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PAKISTAN TELECOMMUNICATION EMPLOYEES\\\' TRUST versus FEDERATION OF PAKISTAN

ections Sections 1 (2), 2 (xxiii) (b) and 3 - Pakistan Telecommunications (Reorganization) Act (XVII of 1996), Sections 2 (W), 44, 45 and 46 - Saleem E-Lizab - Scope - Pakistan Telecommunication Employees Trust ("Wurst") - Zaku, who manages the pension fund "Pension Fund", employees of the Cutatiel Appellant Trust Pakistan Telecommunications Corporation), which has been invested in various banks and schemes. Zakat and Usher Ordinance, 1980 ('Ordinance') under Article 3 - The Trust challenged the deduction on the basis that it was owned by the federal government, therefore, it was not a curriculum and thus Can't be Subject to the mandatory deduction of Zakat of - Integrity - Pakistan Telecommunication Employees Trust ("Trust") was an independent and independent entity not wholly or indirectly owned by the Federal Government, forming a trust solely through a notification. By the federal government under section 44 of the Pakistan Telecommunications (Reorganization) Act, 1996, this did not mean that the trust was wholly owned by the federal government - the trust could acquire the immovable and immovable property and Can sue. In its own name - the trust was administered by the board, which was free to make a simple majority decision, and could not be concluded simply because half the board was appointed by the federal government. That the trust owned. The Federal Government - The Board was free and independent to exercise its powers and to perform its duties in accordance with the law without interference from the Federal Government - for all its actions, actions need not require prior approval of the Trust.

P L D 2017 Supreme Court 718

Present: Mian Saqib Nisar, C.J., Umar Ata Bandial and Faisal Arab, JJ

PAKISTAN TELECOMMUNICATION EMPLOYEES' TRUST—Appellant

versus

FEDERATION OF PAKISTAN and others—Respondents

Civil Appeal No. 1352 of 2013, decided on 4th August. 2017.

(On appeal from the judgment of the Islamabad High Court, lamabad dated 2.10.2012 passed in I.C.A. No. 222 of 2010)

a) Zakat and Ushr Ordinance (XVIII of 1980)—

—Ss. 1(2), 2(xxiii)(b) & 3—Pakistan Telecommunication (Reorganisation) Act (XVII of 1996), Ss. 2(w), 44, 45 & 46 — Saliib-e-lisab — Scope — Pakistan Telecommunication Employees Trust (“the Vrust”)—Zakat, deduction of—Appellant-Trust was managing the Pakistan Telecommunication Corporation Employees Pension Fund “the Pension Fund”), certain amounts of which were invested in various banks and schemes etc.—Zakat and Ushr Department deducted :akat in terms of S.3 the Zakat and Ushr Ordinance, 1980 (‘the Ordinance’)—Trust challenged such deductions on the ground that it was owned by the Federal Government, therefore, it was not a sahib-e-nisab and thus, could not be made subject to compulsory deduction of zakat—Validity—Pakistan Telecommunication Employees Trust (“the Trust”) was an independent and autonomous body which was not wholly owned, directly or indirectly, by the Federal Government—Mere creation of the Trust by a notification issued by the Federal Government under S.44 of the Pakistan Telecommunication (Reorganisation) Act, 1996, did not, mean that the Trust was wholly owned by the Federal Government—Trust could acquire and hold property, both moveable and immoveable, and could sue and be sued in its own name—Trust was managed by the Board which was free to take decisions by simple majority, and just because half of the members of the Board were appointed by the Federal Government, it could not be concluded that the Trust was owned by the Federal Government— Board was free and independent to exercise its powers and carry out its functions in accordance with law with no interference whatsoever from the Federal Government—For all its actions, the Trust was neither required to obtain prior permission nor was bound to get the same validated from the Federal Government, apart from the framing of of Pakistan (Mian Saqib Nisar, C J) rules for the management and conduct of business of the Trust— Federal Government made no contributions whatsoever to the Pension Fund—Additionally, the Trust was a body of individuals, albeit not incorporated, the beneficial ownership of which was held, by Muslim citizens, thus, the Zakat and Ushr Ordinance 1980 was applicable to the Trust in terms of territorial, subject matter and parties’ jurisdiction contained in S.l(2) of the Ordinance—Trust was not owned, directly or indirectly, by the Federal Government and was therefore not excluded from the definition of sahib-e-nisab under S.2(xxiii)(b) of the Ordinance—Trust was liable to compulsory payment of zakat under S.3 of the Zakat and Ushr Ordinance, 1980—Appeal was dismissed accordingly. pp. 726, 727] A & U

Administration General Zakat, Central Zakat Administration, Islamabad and others v. Pakistan Insurance Corporation through Secretary and others PLD 2016 SC 468 distinguished.

