Province of Sindh, etc. vs Young's (Pvt) Ltd and others, Muhammad Salman
This matter originated as an appeal before the Supreme Court of Pakistan concerning the interpretation of the Sindh Sales Tax on Services Act, 2011. The core legal question presented was whether the act of renting out immovable property by a landlord to a tenant constitutes a "taxable service" under the statute, thereby subjecting the transaction to sales tax. The Supreme Court examined the arguments raised by the appellant, who contended that such renting activity falls under the ambit of taxable services pursuant to sections 3 and 8 of the Act. Upon review, the Court upheld the reasoning of the High Court, which determined that a cumulative reading of the relevant provisions—specifically sections 2(72B), 2(72C), 3, 4, 5, and 8—demonstrates that a "taxable service" must be provided by a registered person in the course of an economic activity. The Court held that the mere renting out of immovable property does not qualify as a taxable service under the Act. Consequently, the appeals were dismissed, affirming that such transactions are not liable to sales tax on services.
- Does the mere renting out of immovable property by a landlord to a tenant constitute a taxable service under the Sindh Sales Tax on Services Act, 2011?
- What are the essential requirements for a service to be classified as a taxable service under the Sindh Sales Tax on Services Act, 2011?
- Is a transaction involving the renting of property subject to sales tax on services if it is not provided by a registered person in the course of an economic activity?
- Section 2(72B), Sindh Sales Tax on Services Act, 2011
- Section 2(72C), Sindh Sales Tax on Services Act, 2011
- Section 3, Sindh Sales Tax on Services Act, 2011
- Section 4, Sindh Sales Tax on Services Act, 2011
- Section 5, Sindh Sales Tax on Services Act, 2011
- Section 8, Sindh Sales Tax on Services Act, 2011
MR JUSTICE SYED MANSOOR ALI SHAH.--(1). The question of law before us is whether the mere renting out of immovable property by a landlord to a tenant on rent is a "taxable service" as defined under the Sindh Sales Tax on Services Act, 2011 ("Act"). Leave was granted in this case to consider the scope of "services" under the Act.
2. Learned counsel for the appellant argued that renting of immovable property per se is a "taxable service" under section 3 of the Act and, therefore, liable to sales tax on services under section 8 of the Act. We have examined the impugned judgment in detail. The High Court, after an elaborate discussion, held that a cumulative reading of sections 2(72B), 2(72C), 3, 4, 5 and 8 of the Act shows that "taxable service" is that which is provided by a registered person in the course of an economic activity from his registered office or place of business in Sindh. What the appellants want to tax is not taxable service liable to taxation under the Act.
The mere renting out of property by a landlord to a tenant is not taxable as it is not a taxable service.
3. The grounds raised by the appellants have been convincingly answered in the impugned judgment. We are in complete agreement with the learned Judges of the High Court and see no reason to take a view different from the one taken by the High Court in its well-reasoned judgment or the necessity to further elaborate on any aspect of the matter. The listed appeals are, therefore, dismissed.
4. In view of the dismissal of the main appeals the 'listed C.M.A seeking impleadment as a party has become infructuous and is disposed of accordingly.