| Case ID |
2316fc2d-f8ad-4fe1-979b-095e9ba397c9 |
| Body |
View case body. Login to View |
| Case Number |
I.C.A. No. 134758 of 2018 |
| Decision Date |
Feb 28, 2020 |
| Hearing Date |
Feb 27, 2020 |
| Decision |
The Lahore High Court upheld the validity of the Super Tax imposed under Section 4B of the Income Tax Ordinance, 2001. The court dismissed the instant appeal, affirming that the levy constitutes a tax as defined by law and does not fall under the categories of fee or cess. The court determined that the Super Tax met all essential characteristics of a tax, including compulsory exaction for public purposes without any quid pro quo relationship. Furthermore, the court found that the levy was lawfully enacted through a Money Bill under Article 73 of the Constitution, aligning with the legislative procedures for taxation. The appellants' arguments challenging the Super Tax's classification and constitutional validity were thoroughly examined and rejected. The decision reinforces the government's authority to impose specific-purpose taxes within the constitutional framework, ensuring that financial measures for public welfare, such as the rehabilitation of displaced persons, are legally sanctioned and enforceable. The dismissal of the appeal underscores the judiciary's stance on maintaining the integrity of legislative actions in matters of public finance and taxation. |
| Summary |
In the significant case of I.C.A. No. 134758 of 2018, adjudicated by the Lahore High Court on February 28, 2020, the court affirmed the constitutionality of the Super Tax imposed under Section 4B of the Income Tax Ordinance, 2001. This case, involving D.G. Khan Cement Company Limited & Another as appellants and the Federation of Pakistan through Secretary Revenue, Islamabad & Others as respondents, revolved around the appellants' challenge to the levy of Super Tax, arguing that it was not a tax but a specific-purpose levy, thereby rendering it unconstitutional under the Constitution of Pakistan, 1973.
The appellants contended that the Super Tax was akin to a cess or fee, imposed for the rehabilitation of temporarily displaced persons, and thus should not be classified as a tax. They further argued that the levy was imposed through a Money Bill under Article 73 of the Constitution, which they claimed was inappropriate for such specific-purpose levies, and that it violated Article 160 concerning the distribution of taxes between federal and provincial governments.
The court meticulously examined the legal definitions and distinctions between taxes, fees, and cess, referencing pivotal case law and constitutional provisions. Drawing upon the Chief Justice Latham's definition of tax as a compulsory exaction of money for public purposes without any quid pro quo relationship, the court concluded that the Super Tax unequivocally met the criteria of a tax. Unlike a fee, which implies a direct benefit or service to the payer, the Super Tax was designed as a common burden intended to generate public revenue for the rehabilitation of displaced persons, aligning with Article 73's provisions for imposing taxes.
Furthermore, the court addressed the procedural arguments presented by the appellants. It affirmed that the Super Tax was rightfully enacted through a Money Bill, as stipulated under Article 73 of the Constitution, which governs the imposition, abolition, alteration, or regulation of any tax. The court dismissed the appellants' assertion that the levy's categorization violated Article 160, emphasizing that the validity of the levy should be assessed based on legislative competence and conformity with constitutional mandates, rather than the distribution mechanics of the collected tax.
The judgment also tackled the appellants' claims of double taxation and the misuse of the Super Tax for purposes no longer active. The court held that there was no statutory or constitutional prohibition against imposing additional taxes on the same income subject to previous taxation, provided that the new levy serves a distinct and authorized public purpose. The Super Tax's designation for the welfare of displaced persons was deemed legitimate and necessary, reinforcing the government's prerogative to implement fiscal measures for national welfare under constitutional guidelines.
In its decision, the Lahore High Court underscored the essential role of taxation in state governance and public finance, reiterating that the legislature possesses the plenary power to impose taxes within the constitutional framework. The court's dismissal of the appeal underscored the judiciary's commitment to upholding the legislative intent and the legality of fiscally motivated government actions aimed at addressing public welfare issues.
