Abwa Knowledge Village (Pvt.) Limited Vs Director Excise and Taxation etc

Stereo. H C J D A 38.

Judgment Sheet

IN THE LAHORE HIGH COURT AT LAHORE.

JUDICIAL DEPARTMENT

W.P. No. 41665 of 2022

Abwa Medical College and Hospital

VERSUS

Director Excise and Taxation, Faisalabad etc.

JUDGEMENT

Date of Hearing: 19.11.2025 Petitioner by: Mr. Raza Ahamd, Advocate Respondents by: Mr. Imran Khan, Assistant Advocate General Mian Sardar Muhammad, Law Officer, DG Excise and Taxation, Punjab Mr. Iftikhar Ahmad, Excise and Taxation Inspector, Faisalabad

KHALID ISHAQ, J. This judgment will decide the captioned Constitutional Petition as well as the connected Petition bearing W.P. No.65996 of 2025, filed under Article 199 of the Constitution of the Islamic Republic of Pakistan (the “Constitution”), as both these petitions involve common and overlapping questions of law and facts, which require determination by this Court. For the ease of reference, the captioned Constitutional petition shall be referred to as the “First Petition”, whereas, W.P No. 65996 of 2025 will be referred to as the “Second Petition”.

2.Through First Petition, the petitioner has laid a challenge to P.T. 10 Form/Recovery Notice dated 10.06.2022 (“Impugned Notice”), issued by Respondent No. 2 under the provisions contained in the Punjab Urban Immovable Property Tax Act, 1958 (the “Act, 1958”). The Impugned Notice sought recovery of arrears, as well as current property tax, alongwith default surcharge under the Act, 1958.

3.Arguments heard. Record perused.

4.The grounds sought to be raised by the Petitioner are twofold. Firstly, it is agitated by the Petitioner that the Impugned Notice cannot be served

upon the Petitioner nor the recovery can be effected from it. The Petitioner, by virtue of the Lease Agreement dated 14.09.2017 (the “Lease Agreement”), claims that it is a ‘lessee’ of the land and building in issue i.e. Property No.305 (the “Property”) and not its owner; it is argued that the Lease Agreement is not a registered instrument, therefore, the lease thereunder is not a “lease in perpetuity”, hence, the recovery of the Property Tax, if any, may be directed against the owner of the Property i.e. Lessor (M/s Amtex Limited), in terms of Sub-section (4) of Section 3 of the Act, 1958. Secondly, it is argued that since the Property is situated in the ‘rural area’, therefore, the same is not amenable to property tax under the Act,

5.Let us begin by addressing the first submission. The petitioner is trying to avoid the liability of payment of Property Tax, though on the false pretense, by seeking to rely upon Sub-section (4) of Section 3 of the Act, 1958. Such reliance is a figment of petitioner’s imagination, which is evidently and inherently devoid of any merits, being in conflict with settled principles of interpretation of statutes. For the ease of reference, the relevant provisions of the Act, 1958, as existed at the time of filing of the First Petition, are reproduced herein below:

Clause (e) of Section 2 of the Act, 1958 “owner” includes a mortgagee with possession, a lessee in perpetuity, a trustee having possession of a trust property and a person to whom an evacuee property has been transferred provisionally or permanently under the Displaced Persons (Rehabilitation and Compensation) Act, 1958.” Similarly, Sub-section (2) of Section 3 of the Act, 1958 provided a sunder: “(2.) Subject to sub-sections (2a), (3) and (4), there shall be levied, charged and paid, a tax on the taxable value of a building and land in a rating area at the rate given in the Schedule.”

Sub-section (4) of Section 3 of the Act, 1958 existed as under: “(4). The tax shall be due from the owner of buildings and lands.”

