SHERAZ ZAKA VS FEDERATION OF PAKISTAN through Secretary and Ministry of Finance, 2018 PTD-LAHORE-HIGH-COURT-LAHORE 336 (2017)

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 99-A & Ninth Schedule [as amended by Income Tax (Amendment) Act (III of 2016)]---Constitution of Pakistan, Art.25---Constitutional petition---Discrimination---Intelligible differentia---Petitioner assailed benefit granted to traders through amendment made by Income Tax (Amendment) Act, 2016, on the plea of discrimination---Validity---None of the traders belonging to same class raised voice against benefit under the enactment to have been denied to them---Such measure could be regarded as an affirmative action on the part of Federal Government and one which was actuated by good faith and proper purposes---Petitioner could not point out any similarly placed individuals and persons who were discriminated by the provisions of S.99-A and Ninth Schedule to the Income Tax Ordinance, 2001---Whether in case the benefit under the amending Act was handed out to a certain class of trader that any other class of individuals and citizens would stand to be treated differently having the same status and financial standing was not clear---Such was permissible classification and did not impinge upon the right of any individual in terms of Art. 25 of the Constitution---Reasonable classification could be made in respect of similarly situated persons who were required to be treated alike---Reasonable classification in such matter was the class of traders contemplated by the provisions under challenge and petitioner did not claim any other class to be similarly situated---Constitutional petition was dismissed in circumstances.

Anoud Power Generation Ltd. and others v. Federation of Pakistan and others PLD 2001 SC 340 ref.

(b) Constitution of Pakistan---

----Art. 25---Discrimination---Striking down a law---Scope---In order that a law be struck down on the touchstone of Art. 25 of the Constitution, it must be demonstrated that such law is not based on intelligible criteria and does not have a nexus with the purpose of the law.

(c) Judicial Review---

----Fiscal law---Interpretation/analysis---Discretionary powers---Principle---In matters of economic discretionary powers, a broad and expansive leavay is granted to government and courts have always shown restraint in the analysis of such matters in their power of judicial review.

Elahi Cotton Mill's Ltd. v. Federation of Pakistan PLD 1997 SC 582 rel.

Sheraz Zaka for Petitioner in person.

Nadeem Mehmood Mian Asstt. Attorney-General.

Sarfraz Ahmed Cheema for Respondents.

ORDER

SHAHID KARIM, J.---This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, ("the Constitution") seeks the following prayer:-

"In resuming, the forgoing actual, factual and legal submissions, it is therefore respectfully prayed to declare the Income Tax Amendment Act, 2015 as well as its general provisions unconstitutional and void ab-initio in contravention of Article 25 and Article 14 of the Constitution of Islamic Republic of Pakistan, 1973."

2.The petitioner is a practitioner of law, an advocate of High Court and claims to be a social activist and has brought this petition as a social action petition by which it is alleged that the benefit granted by the provisions of Income Tax (Amendment) Act, 2016 (Amendment Act, 2016) impinged upon the fundamental right of the petitioner to be treated in accordance with law and to be dealt within the same manner as similarly situated individuals and persons. In short, he alleges the contravention of Articles 25 and 14 of the Constitution.

3.I have heard the learned counsel for the parties.

4.By the Amendment Act, 2016, special provisions were enacted in respect of traders. Therefore, the enactment was by way of special measures in order to ensnare a special class of businessmen who were not within the tax net prior thereto and to allure them to file a tax return in accordance with the provisions of section 99A read with the Ninth Schedule. The entire purpose of enacting section 99A and the Ninth Schedule to the Amendment Act, 2016 it was to give opportunity to the traders to file return up to a certain date. The concession was in respect of traders who had not filed their returns for the preceding ten tax years up to 31st day of December, 2015. From a reading of the provisions of the Amendment Act, 2016, is seems that the sole purpose of promulgating the said amendment in the Income Tax Ordinance, 2001, was to broaden the tax base so that more taxpayers could be brought into the tax regime and which would, in turn increase manifold the amount of tax which was being, collected by the Federal Government. Therefore, it can be said that the enactment did not, in any manner, give out any extraordinary benefit which was being denied to similarly placed persons. The measure seems to pander to a special class and no material has been produced or brought on record to establish that traders similarly placed are being discriminated by the sections of law under challenge. There is no data to support the assertions, too, that any of the traders belonging to the same class have raised a voice against the benefit under the enactment to have been denied them. In fact, the measure may very well be regarded as an affirmative action on the part of the Federal Government and one which is actuated by good faith and proper purposes. The petitioner has not been able to point to any similarly placed individuals and persons who would be discriminated by the provisions under challenge. In short, it is not clear as to whether in case the benefit under the Amendment Act, 2016 is handed out to a certain class of traders that any other class of individuals and citizens would stand to be treated differently having the same status and financial standing. This, in my opinion, is permissible classification and does not impinge upon the right of any individual in terms of Article 25 of the. Constitution. One has to bear in mind that in analyzing the provisions on the touchstone of Article 25, it is not the standing of the petitioner which is in question vis-a-vis the traders covered by the Amendment Act, 2016, but the traders who are similarly placed and so, allege discrimination. The question raised is not whether the enactment is outwith the authority of the Parliament but that it discriminates in favour of a section of taxpayers. However, the argument loses sight of the fundamental distinction sought to be drawn here. It is that the Amendment Act, 2016 is directed in respect of traders who have not filed a return for the preceding ten tax years. This is the class which it creates thereby and no comparison can be drawn with traders who have so filed their returns in the last ten tax years, which constitute a class apart.

