LAHORE: Pleas against new property tax system dismissed
By Our Correspondent
LAHORE, March 8: The Lahore High Court on Monday dismissed 500 writ petitions against the new formula for property tax assessment, holding that valuation tables for the purpose were validly prepared and that they were not violative of fundamental rights of taxpayers.
Justice Mohammad Ghani declared section 5-A of the Urban Immovable Property Tax Act, 1958, was intra vires of the legislative powers of the Punjab Assembly, and it did not offend the act in any manner. The new valuation tables for assessment of property tax were prepared and notified by the Punjab government in exercise of its power derived from the amended provision.
Taxpayers had challenged the government decision to replace the assessment of property tax on the basis of annual rental value of a property for which the Urban Immovable Property Act, 1958, was amended in October, 2001, to insert section 5-A for assessment on the capital value of a property.
They contended that the new assessment method, for which all urban property was categorized on the basis of expected annual rentability of a property, had increased the tax manifold.
They pleaded that the new tax system was adopted without affording them an opportunity to file objections and being heard in person as was prevalent under the old system. This, they contended, was in conflict with their fundamental rights.
Petitioners contended that the amendment gave the provincial government arbitrary discretion which was against their fundamental rights as enshrined in articles 4, 8 and 25 of the Constitution.
Advocate-general Syed Shabbar Raza Razvi and Barrister M Saleem Sahgal, who appeared on behalf of the Punjab Excise and Taxation Department, contended that insertion of section 5-A was not the case of excessive delegation of legislative functions.
In the cases pertaining to taxation, legislatures always left the job of working out details and determination of the properties' categories on the administration and the departments concerned.
They pleaded that new valuation tables had been prepared after due deliberations and no discrimination or mala fide could be attributed to the provincial government or the excise and taxation department.
They pleaded that the new taxation system had been adopted to standardize the entire taxation methodology which not only ended the discretionary powers of tax officials, but also projected at minimizing corruption in the department and create a transparent tax regime as far as possible.
The new method, the AG and Barrister Saleem Sahgal argued, gave no discretion to tax department officials because they had to prepare a tax bill on the basis of a table prescribed for each zone on the basis of the property's reasonable annual rentability. The tables were uniform in character and ensured a uniform levy of the property tax.
In his 91-page judgement, Justice Muhammad Ghani observed that every legislative measure had to be taken in furtherance of social interests and harmony. "The law may be blind, but judges are not," he said for the attention of those who were in the habit of evading tax.
The judge said no petitions against the new property tax system were filed from 18 of the 34 districts. Only 33 petitions were filed from Kasur, Sargodha, Jhang, Sheikhupura, Okara, Toba Tek Singh, Khushab, Mandi Bahauddin, Gujrat, Sialkot and Rawalpindi.
The judgement said maximum petitions were filed from Lahore, Faisalabad and Gujranwala, and that, too, concerned commercial properties. Hardly there were petitioners from the common class. Almost all petitioners were cinema owners, industrialists, holders of shopping plazas and multi-storey buildings in posh localities.
