PESHAWAR: The Peshawar High Court has issued notices to the federal and Khyber Pakhtunkhwa governments and Peshawar Cantonment Board seeking their response to a petition against the imposition of tax on immovable property by the board.

The petition will be heard by a bench consisting of Justice Abdul Shakoor and Justice Syed Arshad Ali on April 18.

The petitioners, including Zahidullah and several other residents of the cantonment area, challenged the mandate of the Peshawar Cantonment Board to levy and collect tax on their immovable properties.

They requested the court to declare the “demand notices” and proceedings against them by the board to be illegal and without any legal effect.

Residents insist board can’t levy tax on their immovable properties

The petitioners said the court should declare that they are liable to pay tax on their immovable property under the Khyber Pakhtunkhwa Urban Immovable Property Tax Act, 1958, and that the provincial government should reassess and collect the tax accordingly.

Former additional advocate general Atif Ali Khan appeared for the petitioners and said the Peshawar Cantonment Board was the local government for the residents of the cantonment, while its functions as declared by the law included the provision of amenities to residents.

He added that like other local bodies, the board was mandated by the law to collect taxes to perform its functions.

The counsel said the board levied and collected taxes on the houses of its residents but the move was challenged by the petitioners on the grounds that it was illegal and unconstitutional for it to levy and collect such tax.

Atif Ali Khan, who was an elected member of the board from 2015 to 2019, argued that taxes on immovable property stood excluded from the Federal Legislative List as per item No 50 of the Constitution, so they’re in the exclusive domain of the provinces for being a provincial subject.

He said the governing law on the subject was the Khyber Pakhtunkhwa Urban Immovable Property Tax Act, 1958, which mandated the provincial government to levy, charge and collect taxes on immovable property in the cantonment area and then pay the share to the cantonment board after retaining a percentage as collection charges.

The former board member argued that the law under which the cantonment board relied for levy and collection of taxes i.e. the Cantonments (Urban Immovable Property Tax and Entertainment Duty) Order, 1979 [President’s Order 13 of 1979], was an “obsolete” law, which was passed by military dictator General Ziaul Haq as the chief martial law administrator, and violated the letter and spirit of the Constitution.

He said the order was passed during martial law to protect the interests of the military in the cantonment area in full disregard of the Constitution and the law.

Mr Khan said though that order was later given protection through Article 270-A of the Constitution, it had to be read down for being in conflict with the legislative powers of the federal government.

Published in Dawn, April 16th, 2023