(b) Zakat and Ushr Ordinance (XVIII of 1980) —

—Ss. 2(xxiii)(i) & 3—Pakistan Telecommunication (Re-organisation) Act (XVII of 1996), Ss. 2(w) & 44—Societies Registration Act (XXI of 1860), Preamble—Com pan ies Act (VII of 1913), S. 26 fsince repealed]—Income Tax Ordinance (XXXI of 1979), S. 47 [since repealedJ— "Sahib-e-nisab "—Scope—Charitable trust—Zakat,

exemption from— Pre-requisites— Pakistan Telecommunication Employees Trust (“the Trust")—Institution, fund, trust, endowment or society was exempt from deduction of zakat in terms of S. 2(xxiii)(i) of the Zakat and Ushr Ordinance, 1980 if it met two conditions; first, it was registered as a charitable organization under the Societies Registration Act, 1860, or as a company under S.26 of the Companies Act, 1913 [since repealed], or registered or approved as a charitable or social welfare organization under any other law for the time being in force; and, secondly, it was approved by the (erstwhile) Central Board of Revenue for the purposes of S.47 of the Income Tax Ordinance,

1979 (since repealed)—Pakistan Telecommunication Employees Trust (“the Trust") was not registered as a charitable or social welfare organization under any relevant law—Besides the Trust was not involved in any social welfare or charitable activity, rather it only provided pension to the retiring employees of the erstwhile Pakistan Telephone and Telegraph Department—Pakistan Telecommunication Employees Trust was not a trust that fell within the provisions of S.2(xxiii)(i) of the Zakat and Ushr Ordinance, 1980, and was thus not excluded froth the definition of sahib-e-nisab—Trust was liable to compulsory payment of zakat under S.3 of the Zakat and Ushr Ordinance, 1980—Appeal was dismissed accordingly„

[pp. 727, 728] C & E

(c) Interpretation of statutes —

____Redundancy could not be attributed to the legislature. /p. 728] D

(d) Zakat and Ushr Ordinance (XVIII of 1980) —

—Ss. 2(xxiii) & 3—Pakistan Telecommunication (Re-organisation) Act (XVII of 1996), Ss. 45 & 46—"Sahib-e-nisab"—Scope—Zakat, deduction of—Pakistan Telecommunication Corporation. Employees Pension Fund (“the Pension Fund”)—Scope—Pakistan Telecommunication Employees Trust (“the Trust”) was managing the Pension Fund—Contention on behalf of Trust that the Pension Fund was not m asset of the Trust, rather it (‘the Trust9) was only a conduit and nerely held the Pension Fund on trust for the employees/pensioners of he Pakistan Telecommunication Company Limited as 6am an at}, thus he Trust was exempt from payment of zakat—Validity— Under S. 45 )f the Pakistan Telecommunication (Re-organisation) Act, 1996, all issets of the Pension Fund and such liabilities as were specified in the lotification, stood vested in the Trust and became its assets and labilities—Under S.46 of the Act, the Board was to take over and issume the liability of the Pension Fund, including contributions of the Pakistan Telecommunication Company Ltd. to the Pension Fund— furthermore, the Board was authorized to, inter alia, administer and operate the Pension Fund [section 46(2)(b) of the Act] and acquire, ease, encumber, dispose of, exchange, invest or otherwise deal with my moveable or immoveable property or any interest therein [section 16(2)(f)]—Trust, therefore, clearly held and possessed the assets, i.e. lie Pension Fund—Moreover, to qualify as a n sahib-e-nisab n and to fall within the ambit of the charging section (section 3 of the Zakat and Ushr Ordinance, 1980), a person may not necessarily be the owner of an asset rather need only possess the same—For all intents and purposes it was the Trust that owned or had the legal title to the assets, therefore, even if it was accepted that the real ownership was the beneficial ownership which vested in the employees/pensioners who were the beneficiaries of the Pension Fund, the Trust being in possession of such Fund would still qualify as a “sahib-e-nisab” under

S. 2(xxiii) of the Ordinance and would fall within the ambit of S. 3 thereof and be liable to payment of zakat—Appeal was dismissed accordingly, [p. 728] F & G

Board of Foreign Missions of the Presbyterian Church in the United States of America through Lahore Church Counsel v. The Government of the Punjab through Secretary Education, Civil Secretariat, Lahore and another 1987 SCMR 1197

distinguished.

of Pakistan (Mian Saqib Nisar, C J)

(e) Zakat and Ushr Ordinance (XVIII of 1980) —

____S, 3—Pakistan Telecommunication (Re-organisation) Act (XVII of

1996), Sso 45 & 46—Zakat, deduction of—Double taxation—Scope— Pakistan Telecommunication Corporation Employees Pension Fund (uthe Pension Fund”) managed by the Pakistan Telecommunication Employees Trust (“the Trust”)—Contention on behalf of Trust that deducting zakat from the Trust would amount to double taxation as zakat would subsequently be deducted from the person who eventually received the pension (if he was a sahib-e-nisab)—Validity—Zakat under the Ordinance was collected only once a year—If in one year, zakat was deducted from the Trust, and subsequently an employee/pensioner was determined to be entitled to pension and was made such payment from the Pension Fund, for the next year when such pensioner held and possessed his pension amount, if he fulfilled the conditions of 5.3 of the Ordinance and was a "sahib-e-nisabn, it was only he who would be liable to pay zakat upon the amount held by him, and not the Trust which had ceased to hold and possess such amount—Possibility of double taxation, thus, did not exist—Appeal was dismissed accordingly. [p. 729] II

Hamid Khan, Senior Advocate Supreme Court and M.S. Khattak, Advocate-on-Record for Appellant.

Abdul Rasheed Awan, DAG and Raja Abdul Ghafoor, Advocate-

on-Record for Respondents.

Dates of hearing: 16th and 22nd May, 2017.

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