This landmark ruling not only solidifies the legal standing of the Super Tax but also sets a precedent for future cases involving the classification and constitutionality of government-imposed levies. By affirming the Super Tax as a valid and constitutional tax, the court has provided clear guidance on the boundaries and applications of taxation powers under the Constitution of Pakistan, thereby reinforcing the government's capacity to fund essential public functions and welfare programs through legally sanctioned fiscal policies. |
| Court |
Lahore High Court
|
| Entities Involved |
D.G. Khan Cement Company Limited & Another,
Federation of Pakistan through Secretary Revenue, Islamabad & Others
|
| Judges |
Muhammad Sajid Mehmood Sethi,
Justice Shahid,
Justice Jamil Khan
|
| Lawyers |
Mr. Imtiaz Rashid Siddiqui,
Khawaja Farooq Saeed,
Mansoor Usman Awan,
Muhammad Ajmal Khan,
Asif Hashmi,
Shehryar Kasuri,
Raza Imtiaz Siddiqui,
Muhammad Mohsin Virk,
Habib ur Rehman,
Shahzad Hassan,
Mian Shah Behram Sukhera,
Aleem Raza,
Mian Azeem Sarwar,
Khurram Shehzad Gondal,
Shahid Sarwar,
Muhammad Amin Goraya,
Shahbaz Butt,
Khurram Shahbaz Butt,
Muhammad Akram Babar,
Muhammad Azam Chughtai,
Farooq Raza,
Rana Muhammad Afzal,
Jamshed Alam,
Qadeer Ahmad Klayar,
Sabeel Tariq Maan,
Muhammad Asif,
Muhammad Hamza Sheikh,
Mian Ashiq Hussain,
Syed Shahab Qutab,
Mian Tariq Hassan,
Khawaja Riaz Hussain,
Shahzeen Abdullah,
Mohsin Mumtaz,
Asghar Laghari,
Mian Abdul Ghaffar,
Omer Wahab,
Noreen Fouzia,
Muhammad Azhar Khan Joiya,
Abdullah Akhtar Butt,
Shahid Sharif,
Salman Zaheer Khan,
Ali Usman,
Hassan Ali,
Dania Mukhtar,
Shehzad Ata Elahi,
Habib-ur-Rehman,
Chaudhary Muhammad Ali,
Khurram Saleem,
Majid Jehangir,
Usman Khalil,
Rana Muhammad Mehtab,
Muhammad Imran Rashid,
Sohail Anjum Virk,
Javed Abbas Sial,
Miss Muqaddas Zohra,
Khurram Riaz Kahloon,
Farhan Shahzad,
Muhammad Ahsan Nawaz,
Muhammad Talha,
Rai Amir Ejaz Kharal,
Saadat Ali Saeed,
Mr. Monim Sultan,
Zahid Sikandar,
Dr. Ishtiaq Ahmad Khan,
Mr. Liaquat Ali Chaudhary,
Sarfraz Ahmad Cheema,
Shahzad Ahmad Cheema,
Adeel Shahid Karim,
Mrs. Kausar Parveen,
Ch. Muhammad Yasin Zahid,
Chaudhary Muhammad Zafar Iqbal,
Mrs. Riaz Begum,
Saad Bin Ghazi,
Faraz Anser,
Aamer Khan,
Falak Sher Khan,
Sahar Iqbal,
Zafar Iqbal Bhatti,
Chaudhary Rehmat Ali,
Rana Muhammad Mahtab,
Muhammad Saleem Chaudhary,
Ijaz Mehmood Chaudhary,
Hammad-ul-Hassan Hanjra,
Ibrar Ahmad,
Syed Zain-ul-Abideen Bukhari,
Syed Tasaddaq Murtaza Naqvi,
Shahid Sarwar Chahil,
Saeed Dogar,
Muhammad Yahya Johar,
Mubashar A Malik
|
| Petitioners |
D.G. Khan Cement Company Limited & Another
|
| Respondents |
Federation of Pakistan through Secretary Revenue, Islamabad & Others
|
| Citations |
2020 SLD 592,
2020 LHC 1066,
2020 PTCL 443,
(2020) 121 TAX 381,
2020 PTD 1186
|
| Other Citations |
Matthews v. Chicory Marketing Board (60 C.L.R. 263, 276.),
Lower Mainland Dairy v. Orystal Dairy Ltd. [1933] A.C. 168.,
Findlay Shirras on Science of Public Finance, Vol. P. 203.,
Quetta Textile Mills Limited through Chief Executive v. Province of Sindh through Secretary Excise and Taxation, Karachi and another (PLD 2005 Karachi 55),
Federation of Pakistan through Secretary Ministry of Petroleum and Natural Resources and another v. Durrani Ceramics and others (2014 SCMR 1630),
