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Petitioner: MANAGING DIRECTOR, PARK LUXURY HOTEL, LAHORE VS Respondent: BOARD OF REVENUE, JUDGMENT
Court Name: Lahore High Court Judge(s): Karam Elahi Chauhan Title:MANAGING DIRECTOR, PARK LUXURY HOTEL, LAHORE vs BOARD OF REVENUE,
JUDGMENT
Reported As: PLD 1977 Lahore 24 Result: Petition accept Judgment JUDGMENT ' On 30th June, 1971, the petitioner, who is Managing Director of Park Luxury Hotel, Lahore, sent an application to the Assessing Authority, Lahore Rating Area-H, Lahore, intimating that as demolition of the building known as Park Luxury Hotel, Lahore, has started from the last week of June, 1971, therefore, necessary amendment in the property tax record in that respect be made. The actual application which is contained on page 143 of the departmental file, reads as follows:- "To ' The Assessing Authority, Lahore Rating Area-II, Lahore. 30th June, 1971 ' Subject.-Part demolition of the building known as Park Luxury Hotel, Lahore. ' Sir, ' In connection with our proposed venture of raising Lahore Hilton Hotel at the site of Park Luxury Hotel, the demolition of the latter Hotel has been taken in hand from the last week of June, 1971. Only a set of 22 rooms will be allowed to remain intact till we intimate to you about the demolition of these rooms. ' As required by sub-rule (1) of Rule 12 (Clause 'C') of the West Pakistan Urban Immovable Property Tax Rules, 1958 this intimation is being given to you for effecting necessary amendment in the property tax record. Under the said Rule the intimation of demolition of the property or any portion thereof is required to be given within a period of one month from the date of occurrence of the demolition etc. Petitioner (Sd.) Byram D. Avari Managing Director, Park Luxury Hotel, Lahore. Petitioner
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(Sd.) Byram D. Avari Managing Director, Park Luxury Hotel, Lahore" ' A copy is forwarded to the Excise and Taxation Officer (Circle-0, Lahore with the request that in the hotel tax assessm ent record necessary amendment may also be effected accordingly. ' This application was attended to in the office of the Assessing Authority (Excise and Taxation Officer, Circle II, Lahore) and first of all a Sub-Inspector visited the spot on 23-8-1971, which was followed by a visit of an Inspector on 25-8-1971 and ultimately by a visit of the Assessing Authority himself on 1-10-1971. However, the matter did not find favour with the Assessing Authority who dismissed the petitioner's application, above mentioned, vide order dated 22-10-1971. It is necessary to reproduce that order. It reads as follows:- "ORDER ' This is an order under section 9 of the West Pakistan Urban Immovable Property Tax Act, 1958 to dispose of an application tiled by Managing Director, Park Luxury Hotel regarding demolition of the building No, SE-19R-87 known as Park Luxury Hotel, Lahore, dated 30-6-1971. In the said application the management of the hotel has stated that part demolition of the hotel has been taken in hand from the last week of June 1971. In fact they wanted that a part of the building should be deleted from the valuation list with effect from 1st July, 1971. ' On the receipt of this application Taxation Sub-Inspector incharge of the circle visited the property on 23-8-1971 and reported that "at present doors of about 20 rooms have been removed and the structure of the building is intact" and further that "local enquiries made also reveal that in July, 1971 demolition bad not been started". The Taxation Inspector incharge of this circle also visited the spot on 25.84971 and reported that few doors have been removed and electric wiring was being dislocated. At that time structure of the building was still intact and most of the building was not yet under demolition. ' The Assistant Manager of the hotel Mr. Abbas appeared before me on 27-9-1971 and insisted that demolition work was taken in hand during June 1971 and the undersigned should personally visit the spot and verify his contentions. I visited the spot on 1-10-1971 along with the Taxation Inspector and Taxation Sub-Inspector. Manager and Assistaut Manager of the hotel were also present during my visit. On that day one wing of the hotel comprising 4 single and 26 double rooms was still intact and was being used for all the purposes. The rest of the building was under demolition and work was in progress in good weed, but rooms and walls of most of the rooms were still intact. On 27-9- 1971 when the Assistant Manager appeared before me I had asked him to produce a copy of the demolition contract to verify that when this contract was signed and became operative and he promised to show us the contract after a few days but on 1-10-1971 he stated that no written contract was signed for demolition and it was only an oral agreement between the management and the firm, carrying out the demolition work. This alternate statement also gives rise to doubts regarding the actual date of demolition. ' After visiting the spot, going