2001 PLP 3415 (PTD)

(3) Persons, other than Companies, owning Rs. 500 commercial establishments having 10 or more employees. (4) Persons holding licence under Import and Export (Control) Act, 1950, who during the preceding financial year have imported/exported goods of the value:‑‑ (i) Not exceeding Rs. 50,000 Rs. 500 (ii) Exceeding Rs. 50,000 Rs.1,000 (5) Contractors enlisted for supplying to the Federal or any Provincial Government or any Local Authority goods, commodities and services of the (i) Exceeding Rs. 25 lacs Rs. 5,000 (ii) Exceeding Rs.10 lacs but not exceeding Rs 1,000 Rs.251acs. (iii) Not exceeding Rs. 10 lacs Rs. 500 (6) Persons who are engaged in a profession, trade, Rs. 100 calling or employment either wholly or in part within the Province of the Punjab except those who were not assessed during the preceding financial year to income‑tax under the Income‑tax Act, 1922.

4. The vires of the amendment have been challenged by the petitioners by filing these Constitutional petitions.

5. The learned counsel for the petitioners maintains that the second Schedule, as it stands after its amendment by the Finance Act, 1999, is ultra vires the main Act and is also violative of the judgment of this Court in Siemen Pakistan Engineering Company's case (supra). He elaborated that section 3 ‑of the Punjab Finance Act, 1977 which is charging section levies tax on persons engaged in professions, trades, callings or employment in the Province of Punjab and the rates specified in the Second Schedule must have nexus to the professions, trades, callings or employments while according to the Schedule as amended by the Finance Act, 1999, the rate of taxation is based upon paid‑up capital of the Companies.

6. The learned Assistant Advocate‑General, however, has argued that the judgment of this Court in Siemen Pakistan Engineering Company's case (supra) has lost its efficacy in view of the amendment by the Finance Act, 1999, whereby the maximum limit of taxation has been fixed at Rs.1,00,

000. He argued that the Provincial Legislature was still within its powers to amend the Schedule to section 3 of the Act and provide for levy of the tax on the basis of paid‑up capital of the Companies, who are engaged in business.

7. Before proceeding any further, it is essential to analyse the judgment of this Court delivered in Siemen Pakistan Engineering Company's case (supra). In that case, the dispute between the parties related to levy of professional tax by the Punjab Finance Act, 1977 as amended by Punjab Finance Act, 1997 at the rates prescribed in the Schedule, which was struck down on two grounds, firstly; that under Article 163 of the Constitution, the Provincial Legislature has the power to levy tax on professions, trades, callings or employments subject to any limitation which may have been prescribed by the Federal Legislature. It was noticed that by the Professions Tax Limitation Act, 1941, the maximum limit has been laid down as Rs.50 and, therefore, no tax beyond the limits fixed by the Parliament could be levied. This ground ceases to exist after the amendment of the Professions Tax Limitation Act, 1941 by the Parliament.

8. The other ground which prevailed with this Court at that time was that the tax can only be levied on professions, trades, callings or employments as mentioned in section 3 of the Act and the taxable event in such cases is factum of being in the trades, professions, callings or employments and, therefore, the rate of taxation must necessarily be relatable in that event. The effect of substitution of the Schedule to the Punjab Finance Act, 1977 as amended by the Punjab Finance Act, 1997 by Finance Act, 1999 is that although previously the rate of taxation was based upon the income‑tax paid by the Companies but after the substitution, the tax has to be calculated on the basis of paid capital so far as incorporated companies are concerned.

9. There is no force in the contentions of the learned counsel for the petitioners that the Schedule substituted by the Finance Act, 1999, travels beyond the scope of the charging section. It needs to be reiterated that under section 3 of the Punjab Finance Act, 1977, which is the charging section, tax is to be levied on professions, trades, callings or employments and the taxable event in such a case is the factum of a person being in such professions, trades or callings. Admittedly the petitioners are carrying on business and are, therefore, liable to pay professional tax. The Schedule which fixes the different rates on the basis of paid‑up capital of the incorporated companies does not travel beyond the scope of section 3 of the Act and is based upon reasonable classification and intelligible differentia. As already observed, there is no dispute that the petitioners fall within the mischief of section 3 of the Punjab Finance Act, 1977 and, therefore, they cannot escape their liability. As observed earlier, in Siemen's case (supra) is wholly distinguishable as the main ground which prevailed with this Court was that the Provincial Legislature has acceded the limits fixed by the Parliament and secondly that the Schedule which was purportedly to levy tax on the basis of income‑tax paid by the Companies was not followed.

10. The learned counsel for the petitioner has relied upon the case of Excise and Taxation Officer, Karachi and another v. Burmah Shell Storage and Distribution Company of Pakistan Ltd. and 5 others (1993 SCMR 338). In that case, by section 10 of the West Pakistan Finance Act (I of 1962), a tax on the value of the goods imported or exported, as the case may be, against the licence was levied according to the rates set out in the Third Schedule to the Act. The Schedule, however, instead of providing for scale on the basis of value of the goods imported or exported, provided scale purporting to levy tax on the value of the licenses. The Supreme Court of Pakistan was pleased to hold the Schedule was inconsistent with the charging section and was, therefore, struck down by it in that case.

11. In the present case, there is no inconsistency between the charging section and the Schedule which merely lays down the rates at which the taxes are to be paid by different classes or incorporated companies. It may be noted that the equality clause in the Constitution does not prohibit reasonable classification though it requires that all persons similarly placed should be treated alike. The classification of companies on the basis of their paid‑up capital is rational and is in furtherance of the purpose for which the tax has been levied. In view of what has been said above, all these petitions fail and are dismissed leaving the parties to bear their own costs. Q.M.H./M.A.K./P‑41/L Petitions dismissed.