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Petitioner: GOLDEN INDUSTRIES LTD. VS Respondent: PROVINCE OF SIND AND 2 OTHERS
Court Name: Sindh High Court Judge(s): Naimuddin Ahmed, Munawar Ali Khan Title: GOLDEN INDUSTRIES LTD. vs PROVINCE OF SIND AND 2 OTHERS Case No.: Constitutional Petition No, D-407 of 1977 Date of Judgment:1982-07-07 Reported As: PLD 1983 Karachi 76 Result: Petition dismissed
JUDGMENT
JUDGMENT ' MUANWAR AL! KHAN, J.-This judgment will dispose of a batch of Constitution Petitions Bearing No, D-407/77, D-1287/79, D-1655/79, D-1680/79, D-1624/80, D-427/81, D-434/81, D-887/81, D-892/81 and D-893/81, respectively filed by Golden Industries Ltd. C/16, Estate Avenue, SITE, Karachi, Messrs Globe Textile Mills Limited, IInd Floor, Sattar Chambers, 29 West Wharf Road, Karachi, Messrs Gul Ahmed Textile Mills Limited, Sattar Chambers, 29 West Wharf Road, Karachi, Star Textile Mills Ltd. 9th Floor, Adamji House, I. I. Chundrigar Road, Karachi, Messrs A. B. Beverages Limited, E/18-A, S. I. T. E., Karachi, Messrs Karim Silk Mills Limited, C/30 Sind Industrial Trading Estate Karachi, Messrs B. R. Herman and Mohatta Limited, B-III-305-135-A, Talpur Road, Karachi, Dawood Cotton Mills Ltd. Landhi, Karachi, Adamji Industries Limited, Adamji House, I. I. Chundrigar Road, Karachi, and Hussain Industries Limited, Jubilee Insurance House, I. I. Chundrigar Road, Karachi, as they involve common points of law and fact. 2. The factual background out of which those petitions have arisen may briefly be narrated as follows: The petitioners used to pay property tax in respect of the premises on which their industrial units situate in accordance with the provisions of the Sind Urban Immovable Property Tax Act, 1958 (hereinafter referred to as the 1958-Act). However, in 1976 the Taxation Authorities embarked upon an exercise of self-assessm ent Scheme with a view to prepare new valuation list in respect of the properties used wholly or partly for industrial purposes. By a public notice, which is reproduced below in verbatim, the owners of the properties as per form in pink colour which was made available to them through the National Bank and its Branches. The public notice reads as under:- ATTENTION INDUSTRIAL PROPERTY OWNERS
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' A survey is being carried out by the Excise and Taxation Department, Government of Sind to assess all Industrial, and industrial-cum-Commercial Residential Properties situated in the Rating Area of Karachi, under the Sind Urban Immovable Property Tax Act, 1958. ' All property owners, occupants and lessees are required by the law to supply complete information with respect to their properties. This information is to be supplied by filing in Declaration Forms available at all branches of the National Bank of Pakistan from 26th October to 15th November, 1976. Instructions about how to fill in these forms are also available alongwith the forms. Declaration Forms in duplicate, duly filled in and signed by the owner/ occupier/lessee or his authorized representative must reach the following address by post not later than 15th November, 1976:- Director Taxes, Industrial Survey. P. 0. Box No, 7984 Saddar, Karachi-3. ' Any one who is owner, occupier or lessee of an Industrial or Industrialcum-Commercial-cum- Residential property and fails to submit the information on the Declaration Form by due date, or supplies false information will be liable for prosecution under the Sind Tax Evasion (Punishment) Act, 1974, which prescribes two years' imprisonment for supplying false information or for withholding any information asked for in the Form. ' Please mail the Declaration Forms promptly under registered post. Your co-operation will be highly appreciated. (Ziaul Islam) Director, Excise & Taxation (Taxes), Karachi. ' In response to the above notice the petitioners furnished the requisite 'date. Based on the material received from the petitioners., a new valuation list was hammered out. It was founded on the formula which is reproduced below:- "Dear Prop;rty Owner ' The Draft valuation list of Industrial Properties published today, the 1st of December, 1976, has been prepared by using the following rates prescribed by the Government Cost of Land... Rs, 50,000.00 per acre. (The same flat rate has been fixed, whatever the size of the plot of land irrespective of its location of market value). Cost of Construction............. Rs, 60.00 per sq. Ft. A. C. C. . .. Rs, 45.00 per sq. Ft. (ACC stands for all kinds of constructions which are not RCC). (Improved land.. .Rs, 4.00 per unit of mea- surement). (This includes all kinds of platforms, water tanks, roads, boundary walls, chimneys, funnels etc). ' After calculating the cost of constructions as above the GARV has been worked out as follows:- (1) GARV of Land....... -4% of Cost of Land. (2) Rental Value of RCC, AC and improved Land -5% of cost of construction. (3) GARV of construction area - Rental value as obtained at No, (2) minus 25% depreciation allowance. ' Total G. A. R. V................ (1) Plus (3) ' Please check up for yourself if the G. A. R. V. Shown for your property in the Draft Valuation List is in accordance with the information supplied by you. ' If you have any objection, please fill up the closed objection form and hand over within 30 days to: ' The Assessing Authority, ' Excise & Taxation Department, 6th Floor, Shirin Manzil, Bunder Road, Karachi, ' If you had sent your declaration on form but your name does not appear in the list, this could mean:-
