Last Updated: Wednesday April 16, 2008
Mr. Pervaiz Musharraf
Phone No. 0092-51-???.
Subject: Application of the Land Revenue Act, 1967, on the areas not meant for under the law, Capital Value Tax and certain other issues.
With due respect, some factual aspects on the application of subject law are hereby brought in your kind notice in the wider interest of nation.
Section 3 of the subject law is reproduced below:---
“3. Exclusion of certain land from operation of this Act.--- (1) Except so far as may be necessary for the record, recovery and administration of village-cess, or for purposes of survey, nothing in this Act applies to land which is occupied as the site of a town or village, and is not assessed to land revenue.
(2) It shall be lawful for the Collector acting under the general or special orders of the Board of Revenue, to determine, for the purposes of this Act, what lands are included within the site of a town or village, and to fix and from time to time to vary the limits of the same, regard being had to all the subsisting rights of the land owners.”
As the section
3(1) of the Land Revenue Act, 1967 (hereinafter referred to as the “Act”)
clearly bars the application of the Act on the areas not meant for under the
law, why the Patwar Khanajats are existing and functioning in the urban areas
It is worth mentioning here that locality of the Lahore is supposed to be a urban land in the perspective of Valuation Table issued by Collector under section 27-A of the Stamp Act, 1899, therefore need to remaining continue of Patwar Khanajats becomes illegal.
Also please note that section 116 of the same Act is inconsistent with section 3 which is reproduced below:---
“116. Revenue survey may be introduced by Board of Revenue in any part of Province:---(1) It shall be lawful for the Board of Revenue, whenever it may deem expedient, to direct by notification, the survey of any land in any part of the Province with a view to the settlement of land revenue, the preparation of records-of-rights and preservation thereof, or for any other similar purpose, and such survey shall be called a revenue survey.
(2) A revenue survey may extend to the lands of any village, town, or city generally, or to such land only as may be specified in the notification.
(3) Subject to the orders of the Board of Revenue, it shall be lawful for the officers conducting any such survey to except any land to which it may not seem expedient that such survey should extend.”
The other reasons necessitating to take action are as follows:---
In number of verdicts of higher and superior courts, it has been held that mutation under Act is neither ownership nor document but mere a record prepared and attested on the bases of title deed made adopting the legal measures.
All the Sub-Registrars demand proof of ownership before granting permission for Local Commission and before registration of Sale Deeds particularly in term of Fards where property falls in Revenue whereas Registration Act, 1908, did not empower Sub-Registrar to probe into ownership of property which was subject matter of sale transaction.
As a matter of policy, Sub-Registrar concerned collects the mutation fee and send a copy of registered document to relevant Patwari for mutation but mutation is never effected automatically without payment of Fee. Such mutation is even otherwise is illegal so far as law is concerned on urban land.
(12) Notwithstanding anything contained in the foregoing subsection, the Revenue officer shall in cases of transfer by registered deeds, have the mutations entered and attested within a period of thirty days, on receipt of the registration memorandum alongwith a photo copy of the registered deed, without summoning the parties.
Issuance of Fards (Extracts from the register of periodic Record-of-Rights) for sale, loan, surrender, gift, NEC etc. involve huge finance however law does not provide any provision for their issuance and these documents entail no legal effect. It is not only illegal but big source of corruption and exploitation of layman and the people having no knowledge of law.
It is notable thing that the lives of the Revenue People particularly Patwaris is beyond their ostensible sources. Properties which they hold such as expensive accommodations, mobile phones, cars etc. are open secret to prove the contention. People who cannot afford their shoes and dresses so far as their monthly salaries are concerned, they use such expensive things! Lahore Development Authority (LDA) is on the same footing. It is reasonable believe that the amount collected as land revenue, annually, would not be so enough than of whatever is gone in the pockets of revenue people. Would you like to probe the matter? Would you like to take immediate action under existing Pakistani penal laws?
You are humbly and vehemently requested to make arrangement to put the record of revenue into fire relating to land not meant for under the law for the prevention of its use any more for the purpose whatsoever. Patwar Khanajats are required to be dismantled immediately established for the areas not falling in the agriculture or cultivating land.
