SAEEDULLAH KHAN vs CENTRAL BOARD OF REVENUE And Others
The petitioner, a civil contractor engaged in road, bridge, and dam construction, filed a petition for leave to appeal against the Lahore High Court's order dismissing his writ petition. The writ petition challenged the levy of withholding tax at the rate of 3% under section 80-C of the Income Tax Ordinance, 1979, and its increase to 5% under the Finance Act, 1995. The High Court had relied on earlier judgments upholding the validity of section 80-C and determining that the deduction rate is governed by the time of receipt of payment. The Supreme Court considered that leave to appeal had already been granted in similar matters to examine whether imposing income tax based solely on turnover without adjustment for actual income is a permissible exercise of legislative taxing power under Item 47 of the Federal Legislative List, Part I, of the Constitution of Pakistan. The Supreme Court consequently granted leave to appeal and issued interim orders for the pending appeals.
- Whether the imposition of income-tax on the basis of turnover alone, without providing an opportunity to adjust with reference to actual income, is a permissible exercise of the legislative power of taxation?
- Whether the deduction of income tax under section 80-C of the Income Tax Ordinance, 1979, shall be at the rate prevalent at the time of receipt of payment or at the date of the contract?
- Is section 80-C of the Income Tax Ordinance, 1979, a valid piece of legislation?
- Section 80-C, Income Tax Ordinance 1979
- Section 80-CC, Income Tax Ordinance 1979
- Section 80-D, Income Tax Ordinance 1979
- Finance Act 1995
ORDER
AJMAL MIAN, J.--- The petitioner is engaged in the construction of roads, bridges and dams as a civil contractor. He has filed the present petition for leave to appeal against the order dated 23-12- 1996 of a learned Single Judge of the Lahore High Court passed in Writ Petition No. 23794 of 1996, filed by the petitioner against the levy of withholding tax at the rate of 3% under section 80-C of the income Tax Ordinance, 1979, hereinafter referred to as the Ordinance,. and its increase to 5% under the Finance Act, 1995, dismissing the same on the ground that a Division Bench of the above High Court in the case of Messrs Aisha Spinning Mills Ltd v. Federation of Pakistan and 2 others 1995 PTD 493 has held that section 80-C of the Ordinance was a valid legislation and in Writ Petition No. 5501 of 1996 and seven other connected writ petitions, a learned Single Judge of the said High Court has also held that deduction of income tax under section 80-C of the Ordinance shall be at the rate which was prevalent at the time of receipt of payment and not on the dates of the contract under which these payments were made. The petitioner has, therefore, filed the present petition for leave to appeal.
2. In support of the above petition Ch. Mushtaq Ahmad Khan, learned counsel for, the petitioner, has produced the copies of the leave granting orders in a number of petition for leave to appeal.
The main order was passed in Civil Petitions. Nos. 234, 235*24|-r 244, 252, 255, 274, 275 and 279-L of 1995, wherein leave was granted as under:- "Leave to appeal is granted to consider whether the imposition of 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 bearing upon the validity of sections 80C, 90-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."
The above order was followed in the subsequent petitions for leave to appeal.
3. We, accordingly grant leave to appeal in the above petition and pass interim order as above..Leave granted.