I extend my sincere gratitude and acknowledgment to Dr. Abdul Aziz Khan Niazi, from the Institute of Business & Management (IB&M), UET Lahore, for his invaluable assistance and insights in shaping this knowledge. His expertise in Corporate Laws and Taxation has greatly enriched the content, making it more relevant to contemporary taxation practices. This acknowledgment also highlights his continuous contributions to promoting awareness and fostering meaningful discourse on Corporate Social Responsibility (CSR), benefiting both the student and professional community.

1. Introduction: The Global Context

The world is home to approximately 217 countries, each with its own governance structure, legal systems, and administrative frameworks. Pakistan, as a sovereign nation, has developed a robust governance and legal system tailored to its historical, cultural, and constitutional requirements. This article delves into Pakistan's government system, administrative units, types of laws, and judiciary system, providing a detailed exploration of their interconnected roles.

2. Pakistan: A Nation and Its Citizens

Citizenship

Citizenship in Pakistan entails certain rights and responsibilities. Citizens are expected to obey laws, pay taxes, and contribute to the welfare of the state. The Constitution guarantees fundamental rights, including equality, freedom of speech, religion, and access to justice. Citizens are divided into sub-groups based on factors such as language, religion, and urban or rural residency, reflecting the country's diversity.

3. Administrative Units in Pakistan

Pakistan's administrative framework consists of seven levels:

1. Moza: The smallest unit, often representing villages or land parcels.
2. Union Council: Local councils representing small towns or groups of villages.
3. Tehsil: Subdivisions within districts and grouping of union councils.
4. District: Key administrative areas managing infrastructure and services by grouping tehsils.
5. Division: Groups of districts for streamlined administration.
6. Province: Largest units, each with its own government and legislative assembly. The provinces in Pakistan are:
   • Islamabad Capital Territory (ICT)
   • Punjab
   • Sindh
   • Khyber Pakhtunkhwa (KP)
   • Balochistan
   • Gilgit-Baltistan (GB)
   • Azad Jammu and Kashmir (AJK)
7. Country: Grouping of provinces to form the nation of Pakistan.

4. Definition of Estate and Government

Estate

An estate refers to a structured societal framework comprising distinct elements such as land, governance, and citizens. It defines the territorial and administrative identity of a nation, encompassing its resources, institutions, and population.

Government

A government is a non-business, non-profit organization established to govern a state. It manages resources, enforces laws, and ensures societal welfare by collecting taxes and utilizing revenue for infrastructure, healthcare, education, and security. Governments operate under a defined system and structure to maintain law and order, provide public services, and protect citizens' rights.

5. Citizens Electing and Selecting Representatives

In Pakistan, citizens participate in the democratic process by electing and selecting legitimate representatives to form a government.

1. Electing Representatives:

o Citizens directly vote in general elections to elect members of the National Assembly (MNAs), Provincial Assemblies (MPAs), and Local Councils (Councilors). o Voting ensures representation at federal, provincial, and local levels, allowing citizens to choose leaders based on policies and performance.

2. Selecting Representatives:

o Indirect elections are conducted to select Senators by members of Provincial Assemblies. o The President is selected by an electoral college comprising members of the National Assembly, Senate, and Provincial Assemblies. o Other officials, such as Governors, are appointed based on recommendations from the Prime Minister. This democratic system ensures a blend of direct citizen participation and structured appointments for leadership roles, creating a balanced governance framework.

6. The Government System in Pakistan

Officials and Electable Hierarchy

1. Federal Government:

• Manages national-level units like defense, foreign policy, and economic planning.
• Operates through ministries and departments at the federal level.
• Provides oversight to divisions and inter-provincial matters.
• President: Head of State, elected by members of the National Assembly, Senate, and Provincial Assemblies.
• Prime Minister: Head of Government, elected by members of the National Assembly.
• Federal Ministers: Appointed by the Prime Minister, responsible for specific ministries like Finance, Law, and Defense.
• Members of National Assembly (MNAs): Elected by the public in general elections, representing constituencies.
• Senators: Elected indirectly by the Provincial Assemblies to represent provinces in the Senate.

2. Provincial Government:

• Govern provinces, managing administrative units like districts, tehsils, and union councils.
• Responsibilities include education, healthcare, agriculture, and law enforcement at the provincial level.
• Governor: Appointed by the President as the ceremonial head of the province.
• Chief Minister: Head of the Provincial Government, elected by members of the Provincial Assembly.
• Provincial Ministers: Appointed by the Chief Minister to oversee specific departments like Health, Education, and Agriculture.
• Members of Provincial Assembly (MPAs): Elected by the public to represent provincial constituencies.

