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W.P.No.17004 of 2010.

W.P.No.17004 of 2010.
Pakistan Steel Mills.

30.06.2011.

Province of Punjab.

Mian Sarfraz ul Hassan, Advocate for the petitioner.


Mr.Faisal Zaman Khan, Addl. Advocate General.
The petitioner assails notice dated 11.03.2010
issued by respondent No.2 directing the petitioner to
submit documents for the assessment and finalization of
its case relating to payment of professional tax. The
petitioner is a company registered under the Companies
Ordinance, 1984. Its factory and registered offices are
situated at Karachi in the province of Sindh. The
petitioner has a sales office at 42-Zafar Ali Road, Lahore.
The assessment of the professional tax with regard to the
aforesaid sales office of the petitioner at Lahore is
assailed through this Constitutional petition with the
prayer that the notice dated 11.03.2010 be declared
illegal, without lawful authority and of no legal effect.
2.

The learned counsel for the petitioner submits that

the petitioner being a body corporate and having its


registered office in the Province of Sindh, where it is
paying professional tax, the Province of Punjab is not
competent to levy professional tax on the petitioner on
the basis that a sales office of the petitioner is situated

W.P.No.17004 of 2010.

within the province of Punjab. He further submits that the


professional tax cannot be levied by provinces in view of
the fact that the Federation, by virtue of an entry in the
federal legislative list, has the exclusive jurisdiction to
levy tax on corporation.
3.

The respondents have contested the petition. The

learned Addl. Advocate General has defended the


aforesaid notice as well as right of the Province of Punjab
to levy professional tax. In this regard he has drawn my
attention to a judgment of the Honble Supreme Court of
Pakistan

reported as Province of Punjab through

Secretary, Excise and Taxation, Government of


Punjab and others. Vs. Sargodha Textile Mills Ltd.
Sargodha and others (PLD 2005 SC 988). Further my
attention has also been drawn to a judgment of this Court
rendered in W.P.No.5692/2009 on 03.06.2009, in which
this Court has given a finding that the Province of Punjab
has the power to levy and collect professional tax.
4.

I have considered the respective contentions of the

learned counsel for the petitioner as well as the learned


Addl. Advocate General.
5.

A perusal of the judgment of the Honble Supreme

Court of Pakistan in the case of Sargodha Textile Mills


Ltd ibid clearly establishes the right of the provinces to
impose and collect professional tax. It has categorically

W.P.No.17004 of 2010.

been stated that There is no doubt that it falls within the


legislative competence of the Provincial Assembly to
levy professional tax. In this regard following
paragraphs of the judgment of the Honble Supreme
Court of Pakistan being relevant are reproduced below:In our view, exception can be taken to the
validity of levy and collection of the professional
tax on companies under the Second Schedule of
1977 Act as substituted by the Punjab Finance Act
No.IX of 1999 and the Punjab Finance Ordinance,
2000, which is quite consistent with the provisions
of the professions Tax Limitation Act No.XX of
1941, as amended by the Finance Act No.VI of
1999.
Both in Pakistan and India the companies
were made liable to pay the professional tax, by
the provincial law, in the past as well. Even by the
West Pakistan Finance Act, 1964, the companies
were made liable to pay the professional tax.
Generally speaking, a company is considered to be
a body of persons associated for the purpose of
business. It is a juristic and artificial person
created under the provision is of the Companies
Ordinance, 1984, possessed with certain legal
rights and charged with certain legal duties. The
word person has been defined in Article 260 of
the 1973 Constitution so as to include any body
politic or corporate. The same is the definition of
person is found in section 3(47) of the West
Pakistan General Clauses Act, 1956. Therefore,
the companies cannot be considered as falling
outside the purview of the provincial law in the
matter of imposition of professional taxes. Article
163 of the Constitution clearly postulates that the
professional taxes shall not be considered as a tax
on income. It was with a view to remove the doubt
that all the Constitutional dispensations had made
it clear that a provincial law imposing
professional taxes would not be regarded as
imposing a tax on income.

W.P.No.17004 of 2010.

The provisions of Section 3 of the Second


Schedule of the Punjab Finance Act No.XV of 1977,
through which the professional tax was imposed, are
reproduced below for ready reference:Tax on persons engaged in professions,
trades, calling or employments.(1) With effect
from 1st of July, 1977, there shall be levied and
collected from the persons or classes of persons
mentioned in column 2 of the Second Schedule of
this Act engaged in a profession, trade, calling or
employment in the province of the Punjab a tax for
each financial year at the rates mentioned in
column 3 of the said Schedule.
The said Act was subsequently amended from time
to time and has been the subject matter of various
challenges before this Court as well as the Honble
Supreme Court of Pakistan. It appears that only
restriction that exists on the competence of the Provincial
Legislature to impose and collect professional tax is that
its rate cannot exceed the limit that may be fixed by an
act of Parliament/Federal Legislature. In this regard a
reference may be made to Article 163 of the Constitution
of Islamic Republic of Pakistan, which reads as follows:A Provincial Assembly may by Act impose taxes,
not exceeding such limits as may from time to time
be fixed by Act of Parliament, on persons engaged
in professions, trades, calling or employments, and
no such Act of the Assembly shall be regarded as
imposing a tax on income.
It is not the case of the petitioner that the tax is
being levied or recovered in an amount that exceeds the

W.P.No.17004 of 2010.

maximum limit fixed by the parliament. His only


grievance is that in the first place the Provincial
Legislature is not competent to impose professional tax
and that since the petitioner pays professional tax in the
Province of Sindh, it is not required to pay the said tax in
Punjab. Admittedly, the petitioner is engaged in a
profession, trade, calling or employment in the Province
of Punjab. As such there is no bar against the Provincial
Government recovering professional tax from the
petitioner on account of its presence and conducting
business within the Province of Punjab. The fact that it is
paying professional tax to the Government of Sindh for
its presence in that province is of no consequence insofar
as there is neither a legal nor constitutional bar against
the Provincial Government of Punjab to recover the said
tax from a person engaged in profession, trade, calling or
employment within its territories. I am fortified in
arriving at the aforesaid conclusion by the aforesaid
judgment of the Honble Supreme Court of Pakistan
rendered in the case of Sargodha Textile Mills supra as
well as the judgment rendered by this Court in
W.P.No.5692/2009. It is also noticed that the impugned
notice relates only to submission of documents for
assessment

and

finalization

of

petitioners

case.

Therefore, even otherwise, this petition is not competent.

W.P.No.17004 of 2010.

6.

For the reasons recorded above, I do not find any

merit in this petition. It is accordingly dismissed.

(IJAZ UL AHSAN)
JUDGE
A.Rehman.

Announced in open Court on 13.09.2011.

JUDGE
Approved for reporting.