1999 PLP 3141 (MLD)

(i) with engine capacity upto 2000 cc. Rs. 2,00,000 (ii) With engine capacity exceeding 2000 cc. Rs. 4,00,000 (b) Land Cruiser, Patrol, Pajero, Range Rover of any other luxury jeep and double cabin pick-up with engine capacity of 2500 cc or above or such other makes as may be notified by the Government. (2) The tax shall be payable by the owner of the vehicle. (3) Any person who fails to pay the tax within the prescribed time limit shall in addition to the amount of the tax be liable to pay a penalty not exceeding the amount of the tax due. (4) Any amount of tax or penalty imposed which remains unpaid shall be recoverable as arrears of land revenue. (5) The Government may make rules for giving effect to the provisions of this section."

4. The learned counsel has argued that a reading of subsection (1) of the said section 7 of Punjab Finance Act IX of 1997, tends to show that the legislature intended to levy tax only on such vehicles as are to be registered after 1-7-1997 i.e. the date on which the said Act came into force. We are afraid that on no rule of construction and by no stretch of imagination can the said provisions be held to convey what the learned counsel is submitting. It is also not understandable as to how the judgment in the Mollasses's case helped the appellants. On the other hand the rule laid down in the said judgment is quite to the contrary. It may be stated here that in order to undo the effect of rule laid down in the case of AI-Samreaz Enterprises (1986 S C M R 1917), section 31-A was added in Customs Act, 1969 by the Finance Act, 1988. The plea taken by the appellants before the Supreme Court was that a taxing statute cannot be enacted with retrospective effect and vested right cannot be taken away by legislative measure. It was observed in the main judgment at page 1923 of the report, "it also cannot be disputed that the legislature which is competent to make a law has full plenary power within its sphere of operation to legislate retrospectively or retroactively. Therefore, vested right can be taken away by such a legislation and it cannot be struck down on that ground."

5. Relief was granted to appellants in the said case as the majority was of the opinion that transaction past and closed cannot be re-opened - as a consequence of such a legislation. Under the impugned dispensation a one-time tax has been levied on luxury vehicles manufactured abroad and registered in the Punjab after 30-6-1994 or registered after the said date outside the Punjab and plying in the Punjab. Notwithstanding the above legal position emerging from the case referred to by the learned counsel for the appellants, we find that the legislation is not retrospective at all. A cut off date has been given and the tax is payable by the owner of the vehicles after the Act comes into force. We, therefore, find no force in the said arguments of the learned counsel.

6. Mr. Ali Zafar, Advocate, argued that the said provision inasmuch as it levies tax on a vehicle registered outside the Punjab constitutes violation of Article 151 of the Constitution. According to the learned counsel the tax levied is not within the competence of provincial legislature to levy. It has also been argued that the provision is confiscatory in nature. He further argues that the later part of subsection (1) of section 7 of the said Act, levying tax on vehicles plying in the Punjab is vague and liable to abuse by the executive functionaries

7. So far as the objection that the said provision is violative of Article 151 of the Constitution is concerned, we find the same to be without any basis. Article 151 (3) of the Constitution reads as follows:-- "(3) A Provincial Assembly or a Provincial Government shall not have power to-- (a) make any law, or `take any executive action, prohibiting or restricting the entry into, or the export from, the Province of goods of any class of description, or impose a tax which, as between goods manufactured or produced in the Province and similar goods not so manufactured or produced, discriminates in favour of the former goods or which, in the case of goods manufactured or produced outside the Province discriminates between goods manufactured or produced in any area in Pakistan and similar goods manufactured or produced in any other area in Pakistan. "

8. Section 7 of the said Act does not prohibit or restrict entry into or export from the Province, of goods of any class or description neither has the tax been imposed on goods manufactured or produced in or outside the Province of Punjab. On the other hand it has been made clear in the said provision that the tax will be levied on the vehicles manufactured abroad.

9. Mr. Ali Zafar, Advocate's argument that the Provincial legislature was not competent to levy the said tax has also not impressed us. In our opinion the matter falls squarely under item No. 33 of the concurrent legislative list contained in Schedule to the Constitution. Needless to say that the said item No. 33 is to be read with item No. 47 of the said list.

10. Similarly we are not inclined to agree with the argument that the provisions is discriminatory or confiscatory. We may refer here to some of the principles of law deduced by Mr. Justice Ajmal Mian (as his Lordship then was), after recaptulating the case-law from the Sub-Continent as also USA, England and also after reference to some judgments of Privy Council vis-a-vis a taxing statute in the case of Elahi Cotton Mills Limited v. Federation of Pakistan (PLD 1997 SC 582). The principles find mention in para. 31 of the report. We would quote a few, which are relevant to the present controversy: "That Courts while interpreting laws relating to economic activities view the same with greater latitude than the laws relating to civil rights p, such as freedom of speech, religion etc., keeping in view the complexity of economic problems which do not admit of solution through any doctrinaire or strait jacket formula as pointed out by Holmes, J, in one of his judgments." The Franfurter, J., in Morey v. Doud (1957) U.S. 457 has remarked that 'in the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to the legislative judgment'. 'That the Legislature is competent to classify persons or properties into different categories subject to different rate of tax. But if the same class of property similarly situated is subject to an incidence of taxation, which results in inequality amongst holders of the same kind of property, it is liable to be struck down on account of infringement of the fundamental right relating to equality.' 'That the tests of the vice of discrimination in a taxing law are less rigorous. If there is equality and uniformity within each group founded on intelligible differentia having a rational nexus with the object sought to be achieved by the law, the Constitutional mandate that a law should not be discriminatory is fulfilled.' 'That the policy of a tax, in its operation, may result in hardship or advantages or disadvantages to individual assessees which are accidental and inevitable. Simiplicitor this fact will not constitute violation of any of the fundamental rights.' 'That the law should be saved rather than be destroyed and the Court must lean in favour of upholding the Constitutionality of a legislation keeping in view that the rule of Constitutional interpretation is that there is a presumption in favour of the Constitutionality of the legislative enactments unless ex facie it is violative of, a Constitutional provision'. " Considering the impugned statute in the light of above-noted principles we find that the statute is neither confiscatory nor discriminatory, Owners of luxury vehicles are a class by themselves and no discrimination is reflected from the said statute inter se the members of the said clause.

11. However, the apprehension of Mr. Ali Zafar, Advocate as to the later part of the subsection. I regarding the vehicles plying in Punjab has some force. We find that an undertaking was given to the learned Single Judge by the learned Advocate-General which is reproduced in para. 37 of the judgment under appeal, We may also note here that the learned Single Judge proceeded to declare Rules framed under the said section 7 vide Notification S.O.Tax (Ext)3(97)(LV), dated 23-4-1998 as ultra vires. We called upon the learned Additional Advocate-General as to how the Government proposes to enforce this _ F later provision. The learned Additional Advocate-General, produced the Rules proposed to be notified by the Provincial Government under the said section

7. Upon a reading of the definition of term "owner" given in the said Rule, we are satisfied that only a bona fide resident of the Province or a person carrying on a business or office established within the territory of the Province owning/keeping luxury vehicles is liable to pay the said tax. We also find that the Rules provide for service of notice and opportunity to show cause against the proposed levy. The provision of appeal and revision has also been made. The learned Additional Advocate-General assures that the levy will be made and collected in the manner prescribed in the rules shown to us and copy whereof has been placed on file of this I. C. A.

12. We, therefore, find no reason to interfere with the order under appeal With the observation in para. 11 above, the present I.C.A. is dismissed. H.B.A/R-101/L Appeal dismissed.