3. Local Government:

• Oversee cities, towns, and villages, which include union councils and mozas.
• Responsible for local infrastructure, public services, and community welfare.
• Mayor/Chairman: Elected head of a city or district council, responsible for local administration.
• Deputy Mayor/Deputy Chairman: Assists the Mayor/Chairman in governance.
• Councilors: Elected representatives at the Union Council level, addressing local issues and infrastructure.

7. Functions of Government

Law-Making Process:

1. Drafting bills through public consultation.
2. Presentation in the National Assembly.
3. Committee review and amendments.
4. Debate and voting in both Houses of Parliament.
5. Presidential assent to enact the bill into law.

Implementation of Laws:

• Carried out by administrative bodies and law enforcement agencies.
• Ensures compliance through monitoring and penalties for violations.

8. Business and Non-Business Organizations (Corporate and Company)

Non-Business Organizations (Government)

• Non-business organizations, such as governments, are not driven by profit motives.
• Their primary objective is to serve the public and ensure societal welfare.
• Governments collect taxes to create budgets and fund initiatives that improve citizens quality of life, such as education, healthcare, and infrastructure development.

Business Organizations

Business organizations are profit-driven entities that operate under various structures based on their scale, ownership, and objectives. The Securities and Exchange Commission of Pakistan (SECP) oversees and regulates these businesses. The term business may have different nomenclature based on regional preferences:

• In the United States, businesses are commonly referred to as "Corporates", highlighting their structure as legal entities with shareholders.
• In the United Kingdom, the term "Company" is used, emphasizing the collective nature of the organization.

Below are the common types of business organizations:

1. Sole Proprietorship:

• Definition: A business owned and operated by one individual.
• Characteristics:
  • Simple to set up and operate.
  • The owner is personally liable for all debts and obligations.
  • No legal distinction between the owner and the business.
• Registration with SECP:
  • Although sole proprietorships are not required to register with SECP, they must comply with taxation and business regulations, including obtaining NTN (National Tax Number).
• Scope:
  • Common in small-scale businesses such as retail shops, freelance services, and consultancies.

2. Partnerships:

• Businesses owned by two or more individuals sharing profits and responsibilities.

3. Private Limited Companies:

• Separate legal entities with limited liability for shareholders.

4. Public Limited Companies:

• Larger entities with publicly traded shares, regulated heavily by SECP.

9. Definitions

Definition of System

A system is a structured arrangement of interdependent components or entities working together to achieve a specific purpose or goal. It involves a combination of processes, rules, and frameworks designed to maintain order and facilitate functionality.

Definition of Taxation

Taxation is the process by which a government imposes financial obligations on individuals, businesses, and entities to generate revenue for public expenditures. It serves as the backbone of government operations, funding essential services like infrastructure, healthcare, education, and defense. Taxes are categorized into direct taxes (e.g., income tax) and indirect taxes (e.g., sales tax, customs duties).

Definition of Law

Law is a system of rules and principles designed to maintain order, protect rights, and assign obligations and punishments. It provides the foundation for justice and governance.

Definition of Rights and Obligations

Rights refer to the entitlements or freedoms guaranteed to individuals by law, enabling them to act or benefit in specific ways. Obligations are the duties or responsibilities imposed by law that individuals must fulfill to ensure harmony and societal welfare.

Examples of Rights and Obligations

• Basic Example:
  • Right: Freedom of speech.
  • Obligation: Not to harm others through hate speech or false statements.
• Advanced Example:
  • Right: Ownership of property.
  • Obligation: Paying property taxes and adhering to zoning laws.
• Practical Example in Contracts:
  • Right: A tenant's right to occupy a rented property.
  • Obligation: Paying rent on time and maintaining the property in good condition.

Rights and obligations are interdependent, ensuring that individuals and institutions act responsibly while enjoying their freedoms.

Definition of Penalties

Penalties are the consequences or punishments imposed by law for violations of legal rules or obligations. They are designed to deter unlawful behavior, provide retribution, and maintain societal order. Law is a system of rules and principles designed to maintain order, protect rights, and assign obligations and punishments. It provides the foundation for justice and governance.

Types of Penalties in Pakistan

1. Fines: Monetary penalties imposed for minor infractions or as part of civil remedies.

• Examples: Traffic violations, breach of contract.

1. Imprisonment: Deprivation of liberty for a specified period as punishment for crimes.

• Categories: Simple imprisonment, rigorous imprisonment.

