Professional tax
Professional tax legal meaning, translation and judicial precedents.
Meaning & Judicial Interpretation: (اردو مفہوم اور قانونی تشریح)
Petitioners were aggrieved of deduction / withholding of professional tax directly from their salaries and had also assailed quantum of the tax so deducted
Validity
Professional tax is not tax on income but a tax on profession
Wisdom of Legislation quantifying tax cannot be substituted by High Court, which is otherwise not confiscatory
Two different modes were provided under R. 10 of Khyber Pakhtunkhwa Professions, Trades and Callings Tax Rules, 1991, for deduction / withholding of advanced tax; one from civil servant and the other from the person who were in employment of companies or statutory bodies
One petitioner was an employee of Khyber Pakhtunkhwa Medical Teaching Institutions, whereas the other two were civil servants
Petitioners were liable to impost of professional tax and the same had been rightly recovered from their salaries in the manner as provided under Khyber Pakhtunkhwa Professions, Trades and Callings Tax Rules, 1991
Constitutional petition was allowed accordingly.
Petitioners were aggrieved of deduction / withholding of professional tax directly from their salaries and had also assailed quantum of the tax so deducted
Validity
Professional tax is not tax on income but a tax on profession
Wisdom of Legislation quantifying tax cannot be substituted by High Court, which is otherwise not confiscatory
Two different modes were provided under R. 10 of Khyber Pakhtunkhwa Professions, Trades and Callings Tax Rules, 1991, for deduction / withholding of advanced tax; one from civil servant and the other from the person who were in employment of companies or statutory bodies
One petitioner was an employee of Khyber Pakhtunkhwa Medical Teaching Institutions, whereas the other two were civil servants
Petitioners were liable to impost of professional tax and the same had been rightly recovered from their salaries in the manner as provided under Khyber Pakhtunkhwa Professions, Trades and Callings Tax Rules, 1991
Constitutional petition was allowed accordingly.
Cantonment Boards are not empowered to impose professional tax on those engaged in professions, trades, callings or employments in cantonment areas
Professional tax mentioned in Article 163 of the Constitution recovered by the Cantonment Boards is unconstitutional
Section 60(1) of the Cantonments Act, 1924 [as amended by the Cantonments (Amendment) Act, 2023] and its Schedule VII to the extent that they may authorize the imposition of the professional taxes are ultra vires the Constitution.
Cantonment Boards are not empowered to impose professional tax on those engaged in professions, trades, callings or employments in cantonment areas
Professional tax mentioned in Article 163 of the Constitution recovered by the Cantonment Boards is unconstitutional
Section 60(1) of the Cantonments Act, 1924 [as amended by the Cantonments (Amendment) Act, 2023] and its Schedule VII to the extent that they may authorize the imposition of the professional taxes are ultra vires the Constitution.
Petitioner was a foreign company and aggrieved of demand made by Motor Registration Authority for deposit of Professional tax
Validity
Foreign company was not a company registered under Companies Act, 2017
Foreign companies with place of business established in Pakistan were regulated and required to deliver certain documentation pursuant to Ss.434 to 450 of Companies Act, 2017 but could not be equated to the status of companies formed and registered under Companies Act, 2017
Foreign companies were incorporated outside Pakistan and registered under applicable law of country of their incorporation
Regarding "company" and "foreign company" under Companies Act, 2017, none of subcategories under serial No.1 contained in Seventh Schedule to S.11 of West Pakistan Finance Act, 1964, as substituted vide S. 4 of Finance Act, 2019 applied to a place of business / branch office established by a foreign company in Pakistan as they were only applicable to companies registered under Companies Act, 2017
Demand of professional tax was applicable upon company registered under Companies Act, 2017, having capital exceeding PK.Rs. 200 million whereas petitioner company was a branch office of a foreign company
High Court set aside issuance of demand notice to petitioner company as the same was ultra vires West Pakistan Finance Act, 1964 duly amended vide S.4 of Finance Act, 2019
Constitutional petition was allowed accordingly.
West Pakistan Finance Act (XXXIV of 1964), S. 11 & Seventh Sched., Serial No.1 [as amended by section 4 of Finance Act, 2019]
Foreign company
Professional tax
Registration of vehicles
Petitioner was a foreign company and aggrieved of demand made by Motor Registration Authority for deposit of Professional tax
Validity
Foreign company was not a company registered under Companies Act, 2017
Foreign companies with place of business established in Pakistan were regulated and required to deliver certain documentation pursuant to Ss. 434 to 450 of Companies Act, 2017 but could not be equated to the status of companies formed and registered under Companies Act, 2017
Foreign companies were incorporated outside Pakistan and registered under applicable law of country of their incorporation
Regarding "company" and "foreign company" under Companies Act, 2017, none of subcategories under Serial No.1 contained in Seventh Schedule to S. 11 of West Pakistan Finance Act, 1964, as substituted vide S. 4 of Finance Act, 2019 applied to a place of business/branch office established by a foreign company in Pakistan as they were only applicable to companies registered under Companies Act, 2017
Demand of professional tax was applicable upon company registered under Companies Act, 2017, having capital exceeding PK Rs.200 million whereas petitioner company was a branch office of a foreign company
High Court set aside issuance of demand notice to petitioner company as the same was ultra vires West Pakistan Finance Act, 1964 duly amended vide S. 4 of Finance Act, 2019
Constitutional petition was allowed accordingly.