[Emphasis Supplied]

6.A joint reading of the above makes it abundantly clear that only a ‘lessee in perpetuity’ was covered within the ambit and scope of ‘owner’, as couched under clause (e) of Section 2 of the Act, 1958. We may note here that we were minded to look into the relationship of the Lessor (M/s Amtex

W.P. No. 41665 of 2022 Page 3

Limited) and the Lessee (the Petitioner) in the context that whether the relationship purportedly created under the Lease Agreement, is a mere façade for evading the property tax and other liabilities or it is a relationship which can survive the test of settled principles of law, as enunciated in Salomon v. Salomon1. On the face of it, this was a fit case for applying the tests for piercing the veil of incorporation as it is well settled by now that the legal vehicles created to evade tax is one of the fundamental grounds for lifting the veil of incorporation. However, since this Petition may be decided without embarking to decide the said question, we deem it appropriate to deal with this question in a more relevant case where its resolution is directly required. In the words of Chief Justice John Roberts of U.S. Supreme Court: "If it is not necessary to decide more to dispose of a case, then it is necessary not to decide more2.

7.Since the entire thrust of the Petitioner is rooted in the Lease Agreement, therefore, keeping the same in mind, we have considered the amplitude and effect of the term ‘lease in perpetuity’, while juxtaposing the same with the terms and conditions of the Lease Agreement and the law on the subject, as enunciated by the Supreme Court of Pakistan. Clause 3 of the Lease Agreement states:

“PERIOD: The lease shall be initially for a period of thirty three (33) years commencing form 14.09.2017 to 13.09.2050 and on expiry of the said period the Lease shall not be determined by efflux of time but the lessee shall have the option, without being bound to do so, to renew the same for a further period of 33 years and thereafter to further renew the same from time to time after the expiry of such renewed period or periods. However, 15% increase in the yearly rent after every 3 years shall be made by the parties.”

Emphasis Supplied]

8.Learned Assistant Advocate General, Punjab has placed on record a copy of the W.P No. 46295 of 2021, which Constitutional Petition was filed by the Purported Lessor i.e. Amtex Ltd. with respect to the tax liability of the same Property but the said petition was withdrawn, perhaps with the design in mind, subsequently rolled down by the Petitioner, with an intent to “Salomon v A Salomon & Co Ltd.” [1897] AC 22

Fozia Mazhar v. Additional District Judge, Jhang and others (PLD 2024 Supreme Court 771); Dobbs v. Jackson Women’s Health Org. (597 U.S. 215 (2022) Meera Shafi v. Office of the Governor Punjab & others (2019 LHC 3402) / (PLD 2020 Lahore 54)

W.P. No. 41665 of 2022 Page 4

weave the web of clandestine machinations for evading taxes and liabilities for all times to come. An undertaking dated 02.08.2021, supplied by the Chief Executive of Amtex Limited, has also been placed on record which depicts that Amtex Limited (the Lossor) conceded that the Property Tax is payable by it against the Property and hence it has decided to withdraw W.P No. 46295 of 2021. Be that as it may, the withdrawal of the said Constitutional Petition amounts to acceptance and finality of the liability of the purported Lessor (Amtex Ltd.). This in itself denudes the Petitioner of any locus standi as the present petitioner does not qualify to be an aggrieved person when the purported lessor has accepted its liability and has not assailed the same.

9.The terms ‘lease in perpetuity’ has exhaustively and authoritatively been considered and settled by the Hon’ble Supreme Court of Pakistan in Muhammad Shafi’s3 case, relied upon by the learned counsel for the Petitioner. In the said case, Supreme Court considered a clause of a lease agreement executed by Evacuee Trust Property Board (ETPB) viz a property owned by it and leased out to Muhammad Shafi (respondent of the case) for a fixed period of 30 years. The said lease was renewable at the option of the lessor (ETPB). The Supreme Court held that the lease in question cannot be treated as a ‘lease in perpetuity’ since it was non-compliant with the mandatory requirements of the Registration Act, 1908 (“Registration Act”), which law requires that any lease exceeding period of one year, has to be registered under the Registration Act4. This is the precise ratio decidendi of the judgment in Muhammad Shafi’s case. However, being guided by the settled law on the subject that a case is only authority for what it actually decides and cannot be cited as precedent for a proposition that may be inferred from it5, we have considered that whether the ratio decidendi of Muhammad Shafi’s case is attracted to the facts of the case in hand as a “Government of Sindh v. Muhammad Shafi” (PLD 2015 SC 380) See Sections 17 & 49 of the Registration Act, 1908

Syed Hammad Nabi and others vs Inspector General of Police Punjab, Lahore and others (2023 SCMR 584), Naubahar Bottling Company (Pvt.) Limited and others v. Federation of Pakistan through Revenue Division Ministry of Finance and others (2022 SCMR 765), Quinn v Leathem (1901 AC 495); Trustees of the Port of Karachi v. Muhammad Saleem (1994 SCMR 2213); Sindh High Court Bar Association through its Secretary and another v. Federation of Pakistan through Secretary. Ministry of Law and Justice, Islamabad and others (PLD 2009 SC 879) per Ch. Ijaz Ahmed J,, Mst. Muhammadi and others v. Ghulam Nabi (2007 SCMR 761).

