1. SAIYED SAEED ASHHAD, J.- These Constitutional petitions have been filed by the petitioners, whereby the amendment made in entry No. 2 in the VIIth Schedule of West Pakistan Finance Act, 1964, now Sind Finance Act, 1964 (as amended by Sind Finance Act, 1975) imposing Professional Tax under Section 11 of the Sind Finance Act, 1964, w.e.f. 1.7.1994 to be collected from all limited Companies, Modarabas, Mutual Funds and any other body or corporate with paid up capital or paid up share and reserve having in the preceding year on the basis of a scale given therein has been challenged.
2. The grievance of the petitioners is that by the Sind Finance Act, 1994, the Provincial Legislature has imposed and/or enhanced Professional Tax, in violation of the provisions of Article 163 of the Constitution of the Islamic Republic of Pakistan (hereafter referred to as the Constitution) as well as the provisions of Profession Tax Limitation Act, 1941 (hereinafter referred to as the Act of 1941) and such action was illegal, void ab initio and of no legal consequence, It is further the case of the petitioners that in view of the illegalities enumerated above, respondents Nos. 1 and 2 had no authority to issue notices of demand under Section 81 of the Land Revenue Act, demanding a sum of Rs. 18,75,000 for the years 1994-95, 1995-96, 1996-97, 1997-98 and 1998-99 at the rate of Rs.3,75,000 per annum on account of Professional Tax. It was further submitted on behalf of the petitioners that they tried their level best to convince the respondents that the aforesaid demands made by them under the heading Professional Tax were apparently and clearly illegal, unconstitutional and of no effect and ought to be withdrawn but the respondents did not pay any heed to the representation and arguments of the petitioners and on the contrary submitted that they had issued such demand notices to all the Banking Companies under a policy of the Government, It was further submitted on behalf of the petitioners that the respondents in imposing/enhancing the rate of Professional Tax by Sind Finance Act, 1994, have exceeded their authority by violating the provisions of Section 2 of the Act of 1941, which permits the respondents to impose Professional Tax to a maximum limit of Rs.50.
3. Respondent No. 3 filed para wise comments, wherein it was submitted that the demand of Professional Tax was revised as per the prescribed rate shown in the VIIth Schedule of the Sind Finance Act, 1994 and under the Sind Professions, Traders, Callings and Employments Tax Rules, 1976. They further submitted that the tax had been levied under Article 163 of the Constitution and also objected to the maintainability of these Constitutional Petitions on the ground that a right of appeal was provided by rule 9(1) of the Sind Profession, Traders, Callings and Employment Rules, 1976, which was not availed of by the petitioners. They also denied that the demands raised for payment of the Professional Tax were illegal or invalid and submitted that the same was in accordance with the provisions of the Constitution and legislation made by the Provincial Assembly, It was prayed that the petitions being not maintainable, premature and without any force were liable to be dismissed.
4. We have heard the arguments of the learned counsel for the parties appearing in all the aforesaid petitions, have perused the material on record and the case-law relied upon by them in support of their respective arguments.
5. By the Sind Finance Act, 1994, an amendment was made in Section 11 of the Sind Finance Act, 1964.
6. Section 11 of the Sind Finance Act, 1964 deals with tax on trades, professions, callings and employment. According to the provisions of above Section 11, a tax was levied on the classes of persons mentioned therein at the rate of Rs.30. According to the proviso to Section 11 above, levy of Professional Tax of more than Rs.30 was prohibited. However, by an amendment made by Section 6 of Sind Finance Act, 1975, the rates of Tax chargeable from various categories of professions, traders, callings and employment were enhanced from Rs.30 to Rs.50 in some cases and to Rs.100 in other cases. Subsequently, by Sind Finance Act, 1994, tax was levied on all limited Companies, Modarabas, Mutual Funds and any other Body Corporate and the rate of tax was ad valorem on the amount of paid-up capital or paid-up share and reserves having been assessed to income- tax in the preceding year, whichever was more, In accordance with said Section 5 of the Sind Finance Act, 1994, a minimum Professional Tax on the limited Companies, Modarabas, Mutual Funds and any other body Corporate was fixed at Rs.5,000 and the maximum was fixed at Rs.5,00,000, It was submitted on behalf of the petitioners that the amendments made in Section 11 of the Sind Finance Act, 1964 firstly, by Section 6 of the Sind Finance Act, 1975 and secondly, by Sind Finance Act, 1994, enhancing the Professional Tax on certain categories to Rs.100 and imposing Professional Tax on the limited Companies, Modarabas, Mutual Funds and any other body Corporate ranging from Rs.5,000 to Rs.5,00,000 were illegal, ultra vires, void ab initio and against the provisions of the Constitution as well as the Federal Statute.