5.The petitioner further contended that preferential treatment has been given out to the traders in question, in that, their tax returns are exempted from the proceedings of audit under Sections 177 and 214C. Although, it has been mentioned in Part-II or Ninth Schedule sought to be challenged that the said traders shall not be subjected to the provisions of sections 177 and 214C for tax years 2015 to 2018, however the return qualifying under the Ninth Schedule will be subject to amendment under Section 122 where definite information comes into the knowledge of the Commissioner and it follows therefore that any return filed by the traders covered by the Amendment Act, 2016 will always be subject to an amendment under Section 122 by the Commissioner concerned.

6.In order that a law be struck down on the touchstone of Article 25 of the Constitution, it must be demonstrated that the said law is not based on intelligible criteria does not have a nexus with the purpose of the law. This has clearly not been shown to exist in the instant case by the petitioner and the Amendment Act, 2016 seems to have a purpose to its enactment and which clearly is to increase the financial base of the Federal Government and to rope in as may taxpayers as possible and which would ultimately benefit the exchequer. The said benefit will trickle down to the general public as there will be more money credited to the accounts of Federal Consolidated Fund. No constitutional provision has been cited by the petitioner which prohibits the promulgation of a statute which seeks to broaden the tax base and to enhance the Financial capability of the Federal Government. It is also not denied that any traders who do not file their returns in terms of the Amendment Act, 2016 will be dealt with in accordance with law for failure to file their tax returns and to have themselves registered as taxpayers.

7.In matters of economic discretionary powers, a broad and expansive leavay is granted to the Government and Courts have always shown, restraint in the analysis of such matters in their power of judicial review. It would suffice to quote from the celebrate judgment of Elahi Cotton Mill Ltd. v. Federation of Pakistan (PLD 1997 SC 582). Ajmal Mian, J. enunciated the principles succinctly, as follows:--

"That in view of wide variety of diverse economic criteria which are to be considered for the formulation of a fiscal policy, Legislature enjoys a wide latitude in the matter of selection of persons, subject-matter, events, etc. for taxation. But with all this latitude certain irreducible desiderata of equality shall govern classification for differential treatment in taxation law as well.

(ii) That Courts while interpreting laws relating to economic activities view the same with greater latitude than the laws relating to civil rights such as freedom of speech, religion etc., keeping in view the complexity of economic problems which do not admit of solution through any doctrinaire or straitjacket formula as pointed out by Holmes, J. in one of his judgments.

(v) That "a State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably". (Willi's Constitutional Law).

(vii) That the policy of a tax, in its operation, may result in hardships or advantages or disadvantages to individual assessees which are accidental and inevitable. Simipliciter, this fact will not constitute violation of any of the fundamental rights.

(viii) That while interpreting constitutional provisions Court should keep in mind, social setting of the country, growing requirements of the society/nation, burning problems of the day and the complex issues facing the people, which the Legislature in its wisdom through legislation seeks to solve, The judicial approach should be dynamic rather than static, pragmatic and not pedantic and elastic rather, than rigid.

(ix) That the law should be saved rather than be destroyed and the Court must lean in favour of upholding the constitutionality of a legislation keeping in view that the rule of Constitutional interpretation is that there is a presumption in favour of the constitutionality of the legislative enactments unless ex facie it is violative of a Constitutional provision.

32. We have summarised hereinabove in para. 31 the ratio decidendi of the above discussed cases and certain pertinent observations made therein. A perusal of above sub-paras. (i) to (xxx) of para. 31 indicates that the same do not advance the case of the appellants. On the contrary, they reinforce the principle of law that the Legislature, particularly in economic activities, enjoys a wide latitude in the matter of selection of persons, subject-matters, events etc. for taxation the presumption is in favour of the validity of the legislation. The burden to prove that the same is invalid is on the person who alleges it.

7.The petitioner has relied upon a number of judgments which are not relevant to the determination of the controversy in hand. In fact, in Anoud Power Generation Limited and others v. Federation of Pakistan and others (PLD 2001 Supreme Court 340), a precedent referred by Mr. Sarfraz Ahmad Cheema, Advocate, counsel for the respondents, the following observations will have relevance in the context of the present controversy:

"First of all in this behalf it is to be seen that in fiscal statute element of discrimination cannot be pleaded nor such statute can be struck down at the touchstone of Article 25 of the Constitutional of Islamic Republic of Pakistan. This Court in number of cases while interpreting question of discrimination between the persons placed in like situation and circumstances has also held that different laws can be promulgated to deal with various types of persons, however, subject to reasonable classification. Ready reference may be made to the case of I.A. Sherwani and others v. Government of Pakistan 1991 SCMR 1041; Government of Balochistan through Additional Chief Secretary v. Azizullah Memon and 16 others PLD 1993 SC 341. The principles discussed in these two judgments on the question of classification with regard to quality of citizens have been reaffirmed in the case of Mehram Ali and others v. Federation of Pakistan and others PLD 1998 SC 1445. One of the principle laid down in these judgments being relevant for disposal of instant matter is reproduced hereinbelow:--

"That equal protection of law does not envisage that every citizen is treated alike in all circumstances, but it contemplates that persons similarly situated or similarly placed are to be treated alike."

8.Thus, in the holding of the Supreme Court of Pakistan, different laws can be promulgated to deal with various types of persons and certainly a reasonable classification can be made in respect of similarly situated persons who are required to be treated alike. The reasonable classification in this case is the class of traders contemplated by the provisions under challenge and the petitioner does not claim any other class to be similarly situated.

9.In view of the above, this petition is without merit and is, therefore, dismissed.

MH/S-80/L Petition dismissed.