W.P. No. 41665 of 2022 Page 5

precedent. The Property in Muhammad Shafi’s case was owned by ETPB and was leased in favour of the respondent Muhammad Shafi. If the relevant clause of Lease Agreement of the instant case is juxtaposed with that of Muhammad Shafi’s case, it would unequivocally emerge that the lease in hand is a lease in perpetuity as the discretion to extend the lease vests with the Lessee (the Petitioner), for as many times as it desires. The above clause definitely clothes the lease with permanency, an inherent characteristic of lease in perpetuity. This, of course, brings us to consider that if the Supreme Court of Pakistan has enunciated the law that a lease not registered in terms of the Registration Act cannot be clothed with any lawful continuity or perpetuity, can this Court proceed to declare that the rights conferred upon the Petitioner by virtue of an unregistered Lease Agreement, will be construed as lease in perpetuity? In this respect, we are guided by a well settled principle of administration of justice that a person cannot benefit from his own wrong, thus, giving benefit of a wrong to a wrongdoer would be against the principles of administration of justice and public policy as no one should be allowed to benefit from his/its own wrong of non-adherence to a mandatory provision of law6. It is well settled that a contract, even inter se the parties, will not be construed, so far as possible, in a manner to bestow an advantage for a party to take benefit of his/its own wrong. This principle has a long history in English law, though, there is a jurisprudential debate that whether the rules is of law or construction . In Rede v Farr7 a tenant who had failed to pay his rent asserted that by reason of a proviso for re- entry which said that the lease would be void in the event of breach of obligation his lease was at an end. Lord Ellenborough said:

“In this case, as to this proviso, it would be contrary to an universal principle of law, that a party shall never take advantage of his own wrong, if we were to hold that a lease, which in terms is a lease for twelve years, should be a lease determinable at the will and pleasure of the lessee; and that a lessee by not paying his rent should be at liberty to say that the lease is void.”

This formulation suggests that it is a rule of law. However, the decision could be justified on the basis that the court was construing the Mian Muhammad Saeed etc. v. Province of West Pakistan etc. (PLD 1964 SC 572); Sakhi Jan etc. v. Shah Nawaz etc. (2020 SCMR 832); Government of Khyber Pakhtunkhwa thorugh Secretary Administration Department and others v. Liaquat Ali (2021 SCMR 630); Mukhtiar Hussain v. Mst. Shafia Bibi (2023 SCMR 159); Zeeshan Pervaiz (Late) through his LRs v. Muhammad Nasir (2024 SCP 409).

[1817] 6 M. & S. 121

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word “void” in the proviso for re-entry as meaning “voidable”. In New Zealand Shipping Co v Societe des Ateliers et Chantiers8 de France, Lord Atkinson seems to have treated it as a matter of construction. He said:

“It is undoubtedly competent for the two parties to a contract to stipulate by a clause that the contract shall be void upon the happening of an event over which neither of the parties shall have any control, cannot bring about, prevent or retard.... But if the stipulation be that the contract shall be void on the happening of an event which one or other of them can by his own act or omission bring about, then the party, who by his act or omission brings that event about, cannot be permitted either to insist upon the stipulation himself or to compel the other party, who is blameless, to insist upon it, because to permit the blameable party to do either would be to permit him to take advantage of his own wrong, in the one case directly, and in the other case in a roundabout way, but in either way putting an end to the contract”

[Emphasis Supplied]

In the same case, Lord Finlay L.C. seems to have treated the principle as a rule of law, while Lord Wrenbury treated it as a question of construction. In Cheall v APEX9, in commenting on the New Zealand case, Lord Diplock observed:

“the well known rule of construction that, except in the unlikely case that the contract contains clear express provisions to the contrary, it is to be presumed that it was not the intention of the parties that either party should be entitled to rely upon his own breaches of his primary obligations as bringing the contract to an end.”

