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Petitioner: K.OTRI ASSOCIATION OF TRADE AND INDUSTRY VS Respondent: GOVERNMENT OF SIND AND
Court Name: Sindh High Court Judge(s): Saleem Akhter, Nasir Aslam Zahid Title:K.OTRI ASSOCIATION OF TRADE AND INDUSTRY vs GOVERNMENT OF SIND AND
JUDGMENT
Reported As: 1982 CLC 1252 Result: Order accordingly Judgment JUDGMENT ' NASIR ASLAM ZAHID, J.-These constitutional petitions call into question the validity of the notification No, OSD/Elect/LG/DP-27/79 dated 3-6-1980 of the Government of Sind (hereinafter referred to as "the impugned Notification") to the extent the Sind Government through the impugned Notification delegated its power to sanction levy of taxes to the. Councils. Then some of these petitions challenge the octroi tax, and other petitions impugn export tax, levied by different Union Councils/Town Committees/District Councils in Sind. This judgment will dispose of the following 45 constitutional petitions :- {{TABLE}} . Petitions where octroi tax is challenged No, of Petition Name of petitioner Name of council levying the tax C. P. No, D-1091/80 Allah Warayo Khan Town Committee Sita Road, Taluka Khair- pur Nathan Shah Distt. Dadu. C. P. No, D-1196/80 Shah Murad Sugar Union Council Jhok Mills Limited. Sharif, Taluka Mirpur Bathoro, Distt. C. P. No, D-1271/80 Abdul Majid and another Thatta, Matli Town Commi- ttee Mehrabpur, Distt. Nawabshah. C. P. No, D-1637/80 Bashir Ahmad Kamboo and others Town Committee, Mehrabpur, Distt.
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Nawabshah. C. P. No, D-1716/80 Muhammad Usman and another. Union Council, Bau Khan Pathan, Hala, Distt. Hyderabad. 6. C. P. No, D.125/81 7. C. P. No, D-422/81 8. C. P. No, D-467/81 9. C. P. No, D-470/81 10. C. P. No, D-490/81 11. C. P. No, D-593/81 12. C. P. No, D-603/81 13. C. P. No, D-646/81 14. C. P. No, D-663/81 15. C. P. No, D-745/81 16. C. I', No, D-1011/81 17. C. P. No, D-1051/81 Kotri Association of Trade & Industry. Chilya Corrugated Board Mills Ltd. Bhanero Textile Mills Limited. Shadman Cotton Mills Limited. Hussain Mills Ltd. Central Cotton Mills Ltd. Globe Textile Mills (0. E.) Limited. National Detergent Ltd. Indus Steel Pipes Ltd. Surriya Textile Mills Ltd. Haji Muhammad Yakoob Shoukat Ali and others. Union Council, Bholari, Distt. Dadu. Union Councils Chilya & Bhimpir, Distt. Thatta. Union Council Bholari, Distt. Dadu. do do do do do do do Union Council, Ibrahim Hydari, Karachi. Union Council, Ibrahim Hydri Karachi. 18. " ft 1137/81 Sind Particle Board Union Council, Mills Ltd. Bholari, Distt. Dadu. #TBS 19. If #TBE 1156/81 #TBS " 46 64 #TBE 279/82 319/82 Sind Alkalis Ltd. Sapphire Textile Mills Ltd. Dewan Textile Mills Ltd. Union Council, Ibrahim Hydri Karachi. Union Council, Bholari, Distt. Dadu. do Petitions where Export Tax is challenged 22, 23. 24.
