(a) Punjab Finance Act (NV of 1977)‑‑‑

‑‑‑‑S.3 & Sched. [as amended by Punjab Finance Act (IX of 1999)]‑‑ Professional tax‑‑‑Levy of‑‑‑Substitution of Schedule‑‑‑Effect‑‑‑Tax was to be calculated on the basis of paid‑up capital of the incorporated companies.

(b) Punjab Finance Act (XV of 1977)‑‑‑

‑‑‑‑S.3 & Sched. [as amended by .Punjab Finance Act (IX of 1999)]‑‑ Professional tax‑‑‑Schedule which fixed the different rates on the basis of paid‑up capital of incorporated companies did not travel beyond the scope of S.3 of Punjab Finance Act, 1977 and the same was based upon reasonable classification and intelligible differentia.

Siemen Pakistan Engineering Company Ltd. v, The Province of Punjab through Secretary, Revenue Department, Government of Punjab and 2 others PLD 1999 Lah. 244 distinguished.

(c) Punjab Finance Act (XV of 1977)‑‑‑

‑‑‑‑S.3 & Sched. [as amended by* Punjab Finance Act (IX of 1999)]‑‑ Constitution of Pakistan (1973), Art.199‑‑‑Constitutional petition‑‑ Professional tax, levy of‑‑‑Levy of the tax on the basis of paid‑up capital instead of income‑tax paid‑‑‑Contention of the petitioner was that the Schedule was inconsistent with the provisions of S.3 of Punjab Finance Act, 1977‑‑‑Validity‑‑‑No inconsistency existed between the charging section and the Schedule as the same had merely laid down the rates at which the taxes were to be paid by different classes of incorporated companies‑‑ Classification of companies on the basis of their paid‑up capital was rational measure and was in furtherance of the purpose for which the professional tax had been levied‑‑Petition was dismissed in circumstances.

Siemen Pakistan Engineering Company Ltd. v. The Province of Punjab through Secretary, Revenue Department, Government of Punjab and 2 others PLD 1999 Lah. 244 and Excise & Taxation Officer, Karachi and another v. Burmah Shell Storage and Distribution Company of Pakistan Ltd. and 5 others 1993 SCMR 338 distinguished.

(d) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑--Art. 25‑‑‑Equality‑‑‑Scope‑‑‑Classification‑‑‑Premissibility‑‑‑Principles‑‑ Reasonable classification is not prohibited by the Constitution and the same requires that all persons similarly placed should be treated alike.

Ejaz Ahmad Awan for Petitioners.

A. A.‑G. for Respondents.

JUDGMENT

This judgment shall dispose of Writ Petition No.18187 of 1999 alongwith other petitions mentioned in the list annexed herewith, in all of which common question which falls for determination is as regards the validity of the professional tax levied by the Government of Punjab by section 3 of the Punjab Finance Act, 1977.

2. The background to which the dispute has arisen is that by virtue of Punjab Finance Act, 1977, the Government of Punjab levied a tax on persons engaged in professions, trades, callings or employment w.e.f. 1‑7‑1977 at the rates mentioned in the Schedule. This levy was challenged in a large number of Constitutional petitions inter alia by the petitioners. Those petitions were accepted by this Court vide its judgment reported as Siemen Pakistan Engineering Company Ltd. v. The Province of Punjab through Secretary Revenue Department, Government of Punjab and 2 others PLD 1999 Lah. 244, primarily on two grounds, firstly; that under Article 163 of the Constitution of Islamic Republic of Pakistan, 1973, by the Professions Tax Limitation Act, 1941, which was an existing law, maximum limit of tax has been fixed by the Parliament to be Rs.50 and no tax beyond that limit could be levied and, secondly; that the Schedule to the Act in which the rate of taxation was mentioned travelled beyond the scope of charging section.

3. The professional tax in the. first instance was levied by the Punjab Finance Act, 1977. That Act was amended by the Punjab Finance Act, 1997. It appears that subsequently the Parliament amended the Professions Tax Limitation Act, 1941 by the Finance Act, 1999 so as to provide that the maximum rate of taxation would be Rs.1,00,000. In view of this amendment, the Provincial Assembly amended the Punjab Finance Act, 1977 by the Punjab Finance Act, 1997 and substituted the existing Schedule with the following:‑‑‑

SECOND SCHEDULE

4. The vires of the amendment have been challenged by the petitioners by filing these Constitutional petitions.

5. The learned counsel for the

petitioners maintains that the second Schedule, as it stands after its amendment by the Finance Act, 1999, is ultra vires the main Act and is also violative of the judgment of this Court in Siemen Pakistan Engineering Company's case (supra). He elaborated that section 3 ‑of the Punjab Finance Act, 1977 which is charging section levies tax on persons engaged in professions, trades, callings or employment in the Province of Punjab and the rates specified in the Second Schedule must have nexus to the professions, trades, callings or employments while according to the Schedule as amended by the Finance Act, 1999, the rate of taxation is based upon paid‑up capital of the Companies.