7. Elaborating their arguments, the learned counsel for the petitioners, drew our attention to Article 163 of the Constitution and submitted that certain restrictions were imposed on the Provincial Legislature in levying or imposing Professional Tax on various categories of persons/bodies and the Provincial Legislature could not impose rates of tax, which were contrary to or in conflict with the provisions of Article 163 of the Constitution or any of the Federal Statutes. To have a clear understanding of the arguments advanced by the learned counsel for the petitioners, it will be appropriate to reproduce Article 163 of the Constitution, which is as under:- "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-e-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."
8. From a plain reading of the above Article, it is to be deduced that a Provincial Assembly has been given the powers to impose taxes in respect of professions, etc. Subject to the limitations, which may be fixed by an Act of Majlis-e-Shoora (Parliament) on any person engaged in any Profession, Trade, Calling and Employment. Thus, the power exercisable by the Provincial Assembly in imposing taxes on Professions, Traders, Callings and Employment is subject to the limitations contained in an Act of Parliament, that is to say a Federal Statute. The Federal Statute, the provisions of which according to the learned counsel for the petitioners have been violated by the amendments in Section 11 of the Sind Finance Act, 1964 by Section 6 of the Sind Finance Act, 1975 and Section 5 of the Sind Finance Act, 1994, is the Profession Tax Limitation Act, 1941. Section 2 of the Profession Tax Limitation Act puts a limitation on the powers of a Provincial Assembly, Municipality, District Board, local board or other local authorities to levy/impose taxes on professions, trades, callings and employments in respect of the rate on the amount of such tax which cannot exceed Rs.50 per annum, It will be appropriate to reproduce Section 2 of the Profession Tax Limitation Act, 1941, which is as under:- "Notwithstanding the provisions of any law for the time being in force, any taxes payable in respect of any one person to a Province, or to any one municipality, district board, local board or other local authority in any Province, by way of the tax on professions, trades, callings or employments, shall from and after the commencements of this Act, cease to be levied to the extent to which such taxes exceed fifty rupees per annum."
9. It is the case of the petitioners that both the aforesaid amendments made in the Sind Finance Act, 1964 by the Sind Finance Act, 1975 and Sind Finance Act, 1994 are violative of section 2 of the Profession Tax Limitation Act, 1941 and the imposition/levy of Professional Tax on various categories of persons engaged in profession, trades, callings and employments in excess of Rs.50 was an illegal exercise of powers in view of the provisions of Article 163 of the Constitution Act, 1941. It is a well-settled principle of law that if any Statute violates or infringes upon any provision of existing Statute, then such provision of the newly enacted Statute would be void to the effect which offends or violates any provisions of an existing Statute, In the present case, the amendments brought about by Section 6 of the Sind Finance Act, 1975 and Section 5 of the Sind Finance Act, 1994, not only offended the provisions of a section of a Federal Statute but also of the Constitution. When there is a conflict between a Statute and any provision of the Constitution, then the provision of the Constitution is to prevail as it is the Supreme Law of the Land and all other laws whether Federal or Provincial are subservient to it.
10. Mr. Munirur Rehman, learned Additional Advocate- General, Sind, appearing on behalf of the State, did not controvert the arguments advanced by the learned counsel for the petitioners and conceded that the amendments made in Section 11 of the Sind Finance Act, 1964 firstly, by Section 6 of the Sind Finance Act, 1975 and secondly, by Section 5 of the Sind Finance Act, 1994, were not only violative and in conflict with the provisions of the Constitution. Which has imposed limitation on the powers of a Federal Statute but also with the provisions of a Provincial Assembly to impose/levy tax on the various categories of persons engaged in professions, trades, callings and employments mentioned in Article 163, of the Constitution. He further submitted that imposition and/or enhancement of tax over and above Rs.50 was absolutely in disregard and contrary to the provisions of the Constitution as well as the provisions of Profession Tax Limitation Act, 1941 a Federal Statute.
11. Upon the above discussion, we are satisfied beyond any doubt that amendments made in Section 11 of the Sind Finance Act, 1964 by Sind Finance Acts, 1975 and 1994 empowering the Provincial Government to impose aforesaid tax without putting any limitation on the rate or amount of tax was illegal, ultra vires, without lawful authority and of no legal effect as the same were in complete disregard and violation of Article 163 of the Constitution and Section 2 of the Profession Tax Limitation Act, 1941. The amendments made cannot be sustained and are declared to be null and void and of no legal effect in enhancing the rate of aforesaid tax at more than Rs.50.
12. On 2.2.2000, by a short order, we had allowed the above Constitutional petitions for reasons to be recorded later. These are the reasons for the said short order.