He described “this rule of construction” as being paralleled by the “rule of law” that a contract cannot be brought to an end by self-induced frustration. The principle may be seen as an aspect of the principle of interpretation that leans against interpretations that produce unreasonable or absurd consequences that could not have been intended.10 In Decoma UK Ltd. v. Haden Drysys International Ltd11 the Court of Appeal held that the words of a “crystal clear” clause in a contract could not be overridden by the principle. In Petroplus Marketting AG v Shell12 Trading International Ltd Andrew Smith J. said:

“It is a general principle of construction that prima facie it will be presumed that the parties intended that neither should be entitled to rely on his own breach of

[1918] A.C. 1.

[1983] 2 A.C. 181. See also the dissenting judgment of Donaldson L.J. [1983] Q.B. 126 at 144.

Financial Ombudsman Service v. Heather Moor & Edecomb Ltd. [2009] 1 All E.R. 328, per Stanley Burnton L.J.

[2006] EWCA Civ 723

[2009] EWHC 1024 (Comm)

W.P. No. 41665 of 2022 Page 7

duty to obtain a benefit under a contract, at least where the breach of duty is a breach of an obligation under that contract: see Chitty on Contracts, Vol 1 at para 12-082. This is sometimes presented not as a matter of contractual construction but an implied contractual term that a right or benefit conferred upon a party shall not be available to him if he relies upon his own breach of the contract to establish his claim: Chitty on Contracts Vol 1 at para 13-012. However analysed, the principle is not inflexible or absolute: it may be displaced by express contractual provision or by the parties’ intention to be understood from the express terms: Richco International Ltd. V Alfred C. Toepfer International GMBH13.”

The Court of Final Appeal of Hong Kong has held that the principle may be given effect either as a principle of construction or as a rule of law, according to what is appropriate in the circumstances14; and this has been followed at first instance in England15.

10.Keeping the aforesaid principle in mind, if one considers the judgment and ratio decidendi of Muhammad Shafi and all other judgments on the issue, we have considered the facts of the case in hand, which facts unequivocally reflect that the ratio decidendi of Muhammad Shafi’s case is not attracted in the case in hand due to peculiar facts of this case. So, following the essence of the foregoing, We are not inclined to extend benefit of tax evasion to anyone on account of its/his non-adherence to mandatory provisions of law. Section 49 of the Registration Act states as under:

“49. Effect of non-Registration of documents required to be registered. – No document required to be registered under this Act or under any earlier law providing for or relating to registration of documents shall–

(a)operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, to or in immovable property, or

(b)confer any power to adopt, unless it has been registered.”

11.A reading of Section 49 of the Registration Act would lead to an inescapable conclusion that though the said provision operates viz its disabling mischief inter se the parties to a lease and/or of an immovable property, however, no lawful construction of the said provision may lead to the conclusion of adding premium to a mischievous evader of taxes and liabilities; it cannot operate as to eschew tax liability, if the liability is [1991] 1 Lloyd’s Rep. 136, 144

Kensland Realty Ltd v. Whale View Investment Ltd [2001] HKCFA 57 Rother District Investments Ltd v. Corke [2004] 1 E.G.L.R. 47. In the light of BDW Trading Ltd v. JM Rowe (Investments) Ltd. [2011] EWCA Civ 548, this must be taken to have been wrong on this point.

W.P. No. 41665 of 2022 Page 8

otherwise determined. It is fall to be noted that the effect of non-registration of a compulsorily registerable document is limited to the extent of non- conferring and/or creation or extinguishment of right, however, the same document can always be looked into for collateral purposes. To substantiate the foregoing conclusion, the reliance is placed upon the case of Rahman Cotton Factory16. The cases of M/s Liberty Mills Ltd. Karachi17 and Shiekh Sultan Trust18 may also be referred to for the same proposition of law. Similarly, while considering the effect of a partnership deed executed inter se the parties in the case of Messrs Erose Theatre Arts19, the Supreme Court held that creation of a partnership for heavy evasion of tax cannot be termed as a real partnership. In view of the foregoing, we have considered the object of Section 49 of the Registration Act, which clearly elucidates the mandate of law and spells out consequences of non-compliance of Section 17 of the Registration Act, which cannot be allowed to be banked upon to seek premium of statutory delinquency of a delinquent. In addition, the effect of Section 49 of the Registration Act cannot be extended to the detriment of the Revenue under fiscal statutes as this would hand down a carte blanche to delinquents to eschew tax liability by non-registering compulsorily registerable document(s).

