SC declares professional tax by Karachi Cantt Board illegal

ISLAMABAD: The Supreme Court has declared the collection of the professional tax from businesses including restaurants, banks and poultry farms by the Karachi Cantonment Board illegal.

The apex court upheld the decision of the Sindh High Court, which had nullified the collection of professional tax by the Karachi Cantonment Board. The court ordered the Karachi Cantonment Board to refund the professional tax to the taxpayers.

A three-member bench, headed by Chief Justice Faez Isa, heard the case.

Chief Justice Isa said that the imposition of the tax by the Cantonment board was a violation of democracy and transparency. He questioned the rationale of allowing commercial activities in the Cantonment areas, which were given to the army for a specific purpose. He said that the Cantonment board decisions were made by one person without any consultation or accountability.

He said that government agencies were returning to their original limits and it was expected that other agencies would follow suit.

The professional tax is a provincial levy that is imposed on professionals, traders and businesses according to their income brackets. However, some Cantonment boards across Pakistan have also been collecting this tax from the areas under their jurisdiction, claiming that they are not bound by the provincial laws.

This has led to disputes and litigation between the Cantonment boards and the provincial excise and taxation departments, as well as between the Cantonment boards and the taxpayers.

Some traders and vendors have complained that they are being asked to pay the same tax twice by both the provincial and Cantonment authorities. They have also argued that they are not professionals and should not be liable for this tax.

Some Cantonment boards have also imposed other taxes, such as conservancy tax and water charges, on the residents and businesses in their areas, which have also been challenged in courts.