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44/81 144/81 145/81 146/81 Asif Industries Ltd. And another. Indus Jute Mills Ltd. Anwar Textile Mills Ltd. Forbes Colloids Ltd. District Council, Shikarpur. District Council, Thatta. do do C. P. No, D-147/81 Chilya Corrugated Board Mills Limited. District Thatta. Council, " 44 147/81 Central Cotton Mills Ltd. Do " 44 149/81 Baksh Textile Mills Ltd. Do " ,, 150/81 Ahmad Spinning Mills Ltd. Do 41 151/81 Hamroz Industries Ltd. Do 44 44 152/81 Gharo Textile Mills Ltd. Do " 44 153/81 Annoor Textile Mills Ltd. Do " 4C 165/81 Kotri Association of Trade and Industry. District Dadu. Council, " it 453/81 Sind Fine Textile Mills Ltd. District Shikarpur. Council, 4/ 44 594/81 Central Cotton Mills Ltd. District Dadu. Council, if 41 641/81 Bawany Sugar Mills Ltd. District Dadu. Council, " ,, 647/81 National Detergents Ltd. District Dadu. Council, 44 " 692/86 Indus Steel Pipes Ltd. Do " CI 921/81 Taj Muhammad. District Badin. Council, " it 1136/81 Sind Particle Board Mills Limited. District Dadu. Council, '` CI 48/82 Cosmopolitan Deve- lopment Company Ltd. Do IC 44 272/82 Molasses Trading & Export Co. Ltd. District Badin. Council, " 44 286/82 Surriya Textile Mills Ltd. District Dadu. Council, " .. 287/82 Amin Textile Mills Ltd. Do " 318/82 Dewan Textile Mills Ltd. Do {{TABLE}} 2. Before stating the relevant facts, of these petitions, we have considered appropriate to refer here to those provisions of the Sind Local Government Ordinance, 1979 (hereinafter referred to as "The 1979 Ordinance") and certain Rules, interpretation or reference of which provisions is involved in our decision on these petitions : Section 3 (6).-"bye-laws" means bye-laws made under this Ordinance Section 3 (15).-"Council" means a corporation, municipal committee, town committee district council, taluka council or union council, as the case may be. Section 3 (49).-"Prescribed" means rules made under this Ordinance. Sectton 3 (59).-"rules" means rules made under this Ordinance. Section 3 (70)-"tax" include any toll, rate, cess, fee or other impost leviable under this Ordinance. Section 4-A council constituted under this Ordinance for any local area shall, unless Government by notification, specifies otherwise, be the successor of the local council or local councils for that area existing immediately before the coming into force of this Ordinance.
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Section 60 -Subject to subsection (2) a council may with the previous sanction of Government levy, in the prescribed manner all or any of the taxes, rates, tolls and fees mentioned in Schedule V : ' Provided that where a tax, rate or toll which is levied as a cess, tax or surcharge by Government such tax, rate or toll shall not be more than that levied by Government. (2) No taluka council shall have the power to levy any tax, toll or fee and such council shall be financed in such manner as may be prescribed. (3) All taxes, rates, tolls and fees levied by a council shall be notified in the prescribed manner and shall, unless otherwise directed by Government, be subject to previous publication. (4) Where a proposal for the levy or modification of a tax, rate, toll or fee is sanctioned (the order sanctioning such levy or modification) shall specify the date on and from which such tax, rate, or fee or the modification shall come into force. (It may be observed hence that the words in bracket in section 60 (4) were substituted and be dee med to have always been so substituted by section 4 of Sind Ordinance 15 of 1981, made on 23-9- 1981 for the word `Government'). Section 61.-Government may frame model tax schedules, and where such schedules have been framed, a council shall be guided by them in levying a tax, rate toll or fee. Section 62 (1). -Government may direct any council- (a)to levy any tax, rate, toll or fee which the council is competent to levy under this Ordinance; (b)to increase or reduce any rate, tax, toll or fee to such extent as may be specified ; (c) to suspend or abolish the levy of any tax, rate, toll or fee ; (2) If the directior is issued under subsection (1), the Chief Executive of the Council shall, notwithstanding anything contained in this Ordinance, give effect to it by issuing a notification in terms of the direction not later than the date, if any, specified by Government in this behalf. (Subsection (2) of section 62 as reproduced above was substituted by section 2 of Sind Ordinance V of 1981 for the original subsection (2) which read as follows ' If a direction issued under subsection (1) is not complied with, within the specified time, if any, Government may make an order giving effect to the direction".) Section 64 (1). -Unless otherwise provided all taxes rates, tolls and fees levied under this Ordinance shall be collected in the prescribed manner by the persons authorized for such collection : ' Provided that where any tax, rate, or toll levied by a council is also levied by Government such tax, rate or toll shall be collected with Government Tax, and the proceeds thereof be credited to the local fund of the council. (2) All arrears of taxes, rates, tolls and fees and other moneys claimable by a council under this Ordinance shall be recoverable as arrears of land revenue through Government agency or by the council authorized by Government for such recovery through such servants or class of servants of the council as may be prescribed. Section 67-(l) All taxes, rates, tolls, fees, and other charges levied by a council shall be imposed, assessed, leased, compounded, administered and regulated in such manner and within such period as may be prescribed. (2) Rules framed under the section may, among other matters provide for the obligations of the tax-payer and the duties and powers of the officials and other agencies responsible for the assessm ent and collection of taxes. Section 103-(2) Government may make rules to carry out the purposes of this Ordinance. (2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the matters enumerated in Schedule VII and all matters incidental, consequential and supplemental thereto. Section 104. -(1) A council may, and if required by Government shall, make bye-laws not inconsistent with the rules, to carry out the purposes of this Ordinance.