12.In view of the foregoing, the question arises that whether the Petitioner, who has the absolute discretion to extend the term of lease after initial term of 33 years; was required to register the Lease Agreement, but failed to do so and has successfully been evading the taxes and duties payable for the registration of the Lease Agreement, can be allowed to invoke the extraordinary equitable jurisdiction of this Court under Article 199 of the Constitution, when such a claim is advanced on the premise that, since the lease in question cannot be accorded the status of a “lease in perpetuity” due to the Petitioner’s flagrant and contumacious violation of the law, the Petitioner should nevertheless be allowed to continue evading “Messrs Rahman Cotton Factory v. Ms. Nichimen Co. Limited” (PLD 1976 SC 781) “Liberty Mills Ltd. Karachi v. S. M. Younas and 2 others” (1982 CLC 616);

“Cotton Trading Corporation of Pakistan v. Shiekh Sultan Trust, Karachi” (1981 CLC 623) “Malik Muhammad Ishaque through L.R.s v. Messrs Erose Theatre Arts. And others” (PLD 1977 SC

Property Tax and thereby make a mockery of the legal framework? The answer, it goes without saying, is an emphatic NO.

13.There is another aspect of the case in hand, which would have the effect of putting all the grounds of the petitioner to ultimate rest, in the face of the charging provisions of the Act, 1958. Sub-section Section (2) of Section 3 of the Act, 1958 is the charging provision which, as a taxing and charging provision, stipulates the subject matter of tax whereas Sub-section (4) stipulates as to the person liable to pay tax on the subject matter provided under Sub-section (2) of Section 3 ibid. The determination of the liability is not disputed by the Petitioner; nor the owner of the land/building i.e. AMTEX Ltd. (purported Lessor) has assailed the imposition and determination of the liability. The principal liability is directed towards the owner of the land/building. However, the failure of the person saddled with the principal liability, like all other taxing statutes, propels the machinery provisions into action for the recovery of the tax liability which, in the present case, is Section 14 of the Act, 1958. Thus, the Petitioner’s contention that it is not liable to make payment, is without any substance and cannot withstand any lawful test. For the sake of convenience, Section 14 of the Act, 1958 is reproduced as under:

“14. Recovery of tax from tenants.– Where the tax due from any person on account of any building or land is in arrears, it shall be lawful for the prescribed authority to serve upon any person paying rent in respect of that building or land, or any part thereof, to the person from whom the arrears are due, a notice stating the amount of such arrears of tax and requiring all future payments of rent (whether the same have already accrued due or not) by the person paying the rent to be made direct to the prescribed authority until such arrears shall have been duly paid, and such notice shall operate to transfer to the prescribed authority the right to recover, receive and give a discharge for such rent. If the person paying rent willfully fails or neglects to comply with the notice aforementioned, the prescribed authority may, after giving him an opportunity of being heard, proceed against him as it would have proceeded under the provisions of this Act against the owner of the building or land in respect of which the tax is in arrears.”

14.It is worth noting here that the provisions, somewhat identical and/or pari materia to Section 14 of the Act, 1958 are a regular feature of most taxing statutes, where a person holding money by and/or on behalf of the person against whom tax liability is determined is liable to make payment of the liability and the payment thereof is fictionally deemed to be the

discharge of liability of the person saddled with the principal liability. Section 140 of the Income Tax Ordinance, 2001 is referred in this regard. It is further submitted that Section 14 of the Act, 1958 does not impose any liability on the Petitioner and rather, the petitioner is only liable to make payment of the rent to the taxman on behalf of the owner of the land and building.

