KARACHI: A two-member bench of the Sindh High Court (SHC), comprising Justice Muhammad Shafi Siddiqui and Justice Mahmood A. Khan released detail judgment and dismissed a constitutional petition filed by Pakistan Stock Exchange Limited against Sindh Revenue Board and others against show cause notice for imposition of Sindh Sales Tax on Services.
On 8 February 2022, Customs Today received a detail judgment, according to which, judgment written by Justice Muhammad Shafi Siddiqui, court observed in its verdict that “these four petitions impugned four individual show-cause notices dated 13.04.2018 (of same date in CP No.D-3601 and 3602 of 2018), 25.04.2019 and 11.05.2019 respectively in the following petitions, involving different tax period on the count that imposition of Sindh Sales Tax on Services on the petitioner’s income arising from listing fee and exchange operation earned by it, is ultra vires to the Constitution.
It is the case made out by the petitioner that the respondent Sindh Revenue Board (SRB) cannot influence or exert their provincial executive authority over petitioner since it is a body created in pursuance of subjects enumerated in Fourth Schedule to the Constitution of Islamic Republic of Pakistan, 1973 (hereinafter referred to as the “Constitution”) having federal legislative domain.
The petitioners claimed to have been engaged in conducting, regulating and controlling the trade of buying, selling and dealing with securities. The present enactment of Stock Exchanges (Corporatization, Demutualization & Integration) Act, 2012 (hereafter referred to as “Act 2012”) was introduced by Federal Legislature to develop a uniform capital market in the country and to facilitate the integration of existing stock exchanges and to sum up such uniformity, in pursuance of Entry 30 of Part-I of the Federal Legislative List that concerns with stock exchange and future markets with the object of business not confined to just one province.
Learned counsel laid emphasis on Article 137 of the Constitution and submitted that the question whether a province has a capacity under the Constitution to impose sales tax on services on the body that is covered by Federal Legislative List has now been a concluded and settled issue in terms of authoritative judgment of Hon’ble Supreme Court in the case of Civil Aviation Authority.
Learned counsel for petitioner further submitted that the petitioner was fully controlled by a federal body i.e. Securities & Exchange Commission of Pakistan earlier when it was Karachi Stock Exchange Limited through its Article 22(a)(ii) of Articles of Association of 1 2017 SCMR 1344 (Sindh Revenue Board v. Civil Aviation Authority) Karachi Stock Exchange Limited.
At the relevant time SECP was controlling the Karachi Stock Exchange by nominating and appointing directors to its Board, apart from filling of any casual vacancy on the Board of Directors through Article 24 which include appointment, removal and termination of managing director. Learned counsel however has not pressed entry No.3 and 13 of Part-II of Federal Legislative List though he pleaded them in memo, instead has seriously pictured the effect of Entry 6 of Part-II of Federal Legislative List.
In view of above facts, circumstances and conclusion drawn on the basis of rival submissions of the parties, we are of the view that the impugned show-cause notices do not warrant interference by this Court as the same appear to have been issued having authority and legislative competence in this regard.
More so, the petitioner has already registered itself voluntarily with Sindh Revenue Board earlier and if any issues of “adjudication” and not competence, is raised or agitated by the petitioner, the same shall be addressed by the authority concerned issuing show-cause notices.
The petitions as such merits no consideration and are accordingly dismissed with no orders as to costs along with pending applications”.