1. Debarment: Disqualification or exclusion from specific rights, activities, or privileges.

• Examples: Debarment from holding public office, participating in tenders.

1. Seizure and Confiscation: Legal taking of property or assets involved in unlawful activities.

• Examples: Confiscation of smuggled goods, assets acquired through money laundering.

1. Community Service: Assignment of community work as a penalty for minor offenses.
2. Capital Punishment: Death penalty imposed for the most severe crimes.

• Examples: Treason, terrorism.

1. Probation: Conditional release under supervision instead of imprisonment.

Penalties play a crucial role in upholding justice, and their application varies depending on the nature and severity of the offense. Law is a system of rules and principles designed to maintain order, protect rights, and assign obligations and punishments. It provides the foundation for justice and governance.

9. Types of Laws in Pakistan

1. Government-Wise Segregation

Federal Law:

• Enacted by the National Assembly and applies uniformly across the entire country.
• Examples: Defense laws, Taxation laws, and Foreign Trade regulations.

Provincial Law:

• Enacted by Provincial Assemblies and applies only within the respective province.
• Examples: Education laws, Agricultural policies, and Land Revenue Acts.

Local Government Law:

• Governed by local councils to address municipal and community-level issues.
• Examples: Building codes, Waste management regulations, and Local taxes.

2. Acts and Ordinances

Acts:

• Permanent laws passed by the legislature.
• Examples: Companies Act, 2017, Family Laws Act.

Ordinances:

• Temporary laws promulgated by the President or Governors under special circumstances.
• Ordinances must be ratified by the legislature within 90 days of the establishment of an assembly; otherwise, they are automatically discarded.
• Examples: Tax Amnesty Ordinance, National Accountability Ordinance.

3. Fiscal-Wise Segregation

Fiscal Law:

• Deals with revenue collection, taxes, and government expenditures.
• Examples: Income Tax Ordinance, Sales Tax Act.

Non-Fiscal Law:

• Covers all non-revenue-related areas like criminal offenses, civil disputes, and family matters.
• Examples: Penal Code, Family Court Act.

4. Procedural-Wise Segregation

Civil Law:

• Manages disputes between private individuals or entities.
• Examples: Contract Act, Property Laws.

Criminal Law:

• Focuses on offenses against the state and society.
• Examples: Pakistan Penal Code, Anti-Terrorism Act.

5. General Law and Special Law

General Law:

• Applies broadly to the public and general matters.
• Examples: Contract Act, Civil Procedure Code.

Special Law:

• Special Law addresses specific issues or industries and includes various targeted legislative frameworks:

Banking Laws:

- Regulate financial institutions, focusing on operations, loan recovery, and anti-money laundering.
- Example: Financial Institutions (Recovery of Finances) Ordinance, 2001.

Anti-Terrorism Act:

- Prevents terrorism and ensures public safety by prosecuting individuals involved in terror-related activities.
- Example: Anti-Terrorism Act, 1997.

Anti-Narcotics Laws:

- Control narcotics production, trafficking, and consumption, aiming to combat drug abuse.
- Example: Control of Narcotic Substances Act, 1997.

Army Act:

- Governs the conduct, discipline, and legal proceedings involving military personnel.
- Example: Pakistan Army Act, 1952.

Customs Act:

- Regulates imports, exports, and prevents smuggling to protect national economic interests.
- Example: Customs Act, 1969.

Consumer Protection Act:

- Safeguards consumer rights by ensuring accountability for defective goods and unfair practices.
- Example: Provincial Consumer Protection Acts.

Income Tax Tribunal Act:

- Facilitates the resolution of disputes related to income tax assessments and appeals.
- Operates under income tax laws.

Labor Court Laws:

- Protect employee rights, resolving disputes on wages, wrongful dismissal, and union issues.
- Example: Industrial Relations Act, 2012.

Modaraba Tribunal Regulations:

- Oversee Islamic financial institutions operating under Modaraba principles for compliance and dispute resolution.
- Example: Modaraba Companies and Modaraba Ordinance, 1980.

Criminal Law:

- Defines crimes and prescribes punishments to maintain public safety and order.
- Examples: Pakistan Penal Code, 1860; Anti-Terrorism Act, 1997.

Civil Law:

- Addresses disputes between individuals or entities, covering contracts, property, and family matters.
- Examples: Contract Act, 1872; Family Courts Act, 1964.

Corporate Law:

- Regulates the formation, operation, and dissolution of business entities.
- Example: Companies Act, 2017.