through the reports of the Taxation Inspector and Taxation Sub- Inspector and hearing the views of the management I am of the opinion that the demolition work has certainly been started after the commencement of the financial year in August 1971 as reported by the T. I./T. S. I. ' The property tax is charged or remitted on half-yearly basis, therefore, I proceed to order that full property tax is to be charged for the current half year. Case may be taken up in December 1971 for consideration of amendment under section 9 for the purposes of second half-yearly demand with effect from Ist January 1972. (Sd) Excise and Taxation Officer, Circle-II, Lahore." ' Dated 22-10-1971 2. Just to complete the narration of facts, it may be stated that on 19-10-1971 the petitioner filed another application bearing No, PLH/ 2348/71 which is contained on page 157 of the departmental
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file and is stamped to be received on 28-10.1971. This application reads as follow- "No, PLH/2348/71 Dated 19-10-71. Park Luxury Hotel, The Mall, Lahore. ' To ' The Excise & Taxation Officer, Lahore (Circle-H). ' Subject.-Demolition of Park Luxury Hotel. Sir, ' Reference our application made under rule 12 of the West Pakistan Urban Immovable Property Tax Act, 1958, in the month of June, 1971 and your visit to the Hotel this month (October, 1971), pertaining thereto. (2) It has aleady been explained in our above referred application that the demolition of the hotel is as a preliminary phase of our Lahore Hilton Project. The demolition was started on 1-6-1971, and according to the programme the entire demolition process will be completed in 14 months. Sixty persons (Labour) are engaged in the work of demolition and upto this time more than 2/3rd of the hotel premises has come under the process of demolition. The removal of debris by the Contractors will, however, be in phases and according to their convenience but of course according to the schedule set out for the purpose. (3) In order to give you an idea of the accommodation that was available before starting the demolition and the extent to which the demolition has taken place, the following details may perhaps be helpful:- {{TABLE}} ' Accommodation available Present stage of domolition. Before demolition (i) 86 rooms for lodgers Only 22 rooms remain-wing adjacent to the West Gate of the Hotel to house the Project Offices, Project Contractor, Staff Offices and the two Directors. fii) 3 Main rooms for offices Demolished-Debris being removed. (Reception Office, Accounts Office and Managerial Office) (iii) 1-Room (Reception Lounge) Demolished. 1-Room (Card Room for do. Ladies) 2-Rooms (Restaurant-cum- do. Dining Room) 1-Hall (Upstairs for amateur concerts and dances. 1-Room (used as a Bar) 2-Kitchens (One Eurpean One Pakistani) 1-Cold Storage Room (3 Freezers and 1 defreezer were installed). 2-Big Apartments (used as Bakery) 1-Big Room (for opetating two Tandoor's for baking Nans and Tanduri Rooti). 1-Very big Room (used as Pantry). 1-Service Room (used for service of food and drinks with counter). 1-big room (staff dining room). 40-Servant Quarters 18-Motor Garrages 4-Outhouses. Demolished. do. Do. Do. do. Do. Do. Do. Do. 30-Demolished 10-demolition under way. Only 6 Garrages are scheduled to be left after first phase is over. 1- Occupied by Assistant Manager. Demolished. 2-vacated, demolition is under way. 1-will be demolished after phase 1. {{TABLE}}
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(4) The above description will show the extent of demolition so far undertaken and the accommodation which will remain until first phase of demolition is over. The demolition of the portion, which now remains will be undertaken in December, 1971/January, 1972, and it will be complete by the close of the current year ending 30-6-1972, and the removal of debris will however be completed in 14 months. The construction of the New Project is expected to start before the close of the current calendar year. (5) Lastly it is added that all the services and facilities of the hotel are closed. Only 22 rooms for housing the caretakers and those who would be visiting the hotel off and on to supervise the demolition construction, the Project Offices and the offices of two Directors will remain and which too will be demolished after phase I is completed. Thank you. Yours faithfully, for Park Luxury Hotel. (Sd.) (H. K. Khan)." ' On this application, dated 19-10-1971, the Assessing Authority passed the following order on 29-12- 1971 (page 179 of the departmental file):- "Property Unit No, SE-19-R-87 Park Luxury Hotel. ORDER ' Mr. Talib Rizvi, Advocate, Counsel for Messrs Park Luxury Hotel is present and heard. In view of the fact that the Park Luxury Hotel is on to its process of demolition and that certain portion has not been demolished. The property is to be re-assessed under section 9 of the Act of West Pakistan Urban Immovable Property Tax Act 1958 in the existing factual position I e. The portion of the building as it stands todate. This