996, 1926 of 1996, 1525 of 1996, 8256 1996, 8547 of 1996, 8685 of 1996, 11546 of 1996, 11930 of 1996, 12463 of 1996, 8687 of 1996, 11701 of 1996, 11545 of 1996, 11700 of 1996, 10324 of 1996, 11516 of 1996, 9200 of 1996, 9900 of 1996, 10842 of 1996, 10145 of 1996, 9061 of 1996, 13347 of 1996, 13426 of 1996, 13127 of 1996, 13126 of 1996, 12787 of 1996, 15009 of 1996, 16211 of 1996, 16617 of 1996, 16983 of 1996, 16274 of 1996, 16279 of 1996, 16282 of 1996, 12638 and 12731 of 1996, in which the question arising for determination is as to rate at which tax of 1996, 8684 of 1996, 8543 of 1996, 4827 of 1996, 8672 of 1996, 8673 of under section 80-C of the Income Tax Ordinance, 1979 is to be charged- from the petitioners.
2. There is no dispute on facts. The petitioners in all these petitions entered into various contracts for supply of goods or for carrying on constructions etc. With different agencies on or before 30-6- 1995. It is also not disputed that payments received by the petitioners under the contracts are deemed to be their income in terms of section 80-C of the Income Tax Ordinance, 1979 on which, they are liable to pay tax at the rates specified in the First Schedule to the Ordinance. Before 30-6- 1995, the prescribed rate was 3% of the payments received but by an amendment made through the Finance Act, 1995, the rate of tax was increased to 5% w,e,f, 1-7-1995.
3. The case of the petitioners in these petitions is that as at the time when the agreements were entered into by them, the prescribed rate of tax was 3% and the payments received under the said agreements are liable to be taxed at the said rate notwithstanding the enhancement in the rate of taxation by Finance Act, 1995. The learned counsel appearing on behalf of the petitioners maintained that the provisions of Finance Act, 1995 are not retrospective in nature and as such cannot be given any retroactive operation. It was explained that the petitioners while entering into agreements had calculated tax payable at the rate of 3% and the additional burden being placed upon them would make their business highly uneconomical. The learned counsel cited various cases to show that in the absence of any compulsion in the wording of the Statute itself, vested rights of the affected persons cannot be taken away nor can any additional burden be placed upon them.
4. There may not be any cavil with the rules of interpretation to which reference has been made by the learned counsel for the petitioners. However, these principles have no application to the present cases. The argument that the amendment made by Finance Act, 1995 is being given retrospective effect is misplaced and appears to be based upon some misconception. The question of retrospective operation of the Act would have arisen if the petitioners were asked to pay tax at the enhanced rate on the payments already received by them prior to the enforcement of Finance Act, 1995. However, admittedly demand of enhanced rate of taxation is confined to those payments which have been made to the petitioners after 1-7-1995.
5. The learned counsel for the petitioners, has attempted to argue that as the contract under which payments were being received by the petitioners were entered into before the promulgation of Finance Act, 1995, the rate of taxation prevailing at that time should continue to apply even in respect of payments received after the amendment.
6. The contention raised on the face of it is misconceived and has no leg to stand. The liability to pay tax arises on the receipt of payments and not when a contract is entered into. Both under section 80-C read with para. CCC of the First Schedule to the Income Tax Ordinance, 1979 as well as under the general law taxable event is the receipt of payment/income and no liability to pay tax arises on account of mere entering into a contract. Supposing no payment at all is received by a person under a contract, obviously there would be no liability to pay tax.
7. Be that as it may, the language used in section 80-C of the Income Tax Ordinance, 1979 leaves no room for doubt that the payments received under the agreements would be deemed to be the income of the persons receiving the same on which they are liable to pay tax. There is nothing in section 80-C to sustain the contention that the rate of taxation should relate back to the date on which agreement was entered into and not when the payments were received.
8. The learned counsel for the petitioners are not in a position to show any right vesting in the petitioners by virtue of which they can insist that they be charged tax at a particular rate. Section, 80-C of the Income Tax Ordinance, 1979 clearly prescribes that on the amount received by the person concerned he is liable to pay tax at the rate specified in the First Schedule. Even under section 9 of the Income Tax Ordinance, 1979, tax is to be paid on the income received by a person at the rate specified in the Schedule.
8-A As explained in Cries on Statutes Law, 7th Edition, page 387, "a Statute is not properly called a retrospective Statute merely because a part of the requisites for its action is drawn from a time antecedent to its passing". It is, therefore, idle on the part of the petitioners to contend that the amending Act is being retrospectively enforced as the agreements under which payments were being received are of a date prior to the promulgation of the amending Act though payments (income) were received subsequent thereto. Even if there be some merit in the contention of the learned counsel that the petitioners are suffering hardship on account of application of higher rate of taxation yet this fact by itself is not sufficient to refuse to give effect to the provisions of the Finance Act, 1995 which are clear and explicit. Same view was taken by a learned Single Judge of this Court in Altaf Construction Company v. Central Board of Revenue and others (1996 PTD 804) with which I respectfully agree.
8-B Faced with this situation, the petitioners' learned counsel relied upon the words "execution of contract" appearing in para. CCC of the First Schedule to the Income Tax Ordinance, 1979 to contend that the use of this expression clearly implies that the rate of tax shall be that which was prevailing at the time when the contracts were executed between the parties.
9. This argument is devoid of any force. The meaning being placed by the learned counsel on the expression "execution of contract" is neither borne by the context in which it has been used nor by its dictionary meaning. In "Blacks Law II Dictionary", 5th Edition, at page 510, "execution of contract" has been defined as including performance of all acts necessary to render it complete. Similarly, according to "Words and Phrases", Permanent Edition, "execution" means, completion, fulfillment or perfecting of anything.
' It thus follows from the above discussion that the petitioners are liable to pay tax on the payments received by them under the contracts of the nature specified by subsection (2) of section 80-C of the Income Tax Ordinance at the rate prevailing at the time of receipt of payments and not on the date the contract under which these payments were made, were entered into.
' As a consequence of above, all these petitions are dismissed with no order as to costs.