Administrative Law:

- Governs the operation of public administration and government agencies.
- Examples: Civil Servants Act, 1973; Land Revenue Act, 1967.

Fiscal Law:

- Manages public finance, including taxation and government expenditure.
- Examples: Income Tax Ordinance, 2001; Sales Tax Act, 1990.

Family Law:

- Deals with marriage, divorce, custody, and inheritance matters, often influenced by religious principles.
- Example: Muslim Family Laws Ordinance, 1961.

Environmental Law:

- Protects the environment by regulating activities that impact natural resources and ecosystems.
- Example: Pakistan Environmental Protection Act, 1997.

International Law:

- Manages relations between states and adherence to treaties and conventions.
- Examples: Vienna Convention; United Nations treaties.

Labor Law:

- Ensures worker rights, including safety, minimum wages, and employment standards.
- Examples: Factories Act, 1934; Minimum Wages Ordinance, 1961.

Cyber Law:

- Addresses issues related to technology, internet crimes, and data protection.
- Example: Prevention of Electronic Crimes Act (PECA), 2016.

6. National and International Law

National Law:

- Enforced within the territorial boundaries of Pakistan.
- Examples: Constitution of Pakistan, Local Tax Laws.

International Law Obligations:

• Treaties and agreements that Pakistan has ratified.
  • WHO Regulations: Health-related international policies ensuring global health standards.
  • International Labor Organization (ILO) Standards: Protects workers' rights and sets labor standards globally.
  • Financial Action Task Force (FATF) Guidelines: Policies for combating money laundering and terrorism financing.
  • Letter of Credit (LC) Law (UCP 660): Governs international trade and finance through standard credit practices.
  • Vienna Convention on Diplomatic Relations: Framework for diplomatic immunity and relations between states.
  • Kyoto Protocol and Paris Agreement: Obligations for environmental sustainability and climate change mitigation.
  • United Nations Charter: Fundamental principles for international peace and security.
  • Convention on the Rights of the Child (CRC): Guidelines to ensure children’s rights.
  • Geneva Conventions: Regulations for humanitarian treatment during armed conflicts.
  • World Trade Organization (WTO) Agreements: Rules and policies for international trade.
  • International Maritime Organization (IMO) Regulations: Ensures maritime safety and prevention of pollution.
  • Basel Convention: Regulates the transboundary movements of hazardous waste.
  • International Covenant on Civil and Political Rights (ICCPR): Ensures fundamental human rights.
  • United Nations Convention on the Law of the Sea (UNCLOS): Governs rights over ocean territories and marine resources.

7. Rules and Regulations

• Provide detailed operational guidelines for implementing laws.
  • Examples:
  • Corporate governance rules.
  • Environmental compliance regulations.

8. Norms, Culture, and Values

• Informal systems guiding societal behavior.
  • Examples:
  • Family traditions.
  • Ethical standards.

9. Contracts and Agreements

• Governed by laws such as the Contract Act, 1872.
• Contracts in Pakistan encompass a wide range of legal agreements, each serving distinct purposes. These include:

10. Business Agreements:

Agreements between companies or individuals for trade, services, or partnerships.

Employment Contracts:

Agreements defining employer-employee relationships, including roles, salaries, and obligations.

Lease Agreements:

Agreements for renting property, outlining terms, conditions, and rental amounts.

Rent Agreements:

Specific agreements for residential or commercial property rentals.

Sales Contracts:

Covering the purchase and sale of goods and properties.

Service Contracts:

Agreements for the provision of specific services, such as maintenance or consultancy.

Agency Agreements:

Contracts establishing a principal-agent relationship.

Franchise Agreements:

Outlining terms between franchisors and franchisees.

Partnership Agreements:

Legal documents formalizing partnerships.

Loan Agreements:

Agreements for borrowing and repayment of money.

Indemnity Contracts:

Providing compensation for damages or losses.

Guarantee Contracts:

Assurances of fulfilling obligations by a third party.

10.1. Stamp Duty and Government Revenue:

• Contracts require appropriate stamping to be legally enforceable.
• Stamp duty is a significant source of revenue for the government, contributing to the treasury system.
• The value of stamp duty varies based on the type of agreement and jurisdiction.

11. Judiciary’s Role in Law Enforcement

• Interprets and enforces laws.
• Protects citizens' rights and resolves disputes.
• Monitors government actions for constitutional compliance.