No authority could produce Gazette Notification so far as the collection of tax on transfer of immovable property is concerned but even than the same is being received without any plausible and lawful authority. It clearly reflects that the all amount which has still been received on account of TIP is illegal and without lawful authority and needs to be reimbursed to the persons from it has been collected with interest. No tax can be imposed without Gazette Notification.
Relevant portion of the law relating to tax on the transfer of property is reproduced below:---
“3. Levy of tax.--A Local Government for a Tehsil/Town may levy tax on the transfer of immovable property situated within its limits as provided in Part II of the Second Schedule of the Punjab Local Government Ordinance, 2001.
(2) The rate of the tax shall be fixed as percentage of the amount of consideration of transfer of property.”
The only available
letter of government is letter No. SO(Elec) (LG)2-1/2001, dated
It is obvious from
the language of the enactment that only “a
Local Government for Tehsil/Town may levy tax on the transfer of immovable
property”, but the above referred letter is issued by the authority not
competent to issue such thing, i.e., Government of the
Another error crept in the law is that Part-II of the First Schedule does not contain the provision relating to tax on transfer of immovable property but the same is available in Part-III of the Second Schedule.
Please recall the legislation and notifications on the levy of Capital Value Tax on capital value of assets.
Section 7 of the Finance Act, 1990 (as amended from time to time) is reproduced:---
“7. Levy of tax on Capital Value of certain things:- (1) A tax on the capital value of assets, to be called the capital value tax, shall be payable by every individual 1[, association of persons, firm or a company which] acquires by purchase 2[gift, exchange, 3[power of attorney,] surrender or relinquishment of rights by the owner (whether effected orally or by deed or obtained through court decree) except by inheritance, or gift from spouse, parents, grand parents, a brother and a sister] an asset or a right to the use thereof for more than twenty years, 4[ ] 5[or purchase of modaraba certificate or a registered instrument of redeemable capital as defined in the Companies Ordinance, 1984 (XLVII of 1984), or shares of a public company, listed on a registered stock exchange in Pakistan by a resident person defined in section 81 of the Income Tax Ordinance, 2001 (XLIX of 2001)] such as is specified in sub-section (2), 6[at the rates specified in that sub-section].”
The language of the above section in English clearly states that Capital Value Tax is not applicable on Power of Attorney except where assets are acquired through it. Even then Capital Value Tax is not applicable on Power of Attorney but on the instrument by which assets are acquired/transferred such as Sale Deed, Gift Deed, Exchange Deed, Surrender Deed, Relinquish Deed, or Court Decree etc.
It is understood that Power of Attorney is not an “acquisition of assets” but mere delegation of power to sign some other instruments including transfer deeds.
Registration Authorities are consistently demanding not only the payment of Capital Value Tax on Power of Attorneys but at the rate of 2% of DC Rate even where value is not recorded, without annexing any support of law.
On the complaint to IT Authorities, they do not reply the pubic queries indispensably. Their replies are indigestible thinking thus not acceptable even to the person of common prudence.
Please take notice
whether any authority in
There is no any legal document in English Language supporting the impugned contention of Registration Authorities, as stated earlier.
In the light of above, you are therefore, requested to please bring us out of this dilemma taking measures to stop illegal practice of charge of Capital Value Tax on Power of Attorneys.
Also please note that what will ensue if it is presumed that Capital Value Tax has been levied on Power of Attorney? Following is notable:---
1. It amounts Double Taxation, once at the time of execution of Power of Attorney which is merely delegation of authority and secondly at the time of an execution of conveyance deed.
2. Levy of Capital Value Tax on Power of Attorney amounts taxation without transaction of conveyance.
3. Definition of Urban Areas in Notifications is not in conformity of earth realities.
4. Cultivation area is also included in the definition of Urban Area which is undesirable. Cultivation areas are also subject to land revenue.
5. Under the Notifications of Central Board of Revenue all the target deeds are conveyance deeds except to Power of Attorney.