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(2) In particular and without prejudice to the generality of the foregoing powers such bye-laws may provide for all or any of the matters enumerated in Schedule VIII and all matters incidental, consequential and supplemental thereto. (3) All bye-laws shall be made subject to the condition of previous publication. (4) All bye-laws shall be made subject to the sanction of Government and Government may sanction the same with or without modification. (5) If the council fails to Make any bye-laws when required by Government to do so, Government may frame the bye-laws and publish them in the official Gazette and the bye-laws so published shall be deemed to be bye-laws made by the council. (6) Government may frame model bye-laws and the councils may adopt them or be guided by them. (7) All bye-laws shall be published in such manrer as in the opinion of the authority making them is best suited for information of the residents of the local area concerned. Section 105-(1) All rules and bye-laws made under this Ordinance shall be deemed to form part of this Ordinance, (2) Copies of rules and bye-laws pertaining to a council shall be kept available at the office of the council for inspection and sale. Section 106. -(1) Government may, by notification, delegate any of its powers under this Ordinance or the rules to (a council or to any officer under Government or the council as the case may be). (2) A council may by notification delegate any of its powers to the Mayor or as the case may be, Chairman, or a committee or sub-committee or any officer serving under the council. (The words in bracket in subsection (1) of section 106 were substituted by Sind Ordinance 4 of 1980 published on 4-2-1980 for the words "any officer subordinate to it."). Section 120. -(1) The Sind Local Government Ordinance, 1972, is hereby repealed. (2) Notwithstanding the repeal of the enactment under subsection (1)- (a)everything done, action taken, obligation, liability, penalty or punishment incurred, inquiry or proceeding commmenced, person appointed or authorised, jurisdiction or power conferred, licence, certificate or permit granted (rules or bye-laws made) and order issued under any of the provisions of the repealed enactment shall, if not inconsistent with the provisions of this Ordinance, continue in force and, so far as may be, be deemed to have been respectively done, taken, incurred, commenced, appointed, authorised, conferred, granted made or issued under this Ordinance ; (b)all union councils, district councils, town committees, municipal committees and corporations existing immediately before the coming into force of this Ordinance, shall be deemed to be the councils and the officials or Administrators performing the duties and functions of such councils shall continue to perform such duties and functions until newly elected councils assume office in accordance with the provisions of this Ordinance ; provided that Government may, in the meantime remove or transfer any such official or Administrator and appoint any other person to be Aministrator or official of such council or make any other arrangement for running of the affairs of the Council. (The words in bracket in subsection 2(a) of section 120 were substituted by Sind Ordinance 4 of 1980 for the words "rule made"). ' Heading of Part H of Schedule V to the 1979 Ordinance is as follows :- ' Taxes, rates, tolls and fees which may be levied by a Corporation including the Metropolitan Corporation, Municipal Committees and Town Committees." ' Items Nos. 3, 4, 5 and 25 of Part II of Schedule V read as follows :- ``(3) Tax on the import of goods for consumption, use or sale in the local area. (4)Tax on the export of goods from the local area. (5) Tolls on road and bridges and ferries.