6. The learned Assistant Advocate‑General, however, has argued that the judgment of this Court in Siemen Pakistan Engineering Company's case (supra) has lost its efficacy in view of the amendment by the Finance Act, 1999, whereby the maximum limit of taxation has been fixed at Rs.1,00,000. He argued that the Provincial Legislature was still within its powers to amend the Schedule to section 3 of the Act and provide for levy of the tax on the basis of paid‑up capital of the Companies, who are engaged in business.

7. Before proceeding any further, it is essential to analyse the judgment of this Court delivered in Siemen Pakistan Engineering Company's case (supra). In that case, the dispute between the parties related to levy of professional tax by the Punjab Finance Act, 1977 as amended by Punjab Finance Act, 1997 at the rates prescribed in the Schedule, which was struck down on two grounds, firstly; that under Article 163 of the Constitution, the Provincial Legislature has the power to levy tax on professions, trades, callings or employments subject to any limitation which may have been prescribed by the Federal Legislature. It was noticed that by the Professions Tax Limitation Act, 1941, the maximum limit has been laid down as Rs.50 and, therefore, no tax beyond the limits fixed by the Parliament could be levied. This ground ceases to exist after the amendment of the Professions Tax Limitation Act, 1941 by the Parliament.

8. The other ground which prevailed with this Court at that time was that the tax can only be levied on professions, trades, callings or employments as mentioned in section 3 of the Act and the taxable event in such cases is factum of being in the trades, professions, callings or employments and, therefore, the rate of taxation must necessarily be relatable in that event. The effect of substitution of the Schedule to the Punjab Finance Act, 1977 as amended by the Punjab Finance Act, 1997 by Finance Act, 1999 is that although previously the rate of taxation was based upon the income‑tax paid by the Companies but after the substitution, the tax has to be calculated on the basis of paid capital so far as incorporated companies are concerned.

9. There is no force in the contentions of the learned counsel for the petitioners that the Schedule substituted by the Finance Act, 1999, travels beyond the scope of the charging section. It needs to be reiterated that under section 3 of the Punjab Finance Act, 1977, which is the charging section, tax is to be levied on professions, trades, callings or employments and the taxable event in such a case is the factum of a person being in such professions, trades or callings. Admittedly the petitioners are carrying on business and are, therefore, liable to pay professional tax. The Schedule which fixes the different rates on the basis of paid‑up capital of the incorporated companies does not travel beyond the scope of section 3 of the Act and is based upon reasonable classification and intelligible differentia. As already observed, there is no dispute that the petitioners fall within the mischief of section 3 of the Punjab Finance Act, 1977 and, therefore, they cannot escape their liability. As observed earlier, in Siemen's case (supra) is wholly distinguishable as the main ground which prevailed with this Court was that the Provincial Legislature has acceded the limits fixed by the Parliament and secondly that the Schedule which was purportedly to levy tax on the basis of income‑tax paid by the Companies was not followed.

10. The learned counsel for the petitioner has relied upon the case of Excise and Taxation Officer, Karachi and another v. Burmah Shell Storage and Distribution Company of Pakistan Ltd. and 5 others (1993 SCMR 338). In that case, by section 10 of the West Pakistan Finance Act (I of 1962), a tax on the value of the goods imported or exported, as the case may be, against the licence was levied according to the rates set out in the Third

Schedule to the Act. The Schedule, however, instead of providing for scale on the basis of value of the goods imported or exported, provided scale purporting to levy tax on the value of the licenses. The Supreme Court of Pakistan was pleased to hold the Schedule was inconsistent with the charging section and was, therefore, struck down by it in that case.

11. In the present case, there is no inconsistency between the charging section and the Schedule which merely lays down the rates at which the taxes are to be paid by different classes or incorporated companies. It may be noted that the equality clause in the Constitution does not prohibit reasonable classification though it requires that all persons similarly placed should be treated alike. The classification of companies on the basis of their paid‑up capital is rational and is in furtherance of the purpose for which the tax has been levied.

In view of what has been said above, all these petitions fail and are dismissed leaving the parties to bear their own costs.

Q.M.H./M.A.K./P‑41/L Petitions dismissed.