Messrs THE LAHORE TEXTILE & GENERAL MILLS LTD., LAHORE and others vs THE FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and others
This matter concerns a series of civil petitions challenging the imposition of income tax based solely on 'turnover' under the Income Tax Ordinance. The core legal question granted for leave to appeal is whether the Federal Legislature possesses the constitutional authority, under Item No. 47 of the Federal Legislative List, Part I, of the Constitution (Fourth Schedule), to impose income tax calculated exclusively on turnover without providing an opportunity for subsequent adjustment based on actual income. The Court granted leave to appeal to examine the validity of Sections 80-C, 80-CC, and 80-D of the Income Tax Ordinance in light of this constitutional limitation. The Court also directed that notice be issued to the Attorney-General pursuant to Order XXVII, Rule 1 of the Code of Civil Procedure 1908, given the constitutional implications of the challenge. Pending the final adjudication of these appeals, the Court ordered that existing interim relief remain in force and prioritized the hearing of these matters due to their impact on federal government finances.
- Is the imposition of income tax based solely on turnover, without adjustment for actual income, a permissible exercise of legislative power under the Federal Legislative List?
- Does the imposition of turnover-based tax exceed the legislative authority granted to the Federal Legislature under the Constitution of Pakistan?
- Item No. 47, Federal Legislative List, Part I, Fourth Schedule, Constitution of Pakistan 1973
- Section 80-C, Income Tax Ordinance 1979
- Section 80-CC, Income Tax Ordinance 1979
- Section 80-D, Income Tax Ordinance 1979
- Order XXVII Rule 1, Code of Civil Procedure 1908
ORDER
' SALEEM AKHTAR, J.---Against the judgment impugned leave has been granted in Civil Petitions Nos.234, 235, 241, 244, 252, 255, 274, 275 and 179-L of 1995 in the following manner:- "Leave to appeal is granted to consider whether the imposition of I income-tax on the basis of 'turn over' alone, without giving an opportunity to tax subsequently adjusted with reference to his actual income, is a permissible exercise of legislative power of taxation as enjoyed by the Federal Legislature in pursuance of Item No,47 of the Federal Legislative List, Part I, of the Constitution (Fourth Schedule).
(2) As the question raised will have hearing upon the validity of Sections 80-C, 80-CC and 80-D, Income Tax Ordinance, and need construction of the Constitution notice be issued to the Attorney- General as required by Rule 1, Order XXVII, Civil Procedure Code.
(3) During the pendency of the appeals the interim order already made will remain in force.
(4) As the appeals involve the finance of the Federal Government these should be heard at an early date."
2. Accordingly, we grant leave and pass interim order in the same terms. This appeal may be heard alongwith the appeals arising from the aforesaid petitions. Notice be issued to the Attorney- General.