ISLAMABAD: The top court declared the collection of professional tax by Cantonment Board Karachi from businesses including restaurants, banks, and poultry farms illegal.
A three-judge bench, headed by Chief Justice Qazi Faez Isa, on Friday, heard an appeal of the Cantonment Board, Karachi, against the judgment of the Sindh High Court (SHC).
The land given to the cantonment board was given to the military for a specific purpose, and why are shopping malls being built there, asked the CJP, observing that it was not meant for commercial purposes.
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In the last hearing, the chief justice had questioned how a cantonment board could impose a tax on professionals.
The additional attorney general of Pakistan had replied that the local government was also an elected body and authorised to impose taxes. The chief justice questioned if a tax was imposed on lawyers, would it be collected by a local body?
The CJP had remarked that the court could not ignore the Constitution, and asked how the authority to collect taxes could be given to someone else. He remarked that only the federal and provincial governments could impose taxes.
Justice Athar Minallah had pointed out that the objection was that a local government could not impose tax under Article 163 of the Constitution.
The bench upheld the decision of the SHC, which had nullified the collection of professional tax by the Karachi Cantonment Board. The court ordered the Karachi Cantonment Board to refund the collected professional tax to the taxpayers.
Chief Justice Isa said that the imposition of the tax by the Cantonment board was a violation of democracy and transparency. He questioned the rationale of allowing commercial activities in the Cantonment areas, which were given to the army for a specific purpose. He said that the Cantonment board’s decisions were made by one person without any consultation or accountability.
He said that government agencies were returning to their original limits and it was expected that other agencies would follow suit.
The professional tax is a provincial levy that is imposed on professionals, traders and businesses according to their income brackets. However, some Cantonment boards across Pakistan have also been collecting this tax from the areas under their jurisdiction, claiming that they are not bound by the provincial laws.
This has led to disputes and litigation between the Cantonment boards and the provincial excise and taxation departments, as well as, between the Cantonment boards and the taxpayers.
Some traders and vendors have complained that they are being asked to pay the same tax twice by both the provincial and Cantonment authorities. They have also argued that they are not professionals and should not be liable for this tax.
Copyright Business Recorder, 2023
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