assessment shall be brought into force w,e,f, 1-1-1972. ' As reported by the Taxation Sub-Inspector incharge of the circle that at present only 16 rooms on the ground floor are being used for office and residential accommodation of the staff while there are 16 rooms (14 single and 2 double) on the first floor being rented by the owners of lodging purposes only. ' Since the owners are not deriving any benefit from the accommodation on the ground floor, Rs, 500 p. m. Is being assessed w e.f. 1-1-1972. ' For the first floor a formula of Rs< 4 per lodging unit per day has been adopted as the rooms are being used for lodging purposes only and boarding is not provided to the occupants by the management. According to previous formula it was Rs, 5 per day per lodging unit when boarding facilities were also provided. For eighteen lodging units @ Rs, 4 per day per lodging unit the CARY is calculated Rs, 25,920 and after adding Rs, 6,00U for the ground floor, the GARY amounts to Rs, 31,920 which shall come into force from 1-1-1972. (Sd.) Announced 29-12-1971 Assessing Authority, Lahore-II." 3. Reverting back to earlier order dated 22-10-1971, passed on the application of the petitioner, dated 30-6-1971, it may be mentioned that the petitioner filed an appeal which was rejected by the Director, Excise and Taxation, on 17-5-1972. The petitioner filed a revision which also met the same fate and was dismissed by the Commissioner, Lahore, on 31-7-1972. The petitioner tried further and submitted a representation to the Board of Revenue, which was turned down and the petitioner was informed that "with reference to your letter on the subject dated 23-9-1972 addressed to the Governor, as well as Member (Excise & Taxation), Board of Revenue, Punjab, your representation had been considered by Government. It was noticed that the matter had been adjudicated upon and decided by the judicial authorities. Prima facie their findings were such that the Government did not consider it necessary to interfere with their decision". The petitioner has come up in writ petition to this Court against the proceedings pertaining to and orders passed on his application dated 30-6-1971. 4. Learned counsel for the petitioner took me through the various provisions of the West Pakistan Urban Immovable Property Tax Act, V of 1958, (hereinafter called the Act), the West Pakistan Urban
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Immovable Property Tax Rules, 1958 (hereinafter called the Rules) and the Punjab Tax Manual, Volume II (1948 edition) in order to explain the law and procedure in the matter of making and operation of "valuation Lists" on the basis of which Urban immovable Property Tax is charged. He also referred to West Pakistan Province v. K. B. Andruddin and others (1) and Khan Bahadur Amiruddin and others v. West Pakistan Province (2) where the various relevant provisions have been stated in detail. Learned counsel made particular (1) PLD 1953 Lah. 433 (2) PLD 1956 FC 220 reference to section 3 of the Act which is headed as "Levy of tax" and lays down that "(1) Government may by notification specify urban areas where tax shall be levied under this Act: Provided that one urban area may be divided into two or more rating areas or several urban areas may be grouped as one rating area; (2) there shall be charged, levied and paid a tax on the annual value of buidings and lands in a rating area at the rate of 10 per cent of such annual value' Provided that where a building is occupied for residential purposes by the owner himself, the tax shall be levied at the said rate of one-half of the annual value of such building if the owner or any member of his does not own any other property in that rating area: Provided further that Government may, by notification, remit fore reasons to be recorded in whole or in part, the payment of the tax by any class of persons in respect of any category of property. Explanation.-The annual value for the purposes of this section shall be the aggregate annual value of all buidings and lands owned by the same person in a rating area; (3) the tax shall be due from the owner of buildings and lands". He then read section 5, which is headed as "ascertainment of annual value" and states that "the annual value of any land or building shall be ascertained by estimating the gross annual rent at which such land or building together with its appurtenances and ally furniture that may be let for use or enjoyment with such building might reasonably be expected to be let from year to year, less:-;a) any allowance not exceeding twenty per centum of the gross annual rent as the assessing authority in each particular case may consider reasonable rent for the furniture let with any such building; (b) an allowance of ten per centum for the cost of repairs and for all other expenses necessary to maintain such building in a state to command with gross annual rent. Such deduction shall be calculated on the balance of the gross annual rent after the deduction, if any, under clause (a); and (c) any land revenue