• Apex court allows cantonments to charge property tax until Sindh govt enacts legislation
• Says recovery of previous amounts to remain suspended till final decision in the case

ISLAMABAD: The Supreme Court was told on Thursday that the Sindh government intended to bring a legislation to end a controversy whether the provincial government or the cantonment boards in Karachi will assess and collect the urban property tax from residents of cantonment areas.

A five-judge bench headed by Justice Syed Mansoor Ali Shah ordered the Sindh government to legislate the law within a period of three months.

It said until the new law is devised, the earlier interim relief granted by the court in March 18 will continue.

According to the interim relief, the cantonment boards will charge urban immovable property tax at the rates prescribed under the Sindh Urban Immovable Property Tax Act 1958, but the recovery of previous amounts will remain suspended until final decision of the case.

Barrister Zeeshan Adhi represented the Sindh government.

The apex court also expressed the hope that after the enactment of the legislation, the issue would be resolved forever. However, it said, the Sindh government or any party in case of being aggrieved of the law may again approach the court.

The SC has taken a set of appeals moved by the federal government through the ministry of defence as well as cantonment boards in Karachi against the Jan 6 judgement of the Sindh High Court (SHC) in which it was held that after the amendment in Entry 50 in the Fourth Schedule of the Federal Legislative List (FLL) under the 18th Amendment, the federal government and cantonment boards lacked competence, power, and jurisdiction to levy, charge, impose and recover taxes on any immovable property including tax on the annual rental value of immovable property.

The high court’s judgement had also noted that the 18th Amendment had restored the competence and jurisdiction of the province to levy, charge, recover and legislate on the subject identified and to pursue it accordingly.

At the last hearing on March 18, the Supreme Court had asked the Sindh government why it had failed to resolve the controversy when the option to bring legislation of enacting the law was available to the provincial government under Article 270A(3) of the Constitution and why the matter was being debated at the courts.

In return, the Sindh government’s counsel had offered no plausible answer and sought time to obtain instructions from authorities in this regard.

Attorney General for Pakistan (AGP) Mansoor Usman Awan had also contended that the Sindh Urban Immovable Property Tax Act 1958 was a provincial legislation and the urban rating area includes the cantonments. Subsequently the Presidential Order of 1979: the Cantonments (Urban Immovable Property Tax and Entertainments Duty) Order 1979 was promulgated on Aug 22, 1979 and subsequently protected under 18th Amendment in terms of Article 270A(6) of the Constitution. After the 18th Amendment, the Order 1979 was once again protected under Article 270A(3) of the Constitution.

Thus the only difference between the two laws is that under Order 1979, it was the cantonments that carry out assessment and collection as opposed to the Sindh government, the AGP had stated, adding Order 1979 falls within the federal domain.

The AGP had also contended that due to the SHC judgement, the cantonments had stopped collecting taxes and without funds such boards could not function, thus unable to provide services to the people in the Cantonment areas.

On Thursday, the Sindh government told the Supreme Court that they intended to bring legislation in this regard.

The appeals by the federal and cantonment boards argued that the high court judgement had not appreciated the fact that it was inherent in the nature of a local government to raise taxes, fee, cess for the purposes of local governance and provisions of municipality amenities, services which was a global phenomenon.

The petition contended that the cantonment boards were local authorities and fall within the meaning of the State in terms of Article 7 of the Constitution and as such the boards were by law empowered to impose any tax, fee or cess in its jurisdiction.

The cantonment boards has been discharging their functions and duties and collecting taxes, fee, taxes on the value of the buildings within their territorial limits.

Some residents of cantonments in Karachi had challenged the property tax before the SHC and stated that such taxes could not be imposed and collected by the cantonments.

Published in Dawn, April 27th, 2024