Workers Welfare Funds, Ministry of Human Resources Development, Islamabad and others v. East Pakistan Chrome Tannery (Pvt.) Ltd. through G.M. (Finance), Lahore and others (PLD 2017 SC 28),
Sohail Mills Ltd. and others v. Federation of Pakistan through Secretary, Ministry of Finance and others (PLD 1991 Supreme Court 329),
Pakistan Industrial Development Corporation v. Pakistan through the Secretary, Ministry of Finance (1992 SCMR 891),
Pakcom Limited and others v. Federation of Pakistan and others (PLD 2011 Supreme Court 44),
Commissioner of Income Tax Bangalore and others v. B.C. Srinivasa Setty and others [(1981) 128 ITR 294],
Elahi Cotton Mills supra, Collector of Customs and others v. Sheikh Spinning Mills (1999 SCMR 1402),
Pakistan Flour Mills Association and another v. Government of Sindh and others (2003 SCMR 162),
Durrani Ceramics and Sri Lakshmindra Thirtha Swamiar supra.,
Messrs The Attock Oil Co. Ltd. v. Federation of Pakistan and another (2019 PTD 934),
Sheikh Muhammad Ismail and Co. v. Chief Cotton Inspector Council (ibid),
State of Mahrashtra v. Salvation Army AIR 1975 SC 846,
Chief Commissioner v. DCM, AIR 1978 SC 1181 (para. 4-5),
State of Madhya Pradesh v. Rakesh Kohli and another (2013 SCMR 34),
Badshah Gul Wazir v. Government of Khyber Pakhtunkhwa and others (PLD 2014 Peshawar 210),
Jaora Sugar Mills Ltd. v. State of Madhya Pradesh (ibid),
Sui Northern Gas Pipelines v. Deputy Commissioner Inland Revenue and others (2014 PTD 1939),
ICC Textile Ltd. and others v. Federation of Pakistan and others (2001 PTD 1557),
Anoud Power Generation Limited and others v. Federation of Pakistan and others (PLD 2001 SC 340 at 349),
M. Chandru v. Member-Secretary, Chennai Metropolitan Development Authority and another [2009 (4) SCC 72],
Mohan Meakin Limited v. State of Himachal Pradesh and others [2009 (3) SCC 157],
Kohat Cement Company Limited v. Federation of Pakistan and others,
Messrs AZGARD Nine Limited v. The Federation of Pakistan and others,
Sundar Impex (Pvt.) Limited v. Federation of Pakistan and others,
Masood Impex (Pvt.) Limited v. Federation of Pakistan and others,
Mr. Binyamin C/o Masood Textile Mills Limited v. Federation of Pakistan and others,
Reliance Commodities (Pvt.) Limited and another v. The Federation of Pakistan and others,
DAEWOO Pakistan Express Bus Service Limited v. The Federation of Pakistan and others,
Messrs Conopco Inc. v. Commissioner Inland Revenue and others,
Messrs Habib Rafiq (Pvt.) Ltd. v. The Federation of Pakistan and others,
Messrs Quaid-e-Azam Solar Power (Pvt.) Limited v. The Federation of Pakistan and others,
W.P. No.12589 of 2016 - Haleeb Foods Limited v. Federation of Pakistan and others,
W.P. No.38266 of 2016 - Messrs 12 Pakistan (Pvt.) Limited v. Deputy Commissioner Inland Revenue and others,
W.P. No.7627 of 2017 - Messrs 12 Pakistan (Pvt.) Limited v. Assistant Commissioner Inland Revenue and others,
W.P. No.187298 of 2018 - Messrs Ingredion Incorporated v. Commissioner Inland Revenue and others,
W.P. No.199252 of 2018 - Messrs Alam Khan Brothers Engineering and Construction (Pvt.) Limited v. Federation of Pakistan and others,
W.P. No.201967 of 2018 - Messrs M.A. Aleem Khan and Sons (Pvt.) Limited v. Federation of Pakistan and others,