15.This brings us to the second limb of the challenge by the Petitioner, whereby it was agitated at the time of filing of the First Petition that the tax under the Act, 1958 is not leviable as the Property is located in a rural area. This plea is inherently flawed and the Petitioner cannot be allowed to raise this as the petitioner admittedly claims to have established its private medical college and a private sector hospital (both purely commercial enterprises) in a rural area, which is presumed to be agricultural in nature, without any proof of lawful conversion of agricultural land by making payment of conversion fee for land use under the relevant laws. Despite availing clear opportunity, the Petitioner failed to produce anything in this respect. This fact alone has rendered the petitioner disentitled from seeking relief under Article 199 of the Constitution. Nonetheless, the petitioner also conceded at the bar and did not press this prayer, withdrawing the prayer and grounds to this extent.

16.It was lastly argued by the learned counsel for the Petitioner that if at all, the petitioner is held liable to make payment of the property tax, the same can be imposed for future rent only. For obvious reasons, this submission does not hold water as it flies to the face of settled position of law. The First Petition was filed in the year 2022 and interim relief was obtained at the Petitioner’s own risk. It is well settled, vouched by the respectable authority, that there is nothing wrong in the parties demanding to be placed in the same position in which they would have been, had the Court not intervened by its interim order, when at the end of the proceedings, the Court pronounces its judicial verdict, which does not match with and countenance its own interim order. Reliance is placed upon the case of M/s

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Three Star Hosiery20, whereby it is held that “the injury, if any, caused by the act of the Court then shall be undone and the gain which the party would have earned, unless it was interdicted by the order of the court would be restored to or conferred on the party by suitably commanding the party liable to do so, otherwise the party would continue to get benefit of the interim order even after losing the case in the Court.” Thus, the petitioner is liable to make payment of the property tax ever since even if the petitioner has made payment of the same to lessor as it has been done by the petitioner at its own peril.

17.In view of the above discussion, we have also considered that whether in facts and circumstances of the case in hand, the conduct of the Petitioner entitles it to invoke the extraordinarily equitable jurisdiction of judicial review under Article 199 of the Constitution. We are of the firm opinion that Constitutional Jurisdiction of the superior Courts cannot be invoked in aid of injustice and in order to defeat the express provisions of the statute21 as it is well settled by now that Constitutional jurisdiction is meant to right the wrong and cannot be invoked in favour of a delinquent party who has brought a case for determination of an alleged right, which right is cloaked in patent illegalities, fraud, misrepresentation or the same is devoid of sound legal backing. On many occasions, the apex court refused to intervene where the grant of relief would amount to retention of ill-gotten gains or would lead to injustice or aiding the injustice22. The object of exercising the extraordinary jurisdiction of the Judicial review by the superior Court(s) is to foster justice, preserve rights and to right a wrong; keeping this object in view, while exercising judicial review, a Constitutional Court may proceed in equity to set aside or annul an order/action or enjoin enforcement by refusing to intervene in the circumstances of the case before it.23 In the “Three Star Hosiery Vs Federation of Pakistan etc.” (PLD 2022 LAH 188-DB) “Mumtaz Hussain alia Bhutta v. Chief Administrator Auqaf Punjab” (1976 SCMR 450); “Sayyed Muhammad Ali Shah Bokhari v. Chief Administrator Auqaf” (1972 SCMR 297) See “Gul Muhammad v. Addl. Settlement Commissioner” (1985SCMR 491); “Nazim Ali etc. v. Mustafa Ali etc.” (1981 SCMR 231); “Wali Muhammad and others v. Sheikh Muhammad and others” (PLD 1974 SC 106); “Meraj Din v. Director, Health Services” (1969 SCMR 4); “Tufail Muhammad v. Muhammad Ziaullah Khan” (PLD1965 SC 269); “Azmat Ali v. Chief Settlement and Rehabilitation Commissioner”

(PLD1964 SC 260)

Mst. Mobin Fatima v. Muhammad Amin and 2 others” (PLD 2006 SC 214); “Secretary to the Govt. of the Punjab v. Ghulam Nabi and 3 others” (PLD 2001 SC 415)

instant case, the irrefutable, inseparable and collusive nexus between the Lessor (Amtex Ltd.) and Lessee (Petitioner) is floating on the face of the record for frustrating the mandate of the statute as the purported Lease Agreement has admittedly been executed in the year 2017 when the imposition thereof was initially assailed by the lessor by filing W.P. No.46295 of 2021, which petition was then withdrawn by the lessor and subsequently, the present petitioner/lessee filed the First Petition in the year 2022, therefore, we are of the opinion that instant is not a case for exercising the jurisdiction of judicial review under Article 199 of the Constitution.

