Shahzada SOHAIL KAMRAN KHAN and 2 others vs CHAIRMAN OF STATE LIFE
The petitioners, claiming to be employees of the State Life Insurance Corporation of Pakistan, sought a declaration of their employment status and a restraining order against the Corporation to prevent the deduction of advance income tax from their commissions under Section 233 of the Income Tax Ordinance, 2001. The core legal question was whether commission agents of the Corporation qualify as 'employees' and are thus exempt from such tax deductions. Relying on precedent established by the Supreme Court of Pakistan, the Court held that commission agents do not fall within the definition of 'employees' as prescribed by the State Life Employees (Service) Regulations, 1973, which requires full-time employment on a monthly salary. Consequently, the Court determined that the Corporation is legally entitled to deduct advance income tax from the petitioners' commissions. The petition was dismissed on the grounds that the petitioners failed to establish the status of 'aggrieved persons' necessary to invoke the writ jurisdiction of the High Court, rendering the petition not maintainable.
- Are commission agents of the State Life Insurance Corporation considered employees for the purpose of tax exemption?
- Is a constitutional petition filed by commission agents seeking a declaration of employment status maintainable?
- Does the State Life Insurance Corporation have the legal authority to deduct advance income tax from the commissions of its agents under Section 233 of the Income Tax Ordinance, 2001?
- Section 233, Income Tax Ordinance 2001
- Section 2(c), State Life Employees (Service) Regulations 1973
ORDER
SHAMS MEHMOOD MIRZA, J.---The petitioners seek a declaration from this Court that they are the "employees" of State Life Insurance Corporation of Pakistan (Corporation) and seek a restraining order against the Corporation from deducting advance income tax under section 233 of the Income Tax Ordinance, 2001 (the Ordinance) from the Commission of the petitioners.
2. The premise of the petitioners' argument is that since they are the employees of the Corporation and as such the advance income tax cannot be deducted from their commission.
3. Admittedly the petitioners are in contractual relationship with the Corporation. Clause 5 of their appointment letter describes the functions and duties of their job which reads as under:
(5) Your function and duty will be recommend suitable persons for appointment in the Corporation as Sales Representative (whose legal status will be of a "State Life Agent" (an Agent whose name appears on the Registrar of Agents maintained by the Corporation and who has a valid and subsisting contract in writing with the Corporation to act as an Agent), and to train, supervise and motivate them so as to yield the best results of business production and persistency. The group of Sales representatives working directly under your supervision will compromise your "Direct Unit".
You will also supervise your indirect unit compromising of Sales Officers and their teams.
4. The question whether commission agents of the Corporation are its employees came up before the Hon'ble Supreme Court in CPLA Nos,868-K of 2002 and 869-K of 2002. The Hon'ble Supreme Court agreed with the conclusion of the learned Sindh High Court which dismissed the constitutional petitions filed by the commission agents as being not maintainable. The relevant portion of the judgment of the Hon'ble Supreme Court reads as under: Petitioners' counsel was not in a position to controvert the fact that the petitioners are not the regular employees of the Corporation within the meaning of the expression "em ploye es" as defined in section 2(c) of the State Life Employees (Service) Regulations, 1973, which means a full time employee of the Corporation on monthly salary but does not include salaried officers whose employment are dependent on procuration of business except those who are classed as Area Managers or Chief Managers by the competent authority. In the absence of any legal status as to their legal right or character and the alleged invasion of their legal or fundamental right, we are surely in a manner of doubt whether the petitioners would be entitled to invoke the Corporation jurisdiction of the High Court as resorted by them. Since we are least convinced with the status of the petitioners as aggrieved persons within the meaning of the term, we are inclined to agree with the conclusion arrived at by the High Court in the impugned judgment on the question of maintainability of the writ petition.
5. In view of the aforementioned observations of the Hon'ble Supreme Court, it is clear that the petitioners are not the regular employees of the Corporation. In the circumstances, the Corporation is entitled to deduct advanced income tax on the commission payable to them in terms of section 233 of the Ordinance.
6. In the result, this writ petition being not maintainable is dismissed.