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(a) That your property has not been classified as industrial property. In this case you will be required to fill in a different kind of form which will be announced through the Press later on. (b) That information supplied by you was not sufficient to categories and assess your property. In this case you have already been asked through a letter to supply us further information after which your property shall be included in the final list. This information must be supplied by 2nd December, 1976. ' We thank you for co-operation. Sincerely yours, (Sd.) Ziaul Islam. Director, Excise & Taxation (Taxes), Excise & Taxation Department, Government of Sind, Karachi." ' The draft valuation list was then published inviting objections against the same. The objections were to be filed in the prescribed form. The petitioners did file the objections but the list was finalized without giving them any hearing. The list was put into effect from 1-1-1977. According to the new valuations reflected in the list there had been tremendous enhance-ment in the annual rental value of each unit as is clear from the following table:- {{TABLE}} Unit as is clear from the following table:- S. No, Case No, Original Value Enhanced Value Rs, Rs, D-407/1977 86,634.00 12,824.00 D-1287/1979 2,01,609.30 8,37.506.00 D-1655/1979 2,75,400.00 10,74,101.00 D-1680/1979 3,24,990.00 9,43,760.00 D-1624/1980 7,350.00 79,060.00 D-427/1981 2,94,418.00 5,64,431.00 D-434/1981 58,155.00 2,49,336.00 D-887/1981 7,38,589.00 21,41,951.00 D-892/1981 8,34,308.00 15,52,784.00 D-893/1981 4,07,890.00 11,31,452.00 {{TABLE}} ' The Director Excise and Taxation, issued a cyclostyled communication intimating the petitioners that the objections filed against the list by the Chamber of Commerce and Industry were treated as objections filed on their behalf. Aggrieved by the assessment based on the new valuation list the petitioners went in appeal which was somehow kept pending until a legal cover was provided to the list by making an amendment in the 1958-Act through Sind Finance Act, 1977. By this amendment the controversial valuation list was validated and enforced with effect from 1-1-1977. Sub-, sequent to the passing of this legislation, the appeals pending before the Director, Excise and Taxation were remanded to the assessing authority for de novo assessment. On review of the petitioner's cases by the said authority the assessment made earlier was more or less maintained, with slight variations in some cases. Dissatisfied with the impugned assessment, in some cases the petitioners have come directly to this Court in writ petitions without first availing the remedy by way of appeal before the Departmental authorities. Even in the cases in which the assessment has been challenged in appeal or revision, the petitioners have chosen to invoke writ jurisdiction of this Court without waiting for the outcome of their appeals/revisions. The impatience shown in the latter cases stems from the fact that the appellate authority who had remained associated throughout with the process or preparation of the new valuation list and hence was party to it, is unexpected to decide their appeals impartially and take decision different from the assessing authority. ' We have heard elaborate arguments of the learned counsel for the parties. Mr. Khurshid Anwar Shaikh on behalf of the petitioners in cases D-1287/79, D-1651/79, D-1680/79, D-887/81, D-892/81 and D-893/81, Mr. Imam Ali Kazi on behalf of the petitioners in Cases Nos. D-427/81 and D-434/81,
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Mr. Abdul Rauf on behalf of the petitioner in D-1624/80, Mr. Sabhi Ahmad for petitioner in Case No, D-408/77 and Sattar Shaikh, Additional Advocate-General on behalf of respondents. The points of controversy agitated at the bar may be summarised as under :- (i) The valuation list compiled in pursuance of the so-called self-assessment scheme is illegal, without lawful authority and in-operative because it is prepared without having regard to the provisions contained in the 1958-Act and the rules thereunder: the public notice calling for submission of returns does not satisfy the requirements of section 18 of the Act; the list was not prepared and finalized by assessing authority; the formula which was adopted in preparation of the list is not only arbitrary but is also alien to the said Act-not being in consonance with section 5 of the Act; before finalizing the list petitioners were not given any hearing in support of their objections they had filed against the list; instead they were informed by the cyclostyled communication that the objections submitted by the Chamber of Commerce and Industry were treated as their objections. (ii) The illegality attaching to the valuation list as aforesaid is incurable and the amendment seeking to validate the list is ultra vires the Constitution. (iii) The amendment being confined only to a particular class of the properties namely the properties