SECOND PETITION (W.P. No. 65996/2025)

18.Through this Second Petition, the Petitioner has laid a challenge to Recovery Notice dated 15.10.2025 (the Impugned Notice) issued under the hands of Respondents No. 2, seeking recovery of Property Tax under the Act, 1958. The relief claimed by the Petitioner is again premised on two grounds:

“I. The impugned notice Dated 15.10.2025 may kindly be set aside and declared illegal, unlawful and without any legal effect.

II. The impugned demand for recovery of the Urban Immovable Property Tax on rural area may kindly be set aside.”

19.The first limb of the challenge is devoid of any substance and merit in view of the amendments brought about in clause (e) of Section 2 of the Act, 1958, which was amended by virtue of Punjab Finance Act, 2024 (VIII of 2024), whereby ‘lessee in perpetuity’ has been substituted as ‘lessee in possession’; the legislature, by a deeming fiction, has included the lessee in possession as owner and has arrested the mischiefs carved out by the taxpayers/property owners by means of resorting to ingenuity and evasions of tax on the basis of sham transactions/documentation of leases, such as the one in hand. This has been done by supplying a deeming fiction in Clause (e) of Section 2 of the Act, 1958, whereby, the lessee in possession is deemed as owner. To ‘deem’ is to treat (something) as if it were really something else, or it has qualities that it does not have; 'Deem' has been

W.P. No. 41665 of 2022 Page 13

traditionally considered to be a useful term when it is necessary to establish a legal fiction either positively by 'deeming' something to be what it is not or negatively by 'deeming’ otherwise.24 The word “deemed” is used a great deal in modern legislation. Sometimes it is used to impose, for the purpose of a statute, an artificial construction of a word or phrase that would not otherwise prevail. Sometimes it is used to put beyond doubt a particular construction that might otherwise be uncertain. It is also used to give a comprehensive description that includes what is obvious, what is uncertain and what is, in the contrary sense, impossible.25 In a recent authoritative judgment passed by the Hon’ble Supreme Court of Pakistan in the case of White Gold Steel26, the law on the effect of a deeming provision in a statute has been enunciated, while relying upon an earlier landmark judgment in Mehreen Zaib un Nisa’s Case27, in the following terms:

16....“Now, deeming provisions are well known to the law. They have been used in innumerable statutes and in many different contexts. Their interpretation has come up many times before the courts, including this Court. The leading case in this regard is Mehreen Zaibun Nisa v Land Commissioner Multan and others PLD 1975 SC 397 (“Mehreen Zaibun Nisa”). The principles set out in that judgment, as to the correct approach to take when considering a deeming provision, have never been doubted. They have been followed in many decisions of which two recent examples are Pak Leather Crafts Limited vs. Al-Baraka Bank Pakistan Limited 2022 SCMR 1868 and Dr. Abdul Nabi vs. Executive Officer, Cantonment Board, Quetta 2023 SCMR 1267. The principles laid down are as under (pp. 433-4): “When a statute contemplates that a state of affairs should be deemed to have existed, it clearly proceeds on the assumption that in fact it did not exist at the relevant time but by a legal fiction we are to assume as if it did exist. The classic statement as to the effect of a deeming clause is to be found in the observations of Lord Asquith in East End Dwelling Company Ltd. v. Finsbury Borough Council [[1951] 2 All ER 587, [1952] AC 109] namely:

“Where the statute says that you must imagine the state of affairs, it does not say that having done so you must cause or Dr. Abdul Nabi, Professor, Department of Chemistry, University of Baluchistan, Sariab Road, Quetta v. Executive Officer, Cantonment Board, Quetta (2023 SCMR 1267); All Pakistan Newspaper Society and others v. Federation of Pakistan and others (PLD 2012 SC 01); M/s. Elahi Cotton Mills Ltd. and others v. Federation of Pakistan and 6 others

(PLD 1997 SC 582)

“Mafatlal Gagalbhai & Co. (Pvt.) Ltd. v CIT” (122 ITR 382, (1979) 13 CTR Bom 236; “Amrutanjan Ltd v CIT” (21 ITR 21-affirmed in 53 ITR 218, AIR 1964 SC 1804, (1964) 8 SCR 9, following St. Aubyn v Attorney-General [1952] AC 15, per Lord Radcliffe.

