Summary: Levy and collection of property tax under local government laws do not require specific notification under Section 3 of the Punjab Urban Immovable Property Tax Act, 1958. 73Jail Appeal 71008/23 Zeeshan Abbas alias Kaka Vs The State Mr. Justice Farooq Haider 15-12- 2025 2025 LHC 7761

Summary: (a) Civil Procedure Code (V of 1908): ----S. 100—Second appeal—Scope—Concurrent findings of fact—Reversal by second appellate court—Principle—Suit for declaration and perpetual injunction based on alleged lifetime partition by propositus—Plaintiffs claimed entitlement to land through deceased father who predeceased propositus—Trial and appellate courts concurrently held that since father of plaintiffs died in lifetime of original owner, plaintiffs were not entitled to inherit property—Private partition pleaded by plaintiffs not confirmed under S. 147 of West Pakistan Land Revenue Act, 1967—Held, concurrent findings of fact based on evidence could not be disturbed in second appeal unless grave misreading, non-reading, or violation of law is shown—No legal infirmity or jurisdictional defect established—Appeal dismissed. Cited Case: • 2022 SCR 416 (b) Inheritance Law: ----Transfer of Property Act, 1882 as amended by Transfer of Property (Amendment) Act, 2021—Prospective vs retrospective application—Scope—Children of predeceased son—Held, amendment conferring inheritance rights upon children of deceased son applies prospectively only—Provision does not aid plaintiffs in current proceedings where claim pertains to events prior to enactment—Statutory language explicitly provides for prospective enforcement. (c) Declaratory Relief: ----Claim based on possession and improvements—Legal effect—Held, mere possession or expenditure on improvements does not create ownership rights in absence of valid title—Admission by one co-defendant not sufficient to establish ownership in face of contesting claims by others—Proper remedy lies in formal transfer through recognized legal modes. Appeal dismissed.

