Transfer of immovable properties: SC says cantonment boards cannot charge value of tax

The Supreme Court has held that the cantonment boards cannot charge a value of tax on transfer of immoveable property, which is divergent from what is determined by both the federal and the provincial agencies.

A three-judge bench headed by Justice Umar Ata Bandial, on Thursday heard the appeals of four cantonment boards of Abbottabad, Wah Cantt, Rawalpindi, and Chaklala against a Lahore High Court (LHC) verdict.

Waqarul Haq Sheikh represented Wah Cantt, Rawalpindi, and Chaklala cantonments, while Agha Muhammad Ali appeared on behalf of Abbottabad Cantonment Board. The court noted that the cantonments were purportedly charging a different tax rate on immoveable property to the value determined by the District Collector.

"We find it is not right to unilaterally determine the value of the immoveable property because such authorization under the Stamp Act, 1899, is necessary." The bench observed that the cantonment boards, which were governed under the law, and could not operate differently and charge different value, which was divergent from both the federal and provincial agencies in respect of the same transaction.

This is due to utter lack of coordination between the provincial and the cantonment boards' authorities.

Therefore, an effort is made to resolve this anomaly at the earliest, said the court.

The court said that collection of tax under Article 77 of the Constitution requires that no tax shall be levied for the purposes of the Federation except by or under the authority of Act of [Majlis-e-Shoora (Parliament)].

The transfer of immovable property is subject to payment of Stamp Duty, Registration Fee and Transfer of Immovable Property (TIP) Tax.

Under Section 27-A (1) of Stamp Act, 1899, the value of the immovable property shall be calculated according to the valuation table notified by the District Collector in respect of immoveable property situated in the locality.

Consequently, irrespective of the amount settled between the parties, the value of property on the sale deed is mentioned, which is notified by the District Collector.

The counsel for the cantonment board said that the executive officer of the cantonments have power to determine the property value of their own assessment in pursuant of the SRO No 1786/(1)/73 dated 26-12-1973 as amended from time to time.

They contended that the notification provides for determination of the immovable property as the value notified by the revenue officer has no consideration of the market value.

Malik Saleem Khan had purchased a residential plot measuring 12 marla that is 231 square feet with sale consideration of Rs706,800 from Nazima Shaheen and Malka Sheraz situated in the Revenue Estate of Lohsar Sharfoo, Tehsil Taxila falling within the limits of Cantonment Board Wah, District Rawalpindi.

After the execution of the Sale Deed on the requisite stamp paper the same was presented to the officials of the Cantonment Board for payment of Transfer of Immoveable Property Tax as notified in Section 60 of the Cantonments Act, 1924.

On presentation of the sale deed, he was confronted with the fact that Transfer of Immoveable Property (TIP) Tax is to be collected on the rates fixed. He disputed this determination and filed a writ petition in the LHC, Rawalpindi Bench, which gave judgment in his favour. The Cantonment Board filed an appeal in the apex court.

Their contention was that the LHC judgment is against the law as well as facts of the case; and it completely ignored the implication of notification dated 26-12-1973.