ISLAMABAD: In a recent ruling, the Supreme Court (SC) has barred the Cantonment Boards of Hyderabad and Manora from taking any coercive measures regarding the sealing of properties belonging to the State Bank of Pakistan (SBP) within their limits.
The decision was made by a three-member bench headed by Chief Justice Umar Ata Bandial after hearing an appeal filed by the SBP against the Division Bench of Sindh High Court, Karachi.
According to sources, the Cantonment Boards had issued challans/demand notices to the SBP, demanding immediate payment of property tax for its properties.
However, Faisal Siddiqui, appearing on behalf of the SBP, argued that no property tax could be imposed on the central bank of the country established under the SBP Act for carrying out sovereign functions of the federal government.
While the High Courts of Balochistan, Khyber-Pakhtunkhwa, and Punjab had affirmed the impugned status of SBP properties, the Sindh High Court directed the central bank to approach the relevant authority for seeking exemption under the provisions of the Cantonments Act, 1924.
The SBP challenged the jurisdiction and authority of the Cantonment Boards to levy property tax in respect of its properties or properties of its subsidiary being the property in occupation of the federal government for public purposes within the limits of the cantonment throughout Pakistan.
According to officials, the SBP and all its subsidiaries are wholly owned entities of the federal government, performing sovereign functions which no other private or government entity can perform.
As such, the applicant is entitled to an exemption provided in Article 165 of the Constitution, read with Section 99(2)(f) of the Cantonments Act, 1924.
The Supreme Court ruled that the Cantonment Boards cannot levy property tax on the SBP or take any coercive measures for sealing the properties belonging to the bank.
Besides, the decision also clarifies that any building in occupation of the federal or provincial governments is exempt from the payment of property tax.