Levying tax on annual rental value property: SC questions Sindh govt for not considering matter
ISLAMABAD: The Supreme Court questioned why the Sindh government is not seriously taking up the matter of levying of tax on annual rental value property as its subject through provincial legislation.
A five-judge special bench, headed by Justice Syed Mansoor Ali Shah, heard the petitions regarding demand of tax on annual rental value property by different Cantonment Boards.
The Advocate General of Sindh has sought time to get instructions and to seriously consider legislating on the issue. Justice Mansoor told the AG Sindh that the 18th Amendment has opened the door for the Sindh government to change the law through provincial legislature. “Why we (the Court) get into the complicated debate,” therefore, asked the advocate general to better get instructions from the provincial government in the instant matter.
The advocate general argued that after the 18th Amendment the subject of levying of property tax rests with the provincial government.
He contended that after the omission of the 7th Schedule, there is no need for fresh legislation by the provincial assembly.
The tax demand is based on annual rental value of property by different Cantonment Boards from the petitioners. The petitioners’ assertion is that it is a kind of tax and levy that taxes remain with the provinces only, whereas, the federal government and the cantonment boards claim such levy to be in their competence.
The attorney general said that due to the order of the Sindh High Court (SHC), the Cantonments have stopped collection of the tax, adding without funds the Boards cannot function, and are unable to provide services to the people in the Cantt areas.
He said the Cantonment Boards would collect the amount at the rate prescribed in the 1979 Order, and keep the differential in the high court. He said under the law out of total tax collection 15 per cent goes to the province and 85 per cent remains with the Boards.
The attorney general said that after the Cantonments (Urban Immovable Property Tax and Entertainment Duty) Order, 1979, the Sindh Urban Immovable Property Tax Act, 1958, has become ineffective on properties within the cantonment areas, as the 1979 Order has been given protection under the 8th Amendment, and it is still continuing because the 18th Amendment has not taken away this protection. Therefore, the said order of 1979 (commonly called Presidential Order 13 of 1979) is then applied to such properties, he added.
He said that sub-clause 3 of Article 270A emphasised that such Orders, Ordinances, Regulations, Martial Law Orders, Enactments, Notifications and Rules etc, which were in force immediately before the date of Article 270A shall continue until repealed, amended or altered by the competent authority, whereas, sub-clause 6 of the Article requires clause 1 amendment by the appropriate legislature.
Barrister Ayan Mustafa Memon asked the bench to direct the Cantonment Boards they collect the tax as per Order 1958 because in Order 1979 the rate of tax has been increased.
He contended that after the omission of the Seventh Schedule of the Constitution, which was protected for a period by the Presidential Order of 1979, levying of all property tax now rested with the provincial government.
The SHC judgment noted that the Eighteenth Amendment brought a change to and amended Entry 50 in the Fourth Schedule (Federal Legislative List) of the Constitution. As a consequence, thereof, the federation and all Cantonment Boards lack competence, power, and jurisdiction to levy, charge, impose and recover any or all tax(es) on any immovable property, including, but not limited to, tax on the annual rental value of immovable property.
The high court’s judgment also noted that the Eighteenth Amendment, consequently, restored the competence and jurisdiction of the province to levy, charge, recover, and legislate on the subject identified and to pursue it accordingly.
Copyright Business Recorder, 2024
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