2020 PLP 2056 (PTD)

SHAHID KARIM, J.

This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 lays a challenge to the fixed tax in slabs Nos.4, 5 and 6 in the table substituted through Finance Act, 2012 in Part I of the First Schedule of the Income Tax Ordinance, 2001 to be declared unconstitutional and ultra vires.

2. Precisely, by the said amendment a progressive tax rate was promulgated and in particular the challenge in this petition is to slabs Nos.4, 5 and 6 in the impugned table. Suffice to say that the matter was dealt with by the High Court of Sindh and was decided in a reported judgment as Imran Ahmad v. Federation of Pakistan and another [PLD 2014 Sindh 48 = 2014 PTD 225]. The issue in that judgment was on all fours with the instant petition and the Division Bench of the High Court of Sindh returned the finding as under:-- "

16. We are of the view that the anomaly in the calculation and quantification of tax at S.Nos.4, 5 and 6 of the Table-B as referred to hereinabove, has crept in due to inadvertence and on account of incorrect arithmetic calculation as there is no rational basis or reasonableness whatsoever in such determination of the tax liability. We are of the opinion that the amount of tax as calculated under slabs of taxable income at S.Nos.4, 5 and 6 of table "B" is without any conscious application of mind. It also lacks certain of charge and is devoid of any rational basis and has resulted in creation of additional burden of tax upon a particular group of salaried individuals without legal sanction. It is pertinent to note that this anomaly in tax calculation for salaried individuals neither existed for the earlier tax years, whereas, by Finance Act, 2013, it has been rectified for the tax year 2014 in similar set pattern of tax calculation on the basis continued gradual increase of tax rate as discussed hereinabove.

17. Accordingly, we hold that the table inserted by Finance Act, 2012 for the tax year 2013 in respect of rates of tax for salaried individuals with particular reference to amount of tax calculated under slabs of income at S.Nos.4, 5 and 6 of table "B" as referred to hereinabove, is ultra vires of the Constitution, the Income Tax Ordinance, 2001 and also inconsistent with the slabs of taxable income of the table "B" itself, hence of no legal effect.

18. In view of hereinabove, instant petition is allowed. The table inserted through Finance Act, 2012 in Clause (1A) of Division-I of Part-1 of the First Schedule to the Income Tax Ordinance, 2001 is declared to be illegal, arbitrary and of no legal value, whereas the Table-C as referred in para 9 at page 10 hereinabove is the correct and valid table under clause (1A) of Division-1 of the Part 1 of the First Schedule to the Income Tax Ordinance, 2001, as it contains the correct arithmetic calculation of tax of the salaried individuals falling under different slabs of income as detailed therein. The respondents are directed to make necessary correction in the table by removing the anomaly and to notify the tax rates of salaried individuals for the tax year 2013 in conformity with the judgment of this Court at the earliest."

3. It has been controvered by the learned counsel for the respondents that the said judgment of the High Court of Sindh has been set aside by the Supreme Court of Pakistan and thus holds the field. It can be seen that as per holding of the High Court of Sindh the slabs of income at Serial Nos.4, 5 and 6 of table were declared ultra vires the Constitution and the Income Tax Ordinance, 2001.

4. I have no reason to disagree with the judgment of the High Court of Sindh which holds the field and is applicable in all respects.

5. In view of the above, this petition is allowed. The findings of the High Court of Sindh shall equally apply to the case of the petitioner in all its respect. KMZ/Z-6/L Petition allowed.