Summary: (a) Constitution of Pakistan ----Arts. 142, 184, 270-A, Fourth Schedule (Entries 2 & 50), Eighteenth Amendment—Legislative competence—Levy and collection of tax on immovable property—Jurisdiction of Federation and Cantonment Boards—Effect of constitutional amendments. Tax on immovable property, including tax on annual rental value, has historically been a provincial subject. The legislative competence to levy, charge, or recover such tax was never vested in the Federation except during the Martial Law period through the promulgation of the *Cantonments (Urban Immovable Property Tax and Entertainment Duty) Order, 1979 (P.O. 13 of 1979)*. The Sindh High Court, tracing legislative history from the Government of India Act, 1935 to the Constitution of 1973, held that after the restoration of the Constitution in 1985 and the 18th Amendment, the subject of property tax reverted exclusively to the Provinces. Consequently, the Federation and all Cantonment Boards lacked competence to impose any such tax, the field being expressly excluded from the Federal Legislative List (Entry 50) and reserved for the Provinces under Art. 142(c). (b) Constitutional law ----Art. 270-A—Validation of laws enacted during Martial Law—Scope and limitation—Protection of Presidential Orders—Applicability of Benazir Bhutto case. Presidential Orders issued between 1977 and 1985 were granted temporary protection under Art. 270-A and the Seventh Schedule but lost their efficacy after the restoration of the Constitution and the 18th Amendment. Following the principle laid down in *Benazir Bhutto v. Federation of Pakistan* (PLD 1988 SC 416), laws protected by Art. 270-A could not override the Constitution or survive beyond the cut-off date. The Court reaffirmed that P.O. 13 of 1979, enacted when the Constitution was in abeyance, stood eclipsed and could not continue to authorize taxation in cantonment areas after constitutional restoration. (c) Cantonment Act, 1924 ----Ss. 60, 80, 106 & 109—Scope—Taxation powers of Cantonment Boards—Requirement of federal sanction and publication—Effect of August 2023 amendment. Section 60 empowers Cantonment Boards to impose only those taxes which may lawfully be imposed by a municipality in the province and only with the *previous sanction of the Federal Government* and publication in the official gazette. In the absence of an existing provincial levy, such power cannot be exercised. The 2023 amendment inserting the term “fee” into Section 60 did not expand the scope to authorize new levies; fiscal statutes must be strictly construed. Moreover, as per *Mustafa Impex v. Government of Pakistan* (PLD 2016 SC 808), prior sanction of the Federal Cabinet, not a Division, is mandatory. The amendment delegating such sanction to a Division was held inconsistent with democratic and constitutional principles. (d) Constitutional interpretation ----Entry 2, Fourth Schedule—Not a taxing entry—Entry 50 exclusive field—Distinction between taxes and fees. Entry 2 of the Fourth Schedule, often cited by Cantonment Boards, is a general administrative entry concerning federal subjects and does not include power to tax. Taxing entries are exhaustively enumerated from 43 to 53. The levy under discussion being a charge on immovable property clearly falls under Entry 50, which, post-18th Amendment, excludes immovable property from federal jurisdiction. Argument that the levy was a “fee” under Entry 54 or S.200 of the Cantonment Act was also rejected as the exhaustive list of permissible fees therein does not cover annual rental value of property, and the principle of *quid pro quo* was not satisfied. (e) Provincial legislation ----Sindh Urban Immovable Property Tax Act, 1958—Continuity and supremacy—Applicability to cantonment areas. The Sindh Urban Immovable Property Tax Act, 1958, enacted prior to the 1979 Presidential Order, remains the governing statute for property tax within the province, including cantonment areas. Following *Pakistan v. Province of Punjab* (PLD 1975 SC 37) and *Gulzar Cinema v. Cantonment Board* (PLD 1978 Kar. 500), cantonment areas located within a province are subject to provincial taxation statutes, as they do not constitute federal territory. (f) Fiscal jurisprudence ----Distinction between tax and fee—Purpose of levy—Cantonment funds—Effect of routing revenue. The fact that amounts collected were deposited into Cantonment Funds under Ss.106–109 of the Cantonment Act does not alter the nature of the levy. A tax remains a tax regardless of the fund in which it is credited. Reliance on *Workers Welfare Fund* and *GIDC* cases was misplaced, as those levies were upheld as fees due to specific quid pro quo mechanisms, which are absent here. (g) Discrimination and equality before law (Arts. 25 & 77) ----Differential taxation between municipalities and cantonments—Classification—Validity. Different rates of taxation for identical properties situated across municipal and cantonment boundaries were held discriminatory and violative of equal protection principles. A uniform regulatory framework under provincial supervision was necessary to prevent arbitrary classifications and ensure parity in valuation and assessment. (h) Disposition— Petitions allowed. It was declared that— (i) After the Eighteenth Amendment, the Federation and Cantonment Boards have no competence, power, or jurisdiction to levy, charge, impose, or recover any tax on immovable property, including tax on annual rental value. (ii) The Province of Sindh alone has legislative and fiscal authority over the subject. (iii) All amounts collected under the impugned levy since the 18th Amendment are liable to accounting and reconciliation by the provincial government. (PLD 1975 SC 37; PLD 1978 Kar. 500; PLD 1988 SC 416; PLD 2016 SC 808; 2022 Peshawar 46; 2023 SCMR — Cantonment Board case, 13.10.2023, followed).

Summary: Order suspended by SC order on 18-3-24, next date of hearing 22-4-24 ---- ''All property taxes collected by the cantonment boards in Sindh declared as illegal. It is beyond the jurisdiction of the boards to make any such collections after the 18th amendment, as property tax is now solely a provincial subject. ---- ''Background:The case involves a series of petitions, led by the Millennium Mall Management Co. against the Government of Pakistan and other connected entities, challenging the tax demand based on the annual rental value of property imposed by different Cantonment Boards. The petitioners argue that such taxation is within the exclusive domain of the provinces post the 18th Amendment to the Constitution of Pakistan and that the Cantonment Boards, under the federal government, do not have the authority to levy these taxes.-----Issues:The core issue revolves around the legislative competence to levy tax based on the annual rental value of property post the 18th Amendment. The petitioners contest that this authority rests solely with the provinces, while the federal government and Cantonment Boards assert their right under various legislative acts.----Holding/Reasoning/Outcome:The High Court of Sindh at Karachi held that post the 18th Amendment, the federal government and Cantonment Boards lack the legislative competence to impose taxes on immovable property, including taxes based on annual rental value. The Court concluded that such authority now exclusively resides with the provincial governments. The decision was supported by an examination of constitutional amendments, legislative competencies, and precedents that delineate the separation of powers between federal and provincial authorities concerning tax imposition.----Citations/Precedents:18th Amendment to the Constitution of PakistanVarious judgments clarifying the legislative competence of federal and provincial governments in the context of tax imposition, including cases like Pakistan through Ministry of Defence v. Province of Punjab (PLD 1975 SC 37), Benazir Bhutto v. Federation of Pakistan (PLD 1988 SC 416), and recent judgments that interpret the scope and application of legislative entries in the context of tax on immovable properties.The High Court's decision emphasizes the constitutional boundaries that delineate federal and provincial powers, particularly in the realm of taxation, reinforcing the autonomy granted to provinces in certain legislative areas post the 18th Amendment.