“Commissioner Inland Revenue v. White Gold Steel” (2025 SCP 217=2025 SCMR “Mehreen Zaibun Nisa v Land Commissioner Multan and others” (PLD 1975 SC 397)

W.P. No. 41665 of 2022 Page 14

permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.”

This observation has been referred to with approval in a large number of cases decided by the Courts in this subcontinent, as mentioned by the learned Judges in the High Court....

At the same time, it cannot be denied that the Court has to determine the limits within which and the purposes for which the Legislature has created the fiction. As stated by James, L.J. in Levy Ex parte Walton [(1881) 17 Ch. D 756 [1881-5] All ER Rep 548], a statement approved by this Court in Begum B.H. Sayed v. Mst. Afzal Jahan Begum [PLD 1970 SC 29] when a statute enacts that something shall be deemed to have been done which in fact and in truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to.” [Emphasis Supplied]

For the purpose of completeness, the reliance may also be placed upon the case of Elahi Cotton Mills’ judgment28:

“(xviii) That when a statute enacts that something shall be deemed to have been done which in fact and in truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to.

(xix)That where a person is deemed to be something the only meaning possible is that whereas he is not in reality that something, the Act required him to be treated as he were with all inevitable corollaries of that state of affairs.

(xx)That the legal fictions are limited for a definite purpose, they cannot be extended beyond the purpose for which they are created.”

20.Thus, it is obvious that the Petitioner, by merely being a lessee in possession, is amenable for payment of Property Tax under the Act, 1958. As regards to the second submission, the same has already been answered above.

21.The upshot of the above discussion is that both petitions i.e. W.P No. 41665 of 2022 (First Petition) and W.P. No. 65996 of 2025 (Second Petition) are hereby dismissed.

22.Since the petitioner has initiated false and frivolous litigation and embroiled the State functionaries in baseless cases, continuously avoided the payment of lawful taxes and duties, therefore, while taking guidance from judgments reported as “Province of Punjab through Deputy Commissioner v. Zulfiqar Ali” (2024 SCMR 22), “Javed Hameed v. Aman Ullah” (2024 M/s. Elahi Cotton Mills Ltd. and others v. Federation of Pakistan and 6 others (PLD 1997 SC 582)

SCMR 89), “CDA through Chauirman v. Ahmed Murtaza” (2023 SCMR 61), “Qazi Naveed ul Islam v. District Judge, Gujrat and others” (PLD 2023 SC 298), “Commissioner Inland Revenue, LTO Karachi v. Packages Limited” (2022 SCMR 634), “Muhammad Akbar through L.Rs v. Major Tajjuddin through L.Rs” (2007 SCMR 140), “Iqbal Haider v. Federation of Paksitan” (1998 SCMR 1318) & “National Highway Authority through Chairman, Islamabad v. Messrs SAMBU Construction Co. Ltd. Islamabad and others” (2023 SCMR 1103) & “Qazi Naveed ul Islam v. District Judge, Gujrat and others” (PLD 2023 SC 298), the petitioner is hereby saddled with punitive cost of Rs.10,00,000/- to be recovered as arrears of land revenue under Section 81 of the Punjab Land Revenue Act, 1967. Before parting, we would like to acknowledge the hard work and valuable assistance rendered by Mr. Imran Khan, learned Assistant Advocate General, Punjab.

(Hassan Nawaz Makhdoom) (Khalid Ishaq) Judge Judge

APPROVED FOR REPORTING.

(Hassan Nawaz Makhdoom) (Khalid Ishaq) Judge Judge

Announced on 19.11.2025 Signed on 24.12.2025.

Ihsan/Awais.