The Supreme Court has held that market committees of Multan and Sahiwal are liable to pay tax under Punjab Urban Immovable Property Tax Act, 1958 after the amendment in section 4(b) of the Act brought about through the Ordinance on 25.6.2002.
A three-judge bench headed by Justice Manzoor Ahmad Malik and comprised Justice Syed Mansoor Ali Shah and Justice Qazi Muhammad Amin Ahmed after hearing the arguments of all parties had reserved the judgement on 08-05-2019, which was announced on Wednesday.
Market committees of Multan and Sahiwal (respondents) had challenged the demand of tax raised by Director General Excise and Taxation Lahore and DCO respectively under the Punjab Urban Immovable Property Tax Act, 1958 for a period, before and after, the year 2002.
It was the stance of the respondents that as a "market committee" they are exempted from tax under section 4(b)(ii) of the Act and placed reliance on Province of Punjab vs Market Committee case verdict (2011 SCMR 1856).
The department case was that after the amendment in section 4 of the Act through Punjab Finance Ordinance, 2002 the exemption was no more available.
The Section 4 before the amendment in 2002 said; "The tax shall not be leviable in respect of buildings and lands other than those leased in perpetuity; (i) vesting in Government of West Pakistan and not administered by a local authority, (ii) owned or administered by a local authority when used exclusively for public purposes and not used or intended to be used for purposes of profit."
The court noted that the market committees enjoyed exemption from tax under un-amended section 4(b)(ii) of the Act as Court in the judgement in Province of Punjab vs Market Committee (2011 SCMR 1856) held that the Market Committee falls within the definition of 'Local Authority.'
It said that the LHC judgement correctly follows that verdict of the apex court to hold that the market committee is exempt from the chargeability of tax prior to the amendment bought through the Ordinance. The impugned judgement, however, did not discuss the liability of tax after the said amendment.
The Supreme Court judgement said the Ordinance amended section 4(b) of the Act. After the amendment the term 'local authority' has been deleted and exemption is only available to government of the Punjab or to a local government as defined under the Local Governments Ordinance, 2001.
Market committee does not fall into either of the two. Therefore, respondents are liable to pay tax under the Act after the amendment in section 4(b) of the Act brought about through the Ordinance on 25.6.2002.
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