Summary: Issue: The petitioners challenged the validity of the insertion of Section 5 TE through the Finance Act, 2022, to the Income Tax Ordinance, 2001. This section deemed that for the tax year 2022 and onwards, a resident person would be considered to have derived income equal to 5% of the fair market value of their capital assets situated in Pakistan, chargeable to tax at 20% under Division-VIII C of Part-I of the Ordinance. This specifically targeted immovable property owned by resident persons.---Arguments: The petitioners argued that this deeming clause to tax the fair market value of immovable property as income was not permissible, citing precedents from the Apex Court in the case of Messrs Elahi Cotton Mills and the Indian Supreme Court in the case of Harbhajan Singh Dhillon. They contended that taxing the capital value of an asset, particularly targeting immovable property alone, was beyond the competence of Parliament.---Decision: The court held that:In light of Entry No. 50 of the Fourth Schedule to the Constitution, Parliament did not have the jurisdiction to impose income tax on immovable property.However, Parliament did have the jurisdiction to tax the capital value of assets per Entry No. 47 of the Fourth Schedule to the Constitution.The court did not agree with the reasoning of the Sindh High Court, which upheld the impugned legislation, nor did it find the curative judgment of the Lahore High Court, which suggested reading down the impugned legislation, appropriate.---Outcome: The court declared the challenged section concerning the taxation of the fair market value of immovable property as income beyond the Parliament's jurisdiction.

Summary: [Discussion: (1) Section 39 of the University of Balochistan Act, 1996 (2) Section 84, 88 & 99A of the Cantonments Act 1924 (3) Section 21 of the Pakistan Penal Code, 1860 (4) Benefit of S.R.O.156(I)/2004 (5) Effect of deeming clause] The petitioner, was a professor at the University of Balochistan. He claimed to be a government servant and sought a 60% exemption on house tax and other charges from the Cantonment Board, Quetta. The respondent, the Executive Officer of the Cantonment Board, refused to grant the exemption. After hearing the arguments, the Supreme Court examined the relevant provisions of the University of Balochistan Act and the Pakistan Penal Code. The Court concluded that the employees of the University, including the petitioner, are deemed to be public servants under Section 21 of the Pakistan Penal Code. The Court noted that legal fictions should be interpreted in line with the legislative intent and should not be extended beyond their purpose. Ultimately, the Supreme Court found that the High Court correctly dismissed the petitioner's Constitution Petition, as the petitioner failed to avail the alternate remedy provided under the Cantonments Act Section 84. The Court did not address the issue of whether the petitioner is entitled to the exemption.

Summary: 1.The revenue authorities are bound to make official partition as per the recorded entries-cum-shares in the revenue record and as such any deed or decision even if passed but not incorporated in the revenue record then the revenue authorities are not bound to wait for the same but shall proceed with the partition application.2.Partition of properties as referred in section 136(b) (i) (ii) (iii) of Land Revenue Act, 1967 including grazing ground/Daka Chiragah is not absolutely barred or restriction but such properties too could by partitioned provided the desired partition does not cause any inconvenience to the co-sharer or cause diminish the utility of such co-sharer.3.When the language of the statute and intention of the legislature is clear, then no other interpretation could be made by the Courts of Law as any other view contrary to the plain language of the statute would amount to re-writing of the statute, which is not the job of the Courts of law.4.In a partition case, even if the application has not arrayed/impleaded all the co-sharers, it is the statutory duty of revenue officials under section 137(a) of Land Revenue Act to issue notice to all the recorded co-sharers, and such non-Impleadment would not ipso facto considered as a ground for dismissal of a partition application.5.Where the Courts/tribunal/special hierarchy have improperly or illegally exercised its jurisdiction, then the High can correct such findings by issuing of writ of certiorari.