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25. Any other tax which is levied by the Government. ' Heading of Part III of Schedule V to the 1979 Ordinance is as follows :- "Taxes. Rates, tolls and fees to be levied by District Councils and Union Councils." ' Items Nos. 5, 6, 13 and 27 of Part III of Schedule V read as follows :"(5) Tax on the import of goods for consumption use or sale in the local area (by union council only). (6) Toll on the export of goods to be called Rawangi Mahsool by District Councils only, and may be shared by the District Council with such councils of the District and is such ratio as and when directed by Government. (13) Tolls on roads, bridges and ferries. (27) Any other tax which is levied by the Government." (It may be observed here that originally item No, 6 read as follows:- (6) Tax on export of goods from the local area. ' By Sind Ordinance 15 of 1981 this orininal items No, 6 was substituted by the entry reproduced earlier). ' Through Notification No, OSD/(E)/LG/125/80 published in the Sind Government Gazette Part IV-A of 18-6-1980, the following Rules were made by the Sind Government in exercise of the powers conferred by section 103 of the 1979 Ordinance :- The Sind Councils (Imposition of Taxes) Rules, 1979: 1.-(1) These rules may be called the Sind Councils (Imposition of Taxes) Rules, 1979. (2) They shall come into force at once. 2.(a) "Inhabitant" means any persons ordinarily residing or carrying on business of owning or occupying immoveable property in the local area, and includes a persons who is likely to be affected a taxation proposal ; (b) "Ordinance" means the Sind Local Government Ordinance, 1979 ; (c) "report" means the report of the sub-committee prepared under sub-rule (4) of rule 5 ; (d) "Section" means a section of the Ordinance ; (e) "sub-committee,' means a sub-committee appointed under sub-rule (2) of rule 5 ; f) "taxation proposal" means a proposal framed by a council for the imposition, abolition or suspension of tax or an increase or reduction in the rate of tax. 3. A council may at any time review its financial position and if in its opinion any change in the tax structure is called for it shall formulate or cause to be formulated a taxation proposal : Provided that no taxation proposal shall be formulated in respect of tax before the expiry of six months since its imposition, reduction, suspension or abolition. 4.-(1) Every taxation proposal prepared under rule 3 shall be published alongwith a notice in daily newspapers for inviting objections and suggestions thereon within fifteen days of publication of the taxation proposal. (2) The notice under sub-rule (1)- (i) may specify- (a) the main feature of the taxation proposal ; (b) the class of persons or description of property or both affected thereby ; (c) the amount or rate of tax to be imposed and the previous amount or rate, if any ; (d) additional income likely to be raised by the imposition of the tax or the increase in the tax and the purpose on which this additional income is proposed to be spent ; (e) the loss of income likely to be caused by the abolition or suspension, of the tax or reduction in the rate of the tax and the manner in which this short fall in income is proposed to be made up ; ( f ) justification of the taxation proposal ; and (g) any other particulars considered necessary for the information of the public ; (ii) shall accompany a taxation programme specifying-
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(a) the date, which shall not be earlier than fifteen days from the publication of the notice, by which objections or suggestions may be made by the inhabitants ; (b) the date or dates fixed for the bearing of objections and suggestions received under this rule; (c) the date by which the final taxation proposal shall be sent to Government for sanction. 5.-(l) All objections and suggestion received under rule 4, shall be entered in a register maintained -for the purpose. (2) The Finance Committee of the Council shall hear and examine the objections and suggestions under the Chairmanship of Mayor or Chairman of the Council, as the case may be. (3) On the date or dates fixed for the hearing of objections and suggestions, the committee shall hear the same in public and shall afford all possible facilities to the persons making them to present their case. (4) The committee shall as early as possible after close of the hearing of ojbections and suggestions, draw up and furnish detailed report to the Council. (5) The report under sub-rule (4) Shall specify-- (a) the salient features of the taxation proposal; (b) the number and nature of objections and suggestions received within the specified period; (c) the manner in which the objections and suggestions were heard; (d) the findings of the committee in respect of each objection and suggestion heard by it ; (e) the recommendations of the sub-committee with regard to the taxation proposal indicating whether the recommendations are, as nearly as possible, in accordance with the model tax schedule, if any, framed by Government under section 6; and (f) financial implications involved in such recommendations. 6.-(1) The Mayor or Chairman, as the case may be, shall present the report to the special meeting of the council, convened for consideration of the taxation proposal. (2) The council shall consider the report and for the reasons incorporated in its resolution- (a) approve it with or without modifications ; or (b) drop the taxation proposal ; (c) if the council approves the taxation proposal, with or without modifications, it shall be submitted to Government alongwith a copy each of the report of the committee and the resolution approving it. (7) Where Government has sanctioned the taxation proposal the order of Government shall be notified in the official Gazette and such order shall come into force on and from such date as may be specified in the notification. 