W.P. No.211563 of 2018 - Messrs Conopco Inc. v. Commissioner Inland Revenue and others,
W.P. No.215324 of 2018 - Messrs Habib Rafiq (Pvt.) Ltd. v. The Federation of Pakistan and others,
W.P. No.226851 of 2018 - Messrs Quaid-e-Azam Solar Power (Pvt.) Limited v. The Federation of Pakistan and others,
W.P. No.253371 of 2018 - Messrs Ibrahim Fibers Limited v. Federation of Pakistan and others,
W.P. No.255155 of 2018 - DAEWOO Pakistan Express Bus Service Limited v. The Federation of Pakistan and others,
W.P. No.256520 of 2018 - Messrs Albayrak Turizm Seyahat Insaat Ticaret Anonim Sirketi v. The Federation of Pakistan and others,
W.P. No.257641 of 2018 - Nishat (Chunian) Limited v. The Federation of Pakistan and others,
W.P. No.257644 of 2018 - Nishat (Chunian) Limited v. The Federation of Pakistan and others,
W.P. No.9093 of 2019 - Kohat Cement Company Limited v. Federation of Pakistan and others,
W.P. No.9456 of 2019 - Messrs AZGARD Nine Limited v. The Federation of Pakistan and others,
W.P. No.9457 of 2019 - Sundar Impex (Pvt.) Limited v. Federation of Pakistan and others,
W.P. No.9458 of 2019 - Masood Impex (Pvt.) Limited v. Federation of Pakistan and others,
W.P. No.9459 of 2019 - Mr. Binyamin C/o Masood Textile Mills Limited v. Federation of Pakistan and others,
W.P. No.9478 of 2019 - Messrs Albayrak Turizm Seyahat Insaat Ticaret Anonim Sirketi v. The Federation of Pakistan and others,
W.P. No.12439 of 2019 - Mughal Iron and othersSteel Industries Limited v. The Federation of Pakistan and others,
W.P. No.14514 of 2019 - OPPO Mobile Technologies Pakistan (Pvt.) Limited v. Assistant / Deputy Commissioner (Audit) Inland Revenue and others,
W.P. No.16612 of 2019 - Messrs Alam Khan Brothers Engineering and Construction (Pvt.) Limited v. Federation of Pakistan and others,
W.P. No.17264 of 2019 - Messrs M.A. Aleem Khan and othersSons (Pvt.) Limited v. Federation of Pakistan and others,
W.P. No.18621 of 2019 - Messrs MCC Ruba International Construction Company (Pvt.) Limited v. The Federation of Pakistan and others,
W.P. No.18622 of 2019 - Messrs MCC Ruba International Construction Company (Pvt.) Limited v. The Federation of Pakistan and others,
W.P. No.18672 of 2019 - Messrs Kashif Foundation v. Federation of Pakistan and others,
W.P. No.30159 of 2019 - M. Imran Mumtaz Government Contractor v. Federation of Pakistan and others,
W.P. No.30584 of 2019 - Worldcall Telecom Limited v. The Federation of Pakistan and others,
W.P. No.34118 of 2019 - United Industries Ltd. v. Federation of Pakistan and others,
W.P. No.39111 of 2019 - Abdullah Sugar Mills Ltd. v. The Federation of Pakistan and others,
W.P. No.40685 of 2019 - ZKB Reliable JV v. The Federation of Pakistan and others,
W.P. No.42104 of 2019 - Messrs Habib Construction Services Ltd. v. Federation of Pakistan and others,
W.P. No.64435 of 2019 - Nishat (Chunian) Ltd. v. The Federation of Pakistan and others
|
| Laws Involved |
Income Tax Ordinance, 2001,
Constitution of Pakistan, 1973
|
| Sections |
77,
4B,
142,
73,
4B(4),
7,
141,
73(2),
151,
2(28A),
2(63),
4B(1),
4B(2),
4B(3),
137(1),
Part IV,
Part X,
Part XI,
Part XII of Chapter X,
Part I of Chapter XI,
73(A),
73(3),
78(1),
80,
97,
160,
18th Amendment,
Division II A of Part I of the First Schedule
|