1. This appeal assails the judgment dated 30th July 2008 of a learned Single Judge of the Lahore High Court, Lahore, whereby he had partly modified the orders of the Customs, Excise & Sales Tax Appellate Tribunal by holding that, “the charge created in principle is held to be as lawful while the period of the same is reduced to the extend [sic] of the period fixed by law [Sales Tax Act, 1990] u/s 36(2)”.
2. Mr. Mudassar Khalid Abbasi, the learned Assistant Advocate General, Punjab (“AAG”), stated that the respondents could not levy sales tax under the Constitution of the Islamic Republic of Pakistan (“the Constitution”) on the appellant, an XEN (Executive Engineer) of the Government of Punjab who performs duties for and on behalf of the Government. He referred to the appellant’s petition filed before the High Court and the specific plea taken in this regard, which according to him went to the root of the matter but had not been properly considered. The said objection is reproduced here under:
“The levy of sales tax upon the petitioner is against the constitutional provisions i.e. Article 164, 165 & Article 2A, thus levy of such tax is unlawful. The petitioner is not carrying on any business or trade for any income or profit. Thus is immune from levy of sales tax.”
The learned AAG further stated that the learned Judge of the High Court placed reliance upon Article 165A of the Constitution (inserted in the year 1985) and wrongly assumed that after the insertion of Article 165A taxes could be imposed. He contended that the Executive Engineer was an integral component of the Government of Punjab and the relevant provision was Article 165 of the Constitution and Article 165A of the Constitution, on which the learned Judge of the High Court relied, was not applicable to the case. The learned AAG restricted his arguments on the unconstitutionality of the imposition of sales tax, stating that it could not be levied on the property of a provincial government as it was exempted under Article 165 of the Constitution, and stones or spawl (fragments of broken stones) were not excluded there from. Reference was also made to the definition of property contained in Article 260 of the Constitution and reliance was placed upon the case of Central Board of Revenue v S. I. T. E. (PLD 1985 Supreme Court 97) and the Rules of Business, 2011 enacted by the Government of Punjab.
3. Syed Arshad Hussain Shah, the learned counsel for the respondents, stated that the appellant was a registered sales tax payer and had been paying sales tax, therefore, is now estopped from assailing the same. He further stated that the appellant availed of the remedies provided under the Sales Tax Act, 1990 (“Sales Tax Act”) and could not subsequently take cover under Article 165 of the Constitution, which in any event was not applicable to “taxable activity” or “taxable supply” as respectively defined in subsections (35) and (41) of section 2 of the Sales Tax Act.
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