SBP properties: SC bars Manora, Hyderabad Cantt boards from taking coercive steps

ISLAMABAD: The Supreme Court has barred the Cantonment Boards Hyderabad and Manora from taking coercive measures regarding sealing the State Bank of Pakistan (SBP) properties within their limits.

A three-member bench, headed by Chief Justice Umar Ata Bandial, on Thursday, heard an appeal of the SBP against the Division Bench of Sindh High Court, Karachi, order dated 23-08-23.

The Hyderabad and the Manora Cantonment Boards issued challans/demand notices to the appellant in respect of its property/properties and demanded immediate payment of the property tax.

Faisal Siddiqui, appearing on behalf of the SBP, submitted that the appellant is the central bank of the country established under the SBP Act for carrying out sovereign functions of the federal government, therefore, no property tax can be imposed/collected from the applicant.

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He informed that the High Court of Balochistan, Khyber-Pakhtunkhwa and Punjab, had affirmed the impugned status of the SBP properties. However, the Sindh High Court (SHC) directed the Central Bank to approach the relevant authority for seeking exemption under the provisions of the Cantonments Act, 1924.

The SBP has challenged the jurisdiction and authority of the Cantonment Boards to levy property tax in respect of its properties or properties of its subsidiary being the property in occupation of the federal government for the public purposes situation within the limits of the cantonment throughout Pakistan.

The SBP and all of its subsidiaries are the wholly-owned entity of the federal government, a regulatory body, performing sovereign functions which no other private or government entity is or can perform; thus the applicant is entitled for exemption as provided in Article 165 of the Constitution, read with Section 99(2)(f) of the Cantonments Act, 1924, said the petition.

It said that the entire share capital of the applicant is wholly owned by the federal government and can only be increased or decreased after the approval of the federal government as enunciated in Section 4(1) of the SBP Act. It states that the Central Bank is purely performing functions of the federal government on its behalf as such functions cannot be performed by any other organisations in the country.

The applicant is entirely a federal subject as also reflected in the Fourth Schedule Part I of the Constitution. The petition further states that the applicant has its subject properties in the limits of Cantonment Board and the respondents (Director Military Lands and Cantonment, Karachi and others) are adamant to levy property tax on the applicant on the ground that the organisation is a commercial entity and subject to levy of Property Tax.

The respondents have out rightly refused to extend the exemption as available under Section 99(2)(f) of the Act. The law on the subject is clear that if any building is in occupation of the federal or the provincial governments it shall be exempted from the payment of property tax.

The petition stated that if any premises is owned by the applicant or any of its subsidiaries and trust such premises shall be deemed to be in occupation of the federal government because the sole purpose of the applicant is to advance the objectives and policy of the federal government.

Any income made by the applicant is income of the federal government as provided in Section 42 of the SBP Act and exemption of such income from income tax and wealth tax is provided under section 49 of the SBP Act. The order of the SHC Division Bench is against the legal issues raised in the petition.

The SHC has forced the applicant to agitate the claim of exemption before the Cantonment Board, which is already coercing the applicant for payment of property tax.

The respondents are required not to proceed in excess of their jurisdiction, and not to take any coercive actions or steps for sealing the properties of the applicant situated within the limits of the Cantonments throughout Pakistan.

Copyright Business Recorder, 2023