actually paid in respect of such building or land: Provided that in calculating the annual value of any building or land under this section the value of any machinery in such building or on such land shall be excluded". According to section 7 (1) 'A valuation list shall be made by the prescribed authority in accordance with the rules framed under this Act for every rating area so as to come into force either on the first day of July, or the first day of January, and thereatter a new valuation list shall be made from time so that the interval between the dates on which one valuation list and the next succeeding valuation list respectively come into force shall be a period of five years:-Provided that Government may by order: (a) reduce by a period not exceeding one year or extend by a period not exceeding three years the interval which would otherwise elapse between the coming into force of any two successive valuation lists for any rating area, or, where a valuation list has been lost or destroyed by operation of circumstances beyond control, cancel the list, direct the preparation of a new list and order recovery of pending tax to be made on the basis either of the last preceding valuation list or the new list prepared under this proviso; and (b) divide any rating area into parts for the purposes of a new valuation list and determine the years in which the next following valuation list for each of such parts respectively shall be made and come into force". Subsection (2) of section 7 states that "subject to the provisions of any such order as aforesaid, every valuation list shall come into force on the first day of July or the first day of January as the case may be, next following the date on which it is finally approved by the assessing authority and shall, subject to the provisions of this Act and the rules made thereunder (including the provisions with respect to the alteration of
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and the making of additions to the valuation list) remain in force until it is superseded by a new valuation list". Procedure for prepartion of valuation list is contained in section 18, which states that " (1) in every case where a new valuation list is intended to be made for any rating area, the assessing authority shall give public notice of such intention in such manner as may be prescribed, and may serve a notice on the owner, occupier or lessee or any building or land in the said area, or on any one of them, requiring him, or them, to make a return containing such particulars as may be prescribed. (2) Every person on whom a notice to make a return is served in pursuance of the provisions of this section shall, within thirty days of the date of the service of the notice, make a return in such form as is required by the notice, and deliver it in the manner so required to the assessingauthority. (3) If any person on whom such notice has been served fails within the required period to submit such return, the assessing authority may proceed to value such property in such manner as it deems fit". Section 19 deals with powers of assessing authority to require returns at any timeand states that "if the assessing authority at any time desires any person, who is the owner, lessee or occupier of any building or land wholly or partly within the rating area, to make a return with respect to any of the matters regarding which a return may be prescribed, it may serve a notice on that person requiring the return, and that person shall, within thirty days from the service of the notice send the required return to the assessing authority: Provided that the assessing authority may, in its discretion, extend the period for the delivery of any such return". In Section 9 it is written that "subject to such rules, if any, as the Government may think fit to make in this behalf, the assessing authority may at any time make such amendments in a valuation list as appear to it to be necessary in order to bring the list into accord with existing circumstances and in particular may: (a) correct any clerical or arithmetical error in the list; (b) correct any erroneous insertion or omission or any misdescription; (c) make such additions to or correction in the list as appear to the authority to be necessary by reasons of: (i) a new building being erected alter the completion of the valuation list; (11) a building included in the valuation list being destroyed or substantially damaged or altered since its value was last previously determined; (iii) any change in the ownership or use of any building or land: Provided that not less than fourteen days before making any such amendment in the valuation list for the time being in force, other than the correction of a clerical or arithmetical error, or the correction of an erroneous insertion, omission or misdescription, the assessing authority shall send notice of the proposed amendment to the owner of the building or land and shall also consider any objection thereto which may be made by him". This is to be read with rule 12, which states