Summary: Background: A federal government institution, established under the law and performing sovereign functions, challenged the imposition of property tax by a local cantonment board. The institution argued that its properties should be exempted from property tax under Section 99(2)(f) of the Cantonment Act, 1924, as it performs public service functions on behalf of the federal government. The local board, however, claimed that the institution is a corporation and had been paying property tax since 1962, thus disqualifying it from claiming exemption. -----Issues: 1- Whether the institution is entitled to exemption from property tax under Section 99(2)(f) of the Cantonment Act, 1924. -----2- Whether the institution is estopped from claiming exemption due to its prior payments of property tax. -----3- Whether the institution had an alternative remedy available and if the writ petition was prematurely filed before exhausting such remedies. -----Holding/Reasoning/Outcome: --Exemption from Property Tax: The court held that the institution is entitled to an exemption from property tax. Being wholly owned by the federal government and performing sovereign functions, such as issuing currency and regulating financial institutions, it falls under the category of entities exempted from property tax under Section 99(2)(f) of the Cantonment Act. The court noted that the property was used for public service and purposes related to the federal government’s economic policies, justifying the exemption. --No Estoppel: The court ruled that prior payment of property tax does not estop the institution from claiming exemption now. Legal rights, such as tax exemption, cannot be forfeited based on past conduct. The exemption granted by law remains intact regardless of prior payments. --Appropriate Remedy: The court concluded that the institution was not obligated to exhaust alternate remedies before filing the writ petition. Since the petition challenged the authority of the cantonment board to impose the property tax itself rather than the assessment or calculation of the tax, the matter fell within the jurisdiction of the High Court, making the writ petition appropriate and valid. -----Citations/Precedents: Union Council, Ali Wahan, Sukkur v. Associated Cement (Pvt.) Limited (1993 SCMR 468) The court referred to this case in determining the scope of public service exemptions for entities owned by the government. Sindh Revenue Board through Chairman Government of Sindh and another v. Civil Aviation Authority of Pakistan (2017 SCMR 1344) This case was used to discuss the relationship between federal government entities and the exemption from taxes under Article 165 of the Constitution. Water and Power Development Authority through Director Services and Estates v. Excise and Taxation Department, Government of the Punjab (2017 CLC 716) This case was relevant in confirming that property owned by government bodies performing sovereign functions could be exempted from property taxes. State Bank of Pakistan through Chief Manager, Peshawar v. Federation of Pakistan (PLD 2022 Peshawar 46) The court relied on this case to further elaborate on the exemption of federal government institutions from property taxes and the interpretation of Article 165 of the Constitution. Central Board of Revenue v. SITE (PLD 1985 SC 97) This precedent supported the argument that government-owned properties and instrumentalities are exempt from taxation under Article 165 of the Constitution. Muhammad Zaman and others v. Government of Pakistan (2017 SCMR 571) This case was cited regarding the exhaustion of alternate remedies before filing a writ petition, though the court found it not applicable to the current case.

Summary: The appellant, as a cement manufacturer, was being subjected to discriminatory treatment in the imposition of property tax. While other cement manufacturers were placed in categories 'C' or 'D' with lower tax rates, the appellant was placed in category 'B,' resulting in an unfair advantage for its competitors. The counsel contended that such discrimination violated Article 25 (equality before the law) and Article 18 (right to conduct trade and business) of the Constitution of Pakistan. The court inquired about the existence of any valid reasons or criteria justifying the differential tax rates, but no satisfactory explanation was provided. Consequently, the court held that the discriminatory imposition of property tax on the appellant's buildings was illegal and ultra vires. It emphasized that equal protection of the law required treating similarly situated entities alike, both in privileges and liabilities. The court also noted that the Khyber Pakhtunkhwa Local Government Act, 2013, granted the government the power to direct a local government to levy, increase, reduce, or suspend taxes. However, the government had failed to exercise this power to rectify the discriminatory tax treatment. The court emphasized that the failure to exercise discretionary powers without legal justification amounted to arbitrary and capricious behavior. Based on the above findings, the court allowed the appeal, setting aside the impugned judgment. It directed the respondents to treat the appellant's buildings on par with other cement manufacturers for property tax purposes. Furthermore, the court ordered the repayment or adjustment of the excess property tax already paid by the appellant compared to other cement manufacturers. The taxing authority was given a two-month deadline to comply with these directions.

Summary: Before proper revenue settlement the properties were described through boundaries or with specific name of the property with its dimensions thus, the dispute revolves regarding mentioning of Khasra numbers i.e., description of the property of Chanchanay Khan and thereafter by his legal heirs. Suffice it to say, that in the earlier application submitted by Chanchanay Khan, he has mentioned his entitlement over the property situated in the shape of compact block from sarasari and by considering the description of the property in a compact block in juxtaposition with the settlementrecord qua the spot inspection, the revenue officials found it in conformity with the contention of respondents No.1 to 9, as such, when an application for specification of Khasra numbers was submitted that was allowed in terms of directing the inquiry commission with respect to possession of respondents No.1 to 9 and the entries were made accordingly.