UNION BANK LTD. Versus FEDERATION OF PAKISTAN

This judgment shall dispose of Writ Petitions Nos.28002/97; 1067/98 and 1886/98 in all of which the petitioners are Banking Companies and feel aggrieved of the levy of advance tax under section 14-D of the Wealth Tax Act, 1963 which was introduced by Finance Supplementary (Amendment) Act, 1997.

2. Apart from challenging the vires of the provisions Mr. Zahid Hamid, Advocate for the petitioner has contended that the Wealth Tax Act, 1963 is not applicable to Banking Companies as ordained by section 45 of the aforesaid Act and. therefore, the respondents have no right to charge any tax of the nature mentioned in section 14-D from the petitioner.

3. This contention of the learned counsel is unexceptionable. It is obvious from bare reading of section 45 of the Wealth Tax Act, 1963 that the Wealth Tax Act does not apply to Banking Companies. Consequently, any provision contained therein cannot be pressed into service to recover any tax of the nature mentioned in the Act itself from a Banking Company.

Mr. M. Ilyas Khan, the learned counsel for the respondents has, however, contended that section 14-D operates notwithstanding anything contained in the Act and, therefore, any person including a Banking Company who owns a motor vehicle is liable to pay the tax. This contention is misconceived. Section 14-D has been inserted by the Finance' Supplementary (Amendment) Act, 1997 in the Wealth Tax Act, 1963 and has been made a part of the same. If the Act itself does not apply to certain persons or concerns no part of it can be made applicable.

5. Furthermore, section 14-D itself requires a person to pay the tax in advance on a motor vehicle mentioned therein which is to be treated as an advance tax in respect of the assessment year commencing on the first day of July next following the income year in which it is paid and it shall be adjusted in computing tax payable by the assessee for the said assessment year. Admittedly in view of section 45 of the Wealth Tax Act, 1963 no wealth tax is payable by a Banking Company as the Act itself is not applicable. Consequently the question of advance payment of any tax would not arise. Section 14-D itself treates the tax is under it as an advance payment of the wealth tax. If a person is not liable to pay a certain kind of tax he cannot be asked to pay that tax in advance. Similar question was raised before the Supreme Court of Pakistan in Ellahi Cotton Mills v. Federation of Pakistan 1997 PTD 1555 = PLD 1997 SC 582 wherein it was held that where there is an exemption from the payment of tax it would equally apply to advance tax.

In view of the above, these petitions are allowed and the demand of the respondents for payment of advance wealth tax under section 14-D of Wealth Tax Act from the Banking Companies is declared to be without lawful authority and of no legal effect.

No order as to costs.

M.B.A./K-12/L ??????????????????????????????????????????????????????????????????????????????????? Petitions allowed.