Demand of such tax by Punjab Government from petitioner-company having its sales office in Punjab Province and registered office and factory in Sindh Province
Plea that petitioner was already paying such tax to Sindh Government, thus, Punjab Government was not competent to levy such tax on basis of its sales office located at Lahore; and that Federation by virtue of an entry in Federal Legislative List of the Constitution had exclusive jurisdiction to levy tax on corporation
Validity
Provinces could impose and collect such tax for same falling within legislative competence of Provincial Assembly
According to S.3 of Punjab Finance Act, 1977, only restriction that existed on competence of Provincial Assembly was that its rate could not exceed the limit that might be fixed by an Act of Parliament
Payment of such tax to Sindh Government by petitioner for having its presence there would not legally or constitutionally bar Punjab Government to recover the same from petitioner for being engaged in profession, trade, calling or employment within its territories
Constitutional petition was not competent against impugned notice, which related only to submission of documents for assessment and finalization of petitioner's case
High Court dismissed the petition.
Petitioner company had more than one establishments in different provinces and was already paying professional tax in other province
Plea raised by petitioner was that charging of professional tax by second province was double taxation
Validity
Petitioner company could not point out any defect or legal error nor could refer to any Article of the Constitution or provision of law, which could put any restriction on any Provincial Government to impose such tax on a person
Provisions of Art. 163 of the Constitution postulated that professional tax would not be considered as a tax on income and it had authorized Provincial Government to impose professional tax on any person including any body politic or corporate as defined in Art. 260 of the Constitution
Provincial Government had the authority to impose professional tax on companies having more than one establishments or offices in more than one province, if their work was expanded from one province to another
Levy of professional tax upon petitioner did not amount to double taxation as it was not levy on income of a person
Petition was dismissed in circumstances.
History stated.
"Professional tax", Pakistan Law Portal, available at: https://paklawportal.com/words-terms-maxims/124926383
Precedents & Case Laws citing "Professional tax"
2012 P T D 901
HABIB JUTE MILLS LTD. Versus PROVINCE OF SINDH through Secretary, Finance Department Sindh Secretariat, Karachi and another
Court: Sindh High Court2018 C L C 116
HABIB BANK LIMITED and others — Petitioners Versus CANTONMENT BOARD CLIFTON, KARACHI and others — Respondents
Court: SindhP L D 2005 Supreme Court 988
PROVINCE OF PUNJAB through Secretary, Excise and Taxation, Government of Punjab and others — Appellants Versus SARGODHA TEXTILE MILLS LTD., SARGODHA and others — Respondents
Court: Supreme Court of Pakistan2024 P T D 798
CANTONMENT BOARD FAISAL and another — Appellants Versus HABIB BANK LIMITED, KARACHI and another — Respondents
Court: Supreme Court of Pakistan2024 S C M R 1049
CANTONMENT BOARD FAISAL and another — Appellants Versus HABIB BANK LIMITED, KARACHI and another — Respondents
Court: Supreme Court of Pakistan2010 P T D 1913
Messrs BANK ALFALAH LIMITED, KARACHI — Petitioner Versus EXCISE AND TAXATION OFFICER-IV, PESHAWAR and 2 others — Respondents
Court: Peshawar High Court2010 C L D 975
Messrs BANK ALFALAH LIMITED through Authorized Officer — Petitioner Versus EXCISE AND TAXATION OFFICER and 3 others — Respondents
Court: Peshawar1993 P T D 908
N/A
Court: Income Tax Appellate Tribunal PakistanP L D 2012 Lahore 103
PAKISTAN STEEL MILLS CORPORATION (PVT) LTD through Incharge Law — Petitioner Versus PROVINCE OF PUNJAB through Chief Secretary and others — Respondents
Court: High Court2013 P T D 1304
BASIT CAMPUS DEVELOPMENT AND MANAGEMENT COMPANY through AUTHORIZED, REPRESENTATIVE Versus GOVERNMENT OF THE PUNJAB through Secretary, Excise and Taxation Department, Punjab, Lahore and another
Court: Lahore High Court