used wholly or partly for industrial purposes, situating within the limits of Karachi Rating Area, is clearly discriminatory and militates against the fundamental right of equality of citizens before law as enshrined in Article 25 of the Constitution, 1973. (iv) The amendment mentioned above could not be given retrospective effect, taking away the petitioners' vested right to be assessed in accordance with the list in force at the time of the assessm ent. (v) The valuation list in existence at the relevant time was neither scraped nor replaced by the new valuation list. It was rather extended up to 31-12-1977 by a notification thereby rendering the old list to operate simultaneously with the new list at the time of the impugned assessment. In such a situation, the petitioners were entitled to be assessed in accordance with the old list. (vi) Since the valuation list in question has been extended to the industrial properties situating within the Karachi Rating Area, the similar properties outside that area would continue to be governed by the old valuation list. (vii) The impugned assessm ent purported to have been made in accordance with the new valuation list does not,in fact, conform to the said list. ' Taking up the first point that the valuation list was prepared in violation of the legal requirements, it may be advantageous to reproduce the relevant provisions of the 1958 Act (i . e. Section 3(1)(2), section 7, section 5, section 8 and section 18) which provide the framework for compiling of valuation list and assessm ent of the tax on the basis thereof. They are:- "3(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) Subject to the provisions of subsections (3) and (4), there shall be charged, levied and collected a tax on annual value of buildings and lands at the following scales:- S "S. 5.-(1) The annual value of any land or building shall be the gross annual rent at which such land or building together with any fictures such as lifts, or electric or other such fittings, may be let out. (2) The gross annual rent shall be the prescribed amount not exceeding ten per cent. Of the total value of the land or building. (3) The total value of any land or building shall in the prescribed manner, be determined by the prescribed officer or authority on the basis of the market value thereof and the value of fixtures, if
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any, therein. (4) For the purpose of determining the market value, a rating area may be divided in such sub- rating areas, and each rating or sub-rating area may comprise one or more such categories of lands or buildings and there may be such different rates for determination of the market value for lands or buildings in each rating area, sub-rating area or category, as the case may be, as may be prescribed; ' Provided that the annual value of a building which is subject to any law for the time being in force relating to restriction of rent shall not be greater than the annual value of such building immediately before the coming into force of this section. "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 thereafter a new valuation list shall be made from time to 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 five years the interval which would otherwise elapse between the coming into force of any two successive valuation list for any rating area or where a valuation list has been lost or destroyed by operation of circumstances beyond central, cancel the list, direct the preparation of a new list and order recovery of pending tax to be made on the basis either of last preceding valuation list or of the new list prepared under this proviso; and (b) for the purpose of preparation of new valuation list, divide any rating area into parts, each part comprising such areas or types of properties as may be specified in the order and appoint date or dates on which new valuation lists in respect of such part or parts shall come into force. (2) 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 and the making of addition to the valuation list) remain in force until it is superseded by a new valuation list. "Section 8.-(1) Where the assessing authority for any area has issued notices requiring returns in connection with the making of a new valuation list, the said authority shall, as soon as may be after the expiration of the period allowed for the delivery of the returns cause a draft valuation list to be prepared for the area published in such manner as may be prescribed. (2) Any person aggrieved by any entry in the theft valuation list, or by the insertation therein or omission therefrom of any matter, or otherwise, with respect to the list, may, in accordance with the rules made under this Act lodge an objection with the assessing authority at any time before the expiration of thirty days from the date on which the draft valuation list is published : ' Provided that in special circumstances the Commissioner may, by notification, extend the period to a maximum of sixty days." "Section 18.-(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 of 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 notice, make a return in such form as is required by the notice, and deliver it in the manner so required to the assessing authority.
