ISLAMABAD: The Lahore High Court (LHC) has been prayed to strike down clause (b) of sub-section (2) of section 8 of the Finance Act, 2022, dated 30-06-2022 being ultra vires of articles 1, 7, 23, 24, 25, 70 and 142 of the Constitution.
Zakauddin Malik through advocate Chaudhary Anwarul Haq Arif has filed the petition under Article 199 of the Constitution before the LHC, and cited the federation, government of the Punjab, and the Federal Board of Revenue (FBR) as respondents. The high court has issued notice to the respondents and the Attorney General for Pakistan for September 15.
He has further prayed to declare that the act of Parliament to include the word “movable” in the definition of “foreign assets” under definition clause (c) of sub-section (13) of the Section 8 of the Finance Act, 2022, to levy taxes on “movable properties” is ultra vires to the Constitution. Accordingly, the word ‘immovable” may be struck down from the definition clause.
Chaudhary Anwar submitted that under Article 142(a)(d) read with Article 1(2) of the Constitution and entry 50 of the Federal Legislative List, it is not in the competence of the Parliament to frame law to tax capital value of “assets” in a “state” outside the territorial jurisdiction of Pakistan.
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He stated that under entry 50 of the Federal Legislative List read with Article 70 of the constitution, the Parliament may only frame the law in respect of taxes on capital value of the “assets” other than “movable property” held by the resident individual within Pakistan. Therefore, the insertion of section 8 in the Finance Act 2022 to levy Capital Value Tax on “foreign assets” of resident individuals is ultra vires to the Constitution.
He pointed out that under section 82 of the Income Tax Ordinance, 2001, for the purpose of levy of income tax, a citizen of Pakistan having dual nationality and/or a foreign national, who will be present in Pakistan for a period of, or period amounting in aggregate to 183 days or more in a tax year are considered as resident individual. However, in consequence of the impugned section 8 of the Act, said both categories of persons have also been subjected to CVT on their assets outside Pakistan. Such legislation is not permissible under the constitution.
The petitioner stated that under the article 142 of the constitution, the Parliament has exclusive power to make laws in respect to any matter in the Federal Legislative List, whereas, the Provincial Assembly is empowered to make laws in respect of any matter not enumerated in the Federal Legislative List.
Through 18th Amendment Entry No 50 specifically excludes the tax on immovable property from the competence of federal legislators. It means provincial assembly is vested with exclusive power to levy taxes on immovable property as per the judgment in the case of luxury tax on houses titled Muhammad Khalid Qureshi vs Province of Punjab.
Copyright Business Recorder, 2022
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