3. In these petitions, as observed earlier, levy and recovery of octroi and export tax by the concerned councils has been challenged. In a few cases, there already existed tax schedules on the basis of which taxes were being recovered and when revised schedules were notified, such revised Schedules came to be challenged. However, in most of these petitions taxes which are impugned were imposed by councils for the first time. We have heard M/s. Khalid Anwar, Rashid A. Akhund, J. H. Rahimtoola, Ghiasuddin Baloch, Sabihuddin Ahmed, Maroof Ali Khan, Arif Hussain, Muhammad All Shaikh, Sher Afgan, Abdul Hamid Khan. Zafar Alam Khan, S. Nasiruddin and Iqbal Haider for the petitioners. On behalf of the respondents the main arguments were addressed by Mr. Rasul Baksh Unar and Mr. Saeed A. Shaikh, the learned Advocate-General of Sind, We have also heard M/s. Khuda Bux Omrani, Imam Ali Kazi, Hatif Khddai Ansari, Shahenshah Hussain and S. S. Hamid for the respondents. We may first refer to the two main contentions raised on behalf of the petitioners. First such contention was that levy of tax by a council under section 60(1) of 1979 Ordinance is subject to previous sanction of the Government, levy of tax by the various councils is bad. It may be mentioned here that it has been an admitted position that the Government did not accord any sanction but the case of the respondents is that under section 106 of the 1979
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Ordinance, Government is invested with the power to delegate through notification any of its powers under this Ordinance to any council and that by Notification No, OSD/Elect/LG/DP-27/79, dated 3-6-1980, Government's power to sanction levy of taxes was delegated to all the councils. We may here reproduce the Notification dated 3-6-1980 :- Notification ' Karachi : the 3rd June, 1980. ' No, OSD/Elect/LG/DP-27/79.-In exercise of the powers conferred by subsection (I) of section 106 of the Sind Local Government Ordinance, 1979, the Government of Sind are pieased to delegate its powers under the sections of the said Ordinance mentioned in column 1 of the table below to all the Councils in the manner and extent indicated in column 2 thereof :- {{TABLE}} Table Section No, and its description Extent and manner of delegation 1 2 60(1) The power to sanction Full powers ; provided that- levy of taxes. (i) it does not involve reduction in the existing rates ; (ii) the abolition of an existing tax ; (iii) prior approval of Government would be necessary where imposition of tax has bearing on export of agricultural inputs. ' Petitioners' contention has been that the power of sanction could not be delegated to the union council whose action was itself subject to sanction. The second main point that has been agitated in these petitions has been that the prescribed procedure has not been followed by the councils which renders the levy of taxes invalid. These two contentions are relevant for petitions where octroi tax is challenged as well as petitions where export tax has been challenged. We may also mention here that in respect of export tax cases, another major argument raised was that levy of export tax by the councils was unconstitutional being in violation of Article 151 of the 1973 Constitution. 4. We first take up for our consideration the contention relating to delegation of the power to sanction the taxes through the impugned Notification dated 3-6-1980. Mr. Khalid Anwar, appearing on behalf of the petitioners in several of these petitions advanced the following submission in this regard :- (i) Sanction of the Government is mandatary under seetion 60 of the 1979 Ordinance ; (ii) section 60 requires prior sanction and not ex post facto sanction ; (iii) "sanction" presupposes a prior act which is then ratified by the sanctioning authority ; (iv) "previous sanction" postulates two separate and distinct bodies : (v) impugned Notification dated 3-6-1980 renders section 60(1) of the 1979 Ordinance nugatory ; (vi) impugned Notification purports to alter the fundamental scheme of the 1979 Ordinance relating to levy of taxes by the councils ; (vii) the 1979 Ordinance and the Rules made thereunder require examination by the Government of the taxation proposal made by every council and the blanket sanction in advance through the impugned Notification is not a sanction in the eye of law ; (viii) "sanction" provision in section 60(1) is in the nature of a "Responsibility" of the Government and under law responsibilities conferred on a body cannot be delegated as has been unlawfully done by the Government through the impugned Notification. ' According to learned council, it is a case of "abdication of responsibilities" ; (ix) impugned Notification delegates power to all councils and this according to learned council, was invalid. It was contended that under this Notification it has been made possible for one council to sanction the taxation proposal of any other council also which was not only absurd but contrary to the taxation scheme of the 1979 Ordinance.
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' Counsel appearing for other petitioners adopted the above contentions of Mr. Khalid Anwar and then advanced additional arguments on the question of the vires of the impugned Notification dated 3-6-1980. (x) Mr. Rashid Akhund submitted that the impugned Notification, to the extent it delegated the power of sanction to the councils, was invalid on account of being a case of excessive and impressive delegation ; (xi) According to Mr. J. H. Rahimtoola section 106 came under Chapter XV of the 1979 Ordinance which relates to "Miscellaneous" provisions, and, therefore, power under section 107, a miscellaneous provision could not be exercised to override substantive provisions of section 60 ; (xii) It was also contended by Mr. J. H. Rahimtoola that the power of sanction in section 60(1) is a legislative power and for delegation, such power requires specific provision of delegation and general provision of delegation cannot be resorted for the purpose of delegation of such a power. It was further submitted that even if the power under section 60(1) is an executive power, it being combined with a duty, such power could not be delegated. (xiii) Mr. S. Nasiruddin argued that the power of previous sanction could not be delegated to the councils. It was…
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