Cantonment Boards Cannot Impose Professional Tax. Section 60 (1) and Schedule VII of the Cantonment Act are Ultra Vires the Constitution:

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Cantonment Boards Cannot Impose Professional Tax. Section 60 (1) and Schedule VII of the Cantonment Act are Ultra Vires the Constitution: SC

Hearing a petition for leave to appeal against the judgment of the Sindh High Court, wherein the SHC had restrained the cantonment boards from collecting professional tax in the area falling in their jurisdiction, the Supreme Court dismissed the CPLA and declared section 61(1) and schedule VII of the Cantonment Board Act, 1924, ultra viresย the Constitution. The Court held that Article 163 of the Constitution is still in its full force and it has not become redundant which impowers the provincial governments alone to impose professional tax. The said Article is reproduced for the ease 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 ofย ย [Majlis-e-Shoora (Parliament)]ย , 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. Miscellaneous Financial Provisions.”

None other than the provincial governments is mandated to impose and collect professional tax. It is the sole authority the of the provincial governments. The power to impose and collect professional tax cannot be delegated to any authority including the cantonment boards as the said Article does not envisage any provision which provides for delegation of power.

The Court reiterated that it is in complete agreement with the ratio of the case titled as ICI Pakistan Ltd. v Tehsil Council and reported as PLD 2007 SC 428, wherein the professional tax was declared to be the sole domain of the provinces, neither the Federation nor the local governments. The relevant part is reproduced herein below:

“A bare perusal of the aforesaid Article [163] shows that the repository of the power to impose professional/trade tax is only the Provincial Assembly and that too by an Act. The Article neither empowers the Provincial Assembly to delegate its authority to impose such a tax in favour of the Punjab Government or a Local Council nor it permits imposition of such a tax by subordinate legislation i.e. the notifications which were impugned in the two constitutional petitions filed by the appellant company. The argument of the learned counsel appearing for the Local Council based on sections 137 and 138 is totally misplaced because Article 163 stands in the way and any provision in any statute to the contrary will have to yield in favour of the said Article.

9. Perusal of section 137 shows that power of a Local Council to levy impugned tax was subject to any other provision of law. The limitation on the powers of the Local Government to impose tax is inbuilt in the said provision. Article 163 places a complete embargo to levy professional/trade tax except by an Act of a Provincial Assemblyโ€ฆ .โ€™

10. In view of the above we allow Civil Appeal Nos. 1902 of 2002 and 1381 of 2005 of the ICI Pakistan Limited and declare that the Tehsil Council, Pind Dadan Khan (now Tehsil Municipal Administration) is not lawfully empowered to levy any professional/trade tax. In view of the conclusion reached by us, Civil Appeal No. 1382 of 2005 filed by the Local Council is dismissed.”

The Court also disregarded the argument that the insertion of Article 140A has changed the existing Constitutional scheme after the ICI case. The Court held that neither has Article 163 become redundant nor the has the Federation been impowered through Article 140A to impose tax. Hence, the position is the same as it was at the time of the ICI case, and so should be the power to impose the professional tax and collection thereof.

The Court dismissed the CPLA with the cost throughout.

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