Connection Between Laws and Judiciary

The judicial system in Pakistan ensures that every type of law is paired with the appropriate judicial mechanism for adjudication and review. It operates on a structured escalation system that moves cases through a hierarchy of courts, depending on the nature of the case and the appeals process.

1. Pairing of Laws with Judicial Mechanisms

1. Criminal Law:

• Trial Courts: Sessions Courts and District Courts handle criminal cases at the first level.
• Appellate Review: High Courts hear appeals from Sessions Courts.
• Final Appeal: The Supreme Court is the highest authority for criminal appeals.

1. Civil Law:

• Trial Courts: Civil Courts handle disputes between individuals or entities.
• Appellate Review: High Courts hear appeals on civil judgments.
• Final Appeal: Supreme Court decisions are binding and conclusive.

1. Sharia Laws:

• Federal Shariat Court: Exclusively deals with laws requiring compliance with Islamic principles.

1. Corporate and Administrative Laws:

• Tribunals: Specialized tribunals like Banking Courts, Labour Courts, or Tax Tribunals address initial disputes.
• Higher Review: Appeals from tribunals are heard in High Courts.

2. Flow of Judicial Review and Escalation

1. Trial Courts (First Level):

• Cases are initiated at the relevant trial court based on the nature of the dispute (e.g., Civil Court, Sessions Court, Specialized Court).
• Evidence is presented, and the court delivers its judgment.

1. High Court (Second Level):

• Appeals from trial courts or tribunals are escalated to the High Court.
• Single-Bench Review: A single judge hears straightforward appeals or petitions.
• Division Bench (Two Judges): More complex appeals are assigned to a two-judge bench.

1. Supreme Court (Final Authority):

• Appeals from High Court decisions are heard by the Supreme Court.
• Three-Judge Bench: Regular appeals are handled by a smaller bench.
• Larger Bench (Five Judges or More): Significant cases involving constitutional matters or conflicts of law.
• Full Bench (All Judges): Rarely convened for decisions with profound national importance.

3. Review and Remand Protocols

1. Higher Courts' Review Authority:

• Higher courts (High Courts or Supreme Court) can review the judgment of a lower court to ensure proper application of the law and adherence to judicial procedure.

1. Remanding Cases:

• If the higher court identifies procedural flaws, incomplete evidence, or incorrect application of law, it can remand the case back to the trial court for reconsideration.
• The trial court is bound to follow the directions provided by the higher court during the remand process.

1. Substituting Judgments:

• In cases where the facts are clear and the trial court’s judgment is deemed erroneous, higher courts can issue a substitute judgment without remanding the case.

1. Binding Precedents:

• When a higher court provides a ruling on a legal principle or law, it becomes binding on all lower courts.

4. Bench Types and Their Protocols

1. Single Bench:

• Comprises one judge.
• Handles routine appeals, petitions, and bail applications.

2.Division Bench (Two Judges):

• Deals with more complex cases, especially appeals involving procedural or legal errors in trial courts.
• If the two judges disagree, the case is referred to a third judge or a larger bench.

1. Larger Bench (Three to Five Judges):

• Constituted for cases involving important legal or constitutional questions.
• Provides authoritative rulings that guide the interpretation of laws.

4.Full Bench (All Judges of a Court):

• Rarely formed for issues of extreme national importance or significant constitutional challenges.
• Decisions of the full bench are conclusive and cannot be overruled by smaller benches.

5. Judgment Protocols at Higher Levels

1.Agreement with Trial Court:

• The higher court upholds the trial court’s decision if it finds the judgment correct and based on valid legal principles.

1. Disagreement with Trial Court:

• The higher court may either:
  • Issue its own judgment, replacing the trial court’s decision.
  • Remand the case, directing the trial court to reconsider specific aspects of the case.

3.Judgment on Law:

• If a case involves interpreting or defining legal principles, the higher court’s ruling becomes a precedent, binding on all subordinate courts.

Conclusion

Pakistan’s governance system is an intricate structure that integrates government operations, corporations, legal systems, and taxation to establish societal order and development. The government acts as a guardian of public welfare, ensuring that laws are implemented and justice is served. Corporations, regulated by robust legal frameworks, drive economic progress, generating employment and contributing to the national GDP. Laws underpin every aspect of society, from individual rights to business regulations, forming a foundation for justice and accountability. Taxation plays a pivotal role by funding critical infrastructure, public services, and social welfare initiatives. Together, these elements create a balanced ecosystem that facilitates growth, stability, and equitable governance.

Author:
Mohsin Yaseen
On behalf of SolBizTech Team
https://www.linkedin.com/in/rmyasin