that "(1) the owner of every property shall, within a period of one month from the date of occurrence of any transfer, demolition, destruction, or addition, report to the assessing authority of the rating area: (a) all transfers thereof by sale, gift, exchange or perpetual lease; (b) any increase in rent subsequent to the date on which the value of such property was last assessed; (c) the demolition or destruction of the property or any portion thereof; and (d) any substantial addition to the property whether or not such addition has occasioned an increase in sent. (2) If a building occupied by an owner for his residence and exempted from tax under clause (c) of section 4 of the Act ceases to be so occupied, the owner shall, within thirty days, report the fact to the assessing authority". Section 12 is headed as "tax when payable" and states that "the tax shall be payable half-yearly by such dates as may be prescribed: Provided that Government may, by notification, direct that in any rating area; (I) the tax shall be paid yearly; (Ii) the tax for a specified period shall be paid separately". To complete the introduction of the subject in general, it may be mentioned that in Pakistan the property-tax is levied on the annual value of buildings and lands. In America the tax is levied on the capital value, and the property to be taxed is not confined to buildings and lands ; it extends to all property, tangible and intangible, including bank balance. In Pakistan the property tax is payable by the "owner"-(as this word is defined in the relevant statute). In England property tax is payable
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by the owners while in Scotland it is payable half by the owner and half by the occupier. In Bombay it is payable by the occupier, while in Calcutta half by the owner and half by the occupier like Scotland. In England and America, the tax on property is generally regarded as a local tax, and is placed at the disposal of local bodies. In Pakistan, India, and some other countries property tax is both a provincial and a local tax. (Manual of Municipal Administration Law and Practice by Masudul Husan) (1967 Edition) (Part I, page 261). It may further be indicated that West Pakistan Act V of 1958 follows in general the principles laid down in the Punjab Act HI of 1911 or as a matter of fact of various similar Acts of various other Provinces of Pakistan/India. For further history of this tax in Lahore see Ashfaq-ur-Rehman Khan v. The Government of the Punjab and 3 others (1). 5. Keeping in view the aforesaid provisions of law, the first point argued by the learned counsel for the petitioner was that there is a distinction from the point of view of their enforcement between what he called the Initial valuation list which is of a general type and which is published and framed under section 7(1) of the Act on the one hand, and the individual amendments and alterations of the kind involved in this case made in that list on the other hand. The contention seems to have merit. The initial general list, once it is finally approved, takes effect from the first day of July or the first day of January, as the case may be, next following the date on which it is finally approved by the assessing authority. Once it comes into operation it becomes a current list and is to remain in operation generally for five years as laid down in section 7(1) of the Act. As five years is a long period and it is possible that in between many circumstances may take place which may reflect on valuation of any individual property as given in the initial list hence section 7(2), section 9 and rule 12 authorise and contemplate making of necessary amendments, alterations and changes therein from time to time. The distinction between the amendments and alterations in the current list on the one hand and the initial list on the other hand is that whereas the initial general list comes into operation, as already mentioned, from the next January or July following its approval by the assessing authority but the individual amendments and alterations of the kind involved in this case will take effect from the date when those alterations or amendments actually have taken place and in their case there is no postponement to any ensuing January or July. Another thing to be kept in mind is that the tax is to be charged, B as section 3 states, on the annual value of building and land in a rating area at the rate of (as the law at the relevant time was)-10 per cent. Of that value. For this purpose the procedure is to prepare what are called "valuation lists" which contain the annual value of each property. This list is prepared in advance and takes effect from the first of January or first of July, as the case may be, next following the date on which it is finally (I) PLD 1975 Lab, 23 ' approved. In other words, if I can say so, it is a provisional advance assessment, from one point of view, of the annual valuation of the property of an owner for a year.…
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