Lawful Establishment of Punjab Revenue Authority

Lawful Establishment of Punjab Revenue Authority Appointments - Public Sector Organizations Autonomous Body Case Laws Constitutional Law Employment & Incentives Knowledge - Constitutional Law Lahore High Court Litigation & Arbitration Provincial Legislation Punjab Revenue Authority Sales Tax - Service Solutions - Constitutional Law Ultra Vires Void ab Initio Mr. Justice Syed Mansoor Ali Shah in his judgment has decided the issue regarding lawful establishment of Punjab Revenue Authority under Punjab Revenue Authority Act 2012 in Writ Petition No. 4407 of 2015.

1. The petitioners are taxpayers, who, agitate, amongst other grounds, that Punjab Revenue Authority (“PRA or Authority”) has not been lawfully established or constituted under section 3 of the Punjab Revenue Authority Act, 2012 (“Act-II”). They submit that initially the Government only appointed a Chairperson of the Punjab Revenue Authority, who unlawfully held himself out as the Authority, when the law provides that the Authority shall constitute a Chairperson and at least four Members. They also agitate that the mode of appointment of the Chairperson and the Members is not in accordance with the provisions of Act-II and also offends the pronouncements of the superior courts, which hold that appointments to public sector institutions should be open, fair, transparent, consultative and deliberative.

2. It is submitted that after the filing of these petitions, the Government got wind of the illegalities in the constitution of the Authority and in their passion to rectify things, hurriedly appointed Members on ex-officio basis, which the law does not permit and later on promulgated the Amending Ordinance, validating the acts of the Chairperson, without curing the defect i.e., substituting and empowering the Chairperson with the Authority. It is submitted that the Government failed to rectify things and in haste, jumped out of the frying pan into the fire.

3. The petitioners submit that without the establishment of the Authority, all the orders, notifications, directions and Rules framed by the Chairperson (assuming himself to be the Authority) are unconstitutional, illegal and without lawful authority. It is also submitted that during the course of this litigation, the Governor of the Province, promulgated The Punjab Revenue Authority (Amendment) Ordinance, 2015 (“Amending Ordinance”) on 22.10.2015 in an effort to validate the acts and orders passed by the Chairperson. The taxpayers have also challenged the constitutionality and legality of the said Ordinance, through separate writ petitions, which are also being decided through this judgment. It is argued that in terms of Article 128 of the Constitution, the Ordinance stood repealed after 90 days on 20.01.2016, hence, the proposed amendment has died its own death. It is submitted that after repeal of the Ordinance, the position prior to the Ordinance stands revived.

4. On the other hand, learned counsel for the respondent Authority has principally placed reliance on Section 8 of Act-II to submit that no act, proceedings, decisions or orders of the Authority shall be invalid for the reason only of the existence of vacancy or any defect in the constitution of the Authority. He further submits that in any case the Authority stood lawfully constituted on 15.06.2015, when remaining members were appointed on ex-officio basis and, therefore, all acts taken after the said date are lawful and in accordance with law.

5. Learned DAG and the learned law officers, in response to notice under Order 27-A of CPC, adopted the arguments of learned counsel for the respondent Authority and add that lapse of the Ordinance does not affect the validity of the amendment and, therefore, the validation clause is there to stay, inspite of the lapse of the Amending Ordinance and, therefore, all the actions of the Chairperson stand protected. Learned Law Officers further submitted that Ordinance has been placed before the Provincial Assembly in its 18th session which has been adjourned and in terms of Articles 79, 117 128 the bill is deemed to be pending rather than having been lapsed.

6. I have heard the arguments of the parties and have gone through the law, as well as, the compendium of notifications issued from time to time under Act-II (the compendium of notifications was supplied by the counsel representing the Authority and has been placed on the record of this case as “Mark-A” (booklet).

Opinion of the Court

7. At the outset it might be useful to note that in one of the initial hearings, learned Advocate General, Punjab was called and apprised of the case set out against the Government. He sought time to redress the issue. The Government, instead of establishing and constituting the Authority under the law and salvaging the situation, decided to promulgate the Amending Ordinance, attempting to validate the acts of the Chairperson. It is noted for record that even though the petitioners have challenged the imposition of tax on a number of other grounds, this judgment addresses the more fundamental question of the establishment and constitution of the Authority under Act-II. Hence, petitioners’ right to challenge the levy on other grounds, remains intact.

Legislative Design

8. In Punjab, the architecture of sales tax on services stands on two separate pieces of legislation i.e., Punjab Sales Tax on Services Act, 2012 (“Act-I”) (Act XLII of 2012) and Punjab Revenue Authority Act, 2012 (“Act-II”) (Act XLIII of 2012).

Punjab Sales Tax on Services Act, 2012 (“Act-I”)

9. Act-I provides for levy of a tax on services provided, rendered, initiated, received, originated, executed, or consumed in the Punjab. The “Authority” provided under Act-I is Punjab Revenue Authority established under Act-II. The Authority has been entrusted with the powers of registration, assessment, administration and collection of taxes, etc. Hence, the Authority is at the heart of the taxing statute and pumps its body to life. Operationalization of the taxing statute (Act-I) presupposes the establishment and constitution of the Authority under Act-II. So while sales tax on services is levied under Act-I, it gets administered through the Authority, once the Authority has been established and functionalized (duly constituted) under Act-II.

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