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(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. ' As provided in subsection (1) of section 3, tax is collected in urban areas which are declared, by notification, as rating areas. Subsection (2) of section 3 provides that the tax is leviable on annual value of building and lands. According to subsection (1) of section 5, annual value is nothing but the gross annual rent at which the land or building in question is let out. Subsection (2) of the same section shows that gross annual rent is the prescribed amount not exceeding 10% of the total value of the land or building. Again subsection (3) of this second provides the mechanism for determining the total value of the land or building, which again is linked with market value and subsection (4) lays down the procedure for computing the market value. ' Keeping in view the guidelines contained in section 5, preparation of valuation list is undertaken under section 7 by the prescribed authority in accordance with the rules. According to the section there has to be a separate list for every rating area, and the list so prepared is to be brought in force either from 1st day of July, or 1st day of January, and is to remain valid for a period of 5 years. However, the Government has power to reduce this period by a maximum period of one year or extend it by a period not exceeding 5 years. As provided in section 8, where the assessing authority has called for returns for making of new valuation list, he shall, at the expiry of the period for submitting the returns publish draft valuation list. Any person aggrieved by the draft list can file objections with the assessing authority within 30 days of its publication. Thereafter the list is finalized by disposing the objections. It may also be mentioned that returns for preparation of new valuation list are called for and are submitted in accordance with section 18. ' In the instant case the owners of the properties used wholly or partly for industrial purposes were no doubt called upon by a public notice (reproduced above) to furnish the requisite date in respect of their properties on the prescribed form. The petitioners in response to the notice submitted the details of their properties in the said form. But still the complaint in that section 18 was not strictly followed in calling for and submitting of the returns. However, as required by section 8, the draft valuation list based on the formula (reproduced above) was published, vide the public notice dated 1st December, 1976, given by the Director, Excise & Taxation through Press. Under the same section the petitioners filed their objections against the list. Despite this, their grievance is that they were not given hearing in support of the objections and the list was finalized in their absence without according them any opportunity of being heard. They were simply informed by the cyclostyled communication that the objections filed by the Chamber of Commerce & Industry were treated as their objections. The petitioners also took exception to the formula which was made the basis for determining the valuations specified in the list. According to them the formula was not in accordance with the principles of section 5. Finally as provided in section 7 the list was enforced with effect from 1st January, 1977. But the enforcement of the list from this date is also under fire. ' From the above appraisal, it would appear that although attempt was made to comply with the necessary legal requirements in preparation of the list, yet there can be not manner of doubt that the list was prepared and finalized not strictly in accordance with the provisions of the 1958, Act, and the rules thereunder. Neither the list was prepared by prescribed authority as required by section 7 nor the valuations reflected therein were computed in the light of guidelines contained in section 5. The formula adopted in the preparation of the list had no legal basis and was totally alien to the said Act. Precisely for these reasons the concerned authorities seemed to have felt the necessity to cure the list of legal infirmities by providing it a legal cover. Accordingly the list was validated by an amendment brought the Sind Finance Act, 1977 (hereinafter referred to as 1977- Act).
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' This brings us to consideration of the second objection by which vires of the validating legislation have been assailed. Third and fourth objections which too call in question the validity of the aforesaid amendment may be considered together with this objection. The amendment was made in the 1958-Act by inserting section 8-A which reads as under:- "Section 8-A.-Notwithstanding anything contained in this Act the valuation list which has been prepared in respect of the properties used wholly or partly for industrial purposes and situating within the limits of Karachi Rating Area and has been enforced from the 1st day of January, 1977, shall be deemed to have been validly prepared and enforced." ' This amendment is the creature of the Provincial Legislature which derives its power and authority from the Constitution. The relevant part of Article 142 of the Constitution, 1973, which deals with the legislative power of Provincial Assembly reads as under:- "142. Subject to the Constitution- (a). . . . (b) . (e) a Provincial Assembly shall, and Parliament shall not, have power to make laws with respect to any matter not enumerated in either the Federal Legistative List or the Concurrent Legislative List; and (d) . . I* ' It would appear that the Provincial Legislature has unfettered legislative jurisdiction in respect of the matters not mentioned either in the Federal Legislative List or the Concurrent Legislative List. Any law made in exercise of such jurisdiction would however be subject to the Constitution (1. e. Not being in contravention of any provision of the Constitution). There is no dispute that the subject- matter of the controversial amendment falls within the Provincial Legislative sphere. The only question that remains to be examined is whether the amendment under consideration contravenes any provision of the Constitution. The amendment has been attacked on several grounds. The first ground of attack is that, although it is not a monetary measure, it has been passed as a part of the Finance Act, 1917. As the mode of passage of the law relating to financial matters through assembly is different from the one followed in case of other laws, the amendment, it is argued, has been passed in contravention of the procedure laid down by the Constitution and the rules framed thereunder. Consequently the amendment is thought to be invalid and inoperative. With regret we cannot subscribe to the view that the legislation which validated the valuation list, thereby paving the way for assessment of Property Tax cannot be treated as law relating to monetary affairs. We are of the considered opinion that the amendment which has bearing on finances of the Province is essentially a financial legislation and was therefore rightly got through the Assembly as a part and parcel of "Money Bill". We are strengthened in our view by clause (2) of Article 115 of the Constitution. It defines the scope of 'Money Bill' in the following terms: "I15.-(2) For the purposes of this Article, a Bill or amendment shall be deemed to be a Money Bill if it contains provisions dealing with all or any of the following matters namely : (a) the imposition, abolition, remission, alteration or regulation of any tax; (e). . (f) Any matter incidental to any of the matters specified in the preceding paragraphs." ' The amendment which relates to the validation and enforcement of the valuation list undoubtly provides a basis for assessm ent of the property tax and as…
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