6. Power of Attorney is a deed, which can be revoked at any time on the behest of its Maker or Donor or Principal. What will be the status of Capital Value Tax when the same will be revoked? Therefore, so called, levy of Capital Value Tax on Power of Attorney is, in any way, unreasonable and inconsistent.
7. Capital Value Tax is levied in the pretext of prevention of speculation of land so that its prices may be controlled. Power of Attorney is not subject matter of such contention of parliament. This contention was also expressed in News Clippings.
8. Even it is
presumed that Power of Attorney is transfer of property then Capital Value Tax
may also be levied on Rent Deeds and Lease Deeds. It may also be extended on
Till now Registration Authorities have collected billions of rupees on account of Capital Value Tax on Power of Attorneys. Central Board of Revenue is on the back of such Registration Authorities. They have caused huge financial loss to general public. Would you like to send Reference against these authorities on appropriate forum?
Please resolve the problem at your earliest as the matter has became headache for the general public.
Under section 27-A of the Stamp Act, 1899, Valuation Table can be issued only for the urban property but Collectors’ include the agricultural property also in Valuation Table, which is beyond their authority. It is wrongful loss to general public on the one hand and wrongful gain on the other hand to public exchequer. Why? This practice may be eliminated at once and wrongful gain may be reimbursed to those from whom it is received wrongfully.
This refers to
Notification No. 13-2004/31-ST(I), dated
According to Clause B(iv) of the said Notification, the maximum Stamp Duty payable for the mortgage deeds for housing finance executed in favour of Banking Companies of every denomination has been fixed to Rs. 1,500/-.
District Officers (Registration)/Sub-Registrars in
Please resolve all the matters in accordance to law.
Nasir Nazir Butt
for NASIR LAW ASSOCIATES
c. c.: Prime
Minister of Islamic
Revenue Division, Central Board of Revenue,
The Secretary Revenue, (Federal & Provincial).
The Secretary Finance (Federal & Provincial).
Commission of Islamic
Chief Ministers Punjab, Sindh, NWFP, &
Governors Punjab, Sindh, NWFP, &
Executive District Officer,
District Officer (Revenue),
Deputy District Officers (Revenue),
All Deputy District Officers (Registration),
Deputy District Officer (Revenue –
All leading papers of
Board of Revenue,
Mr. Nasir Nazir Butt
Advocate High Court
Shah Kamal, Near Mosque Aouqaf, Ichhra
SUBJECT: APPLICATION OF THE LAND REVENUE ACT, 1967, ON THE AREAS NOT MEANT FOR UNDER THE LAW, CAPITAL VALUE TAX AND CERTAIN OTHER ISSUES.
No. NLA/2007/057, dated
2. It is to inform that the matter regarding Stamp duty & Registration on mortgage deeds for Housing Finance has already been considered and also issued a letter to the District Officer (Revenue), in the PUnjab, vide Memo: No. 726-2007/378-ST(I), dated 22-5-2007 (copy enclosed for ready reference).
CHIEF INSPECTOR OF STAMPS
BOARD OF REVENUE,
Board of Revenue,
All District Officers (Revenue)
Subject: CHARGE OF STAMP DUTY AND REGISTRATION FEE ON MORTGAGE FOR HOUSING FINANCE.
Please refer to the subject cited above.
2. The Provincial Chief, House Building Finance Corporation, NWFP pointed out that the Board of Revenue, Punjab issued instructions vide Notification No. 13-2004/31-ST(I), dated 10-1-2004 and No. 13-2004/38-ST(I), dated 10-1-2004 for charging of Stamp Duty & Registration Fee on mortgage for Housing Finance at the rate mentioned under Clause B of the said Notifications. Whereas the Sub-Registrars are still charging Stamp Duty @ Rs. 0.25% and Registration Fee @ Rs. 0.25% from the clients of House Building Finance Corporation.
3. All the Sub-Registrars in
your respective district may be directed to employ with the instructions issued
by the Board of Revenue,
A copy is forwarded for information to:---
Provincial Chief, House Building Finance Corporation
Provincial Chief (
Author’s Opinion: This clarification does not serve the purpose put up in the letter under reference.
 Probably the correct word is “exempt” rather “except”.
 Land revenue.
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 Heavy bribe.