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Petitioner: WAZIR ALI INDUSTRIES Ltd. and another VS Respondent: The SECRETARY TO GOVERNMENT JUDGMENT
Court Name: Sindh High Court Judge(s): Ajmal Mian, Ibadat Yar Khan Title:WAZIR ALI INDUSTRIES Ltd. and another vs The SECRETARY TO GOVERNMENT
JUDGMENT
Reported As: 1985 CLC 1843 Result: Petition dismissed Judgment JUDGMENT ' AJMAL MIAN, J.-- By this common judgment we intend to dispose of the above two petitions as they involve some common points of law. The brief facts leading to the filing of the above petitions are as follows: (i) Constitutional Petition No.D-731 of 1983. The two petitioners are the nationalised units of Ghee Corporation of Pakistan Limited and have their respective factories .inter alia for manufacturing oil Ghee and its by-product, laundary soap within the Municipal Coroporation Hyderabad. Respondent No.2 (which is the Hyderabad District Council) by impugned notifica tion, dated 3-9-1983 issued in exercise of the power conferred by section 60 of the Sind Local Government Ordinance, 1979 (hereinafter referred to as the Ordinance) read with Sind Councils (Imposition of Taxes) Rules, 1979 and section 48 (d) of the Ordinance imposed Rawangi Mahsool with effect from 1-9-1983, inter alia in respect of refined oil of all kinds including Ghee. Respondent No.3 is the Contractor, who has been awarded the contract to collect the above Rawangi Mahsool. Since the recovery of the above Rawangi Mahsool was made from the petitioners they have filed the present petition impugning the above levy. (ii) Constitutional Petition No. D-586 of 1984. The petitioner is a Sugar Mill situated within the territorial area and limits of Town Committee, Shahpur Jahania, whereas respondent No.1 is the District Council Nawabshah, which by a notification, dated 28-6-1984 issued in exercise of the powers delegated to it by the Government of Sind under notification, dated 3-6-1980 under section 60 (1) of the Ordinance read with Item 6 of Part III of Schedule V and in continuation of notification, dated 19-5-1984 imposed export tax
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(Rawangi Mahsool) on the three extra items mentioned in column 2 namely sugar (refined), bagasse and molasses at the rates mentioned therein. The respondent No.2 is the Contractor, who has taken contract to collect the above Rawangi Mahsool on behalf of respondent No.1. Since the above Mahsool was recovered from the petitioners, they have impugned the above levy. ' The above writ petitions have been resisted by the respondents including the Government of Sind, which is one of the common respondents in both the writ petitions. It has been averred by the respondent that the above levy is legal. It has also been denied that the respondent concerned has not observed the mandatory rules. 2.(a) In support of the above petitions Messrs Rashid Akhund and Samiuddin Sami have urged as follows: (1) That under rule 2(2)(f) of the People's District Council Export Tax Rules, 1976, the limits of People's Municipalities and Town Committees have been excluded from the limits of the District Council and, therefore, the levy is ultra vires. (ii) That in view of the Government directive contained in sub-para. (5) of the Director-General Rural Development Department, Government of Sind, dated 6-6-1983 the Rawangi Mashsool could not have been claimed or recovered on the goods exported from the area falling outside the limits of the District Councils i.e. goods from the Urban areas within the District. (iii) That the mandatory requirement of the Sind Council (Imposition of Taxes) Rules, 1979, have not been followed. (iv) That since the respondent District Councils are not rendering any service to the petitioners the toll i.e. the Rawangi Mahsool cannot be recovered. (b) On the other hand Messrs Khalid M. Ishaque, Imam All Memon, Rasool Bux Unar and Satter A. Sheikh, Additional Advocate-General, Sind have submitted as under: (i) That the petitioners in Constitutional Petition No.D-586/1984 have no locus standi to impugn the above levy. (ii) That since rule 2 (2)(f) of the People's District Council Export Tax Rules, 1976, is inconsistent with the provisions of the Ordinance, the same is not saved by section 120 of the Ordinance. (iii) That the above directive of the Provincial Government, dated 6-6-1983 is ultra vires of the powers of the Provincial Government. (iv) That the provisions of the Sind Councils (Imposition of Taxes) Rules, 1979 were complied with. (v) That the petitioners have not raised any plea in their petitions that the respondent District Councils are not rendering any service. 3. Adverting to the question of locus standi of the petitioners in Constitutional Petition No.586 of 1984, it may be observed that Mr. Khalid Ishaque in support of his above submission has relied upon the case of Burmah Oil Company Limited v. The Trustees for the Port of Chittagong PLD 1961 SC 452 in which the Hon'ble Supreme Court dismissed Civil Appeal No.13 of 1961 on the ground that the appellant had no locus standi to maintain the writ application in the High Court. It has been contended by Mr. Khalid Ishaque that since the Rawangi Mahsool is paid by the purchasers of the sugar from the above petitioners, the petitioners have no locus standi. ' On the other hand Mr. Akhund has invited our attention to Annexures I-1 and 1-2 which are the receipts issued for the payment of Rawangi Mahsool. It has been averred by the petitioners that the above payments have been made by them. ' Mr. Akhund has placed reliance on the case of Montgomery Flour and General Mills Limited. v. Director, Food Purchase PLD 1957 Lah. 914, in which it was held that any person whose interests are affected by the order can maintain a petition for a writ or direction. It will suffice to observe that in the present case since the petitioners in the above petitions have produced the receipts for payment of Rawangi Mahsool, it cannot be urged that they have no locus standi.
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4.(a) As regards the second submission of the learned counsel for the petitioners that under rule 2 (2) (f) of the People's District Council Export Taxes Rules, 1976, has excluded the limits of People's Municipali ties and Town Committees for the purpose of export tax, it may be advantageous to reproduce hereinbelow the above clause which reads as follows: "(2)(2) '(f) District Council limits' means limits of the revenue District, excluding the limits of People's Municipalities and Town Committees." ' It has, therefore, been contended that since the limits of the People's Municipalities and Town Committees have been excluded from the limits of the District Council, the Rawangi Mahsool cannot be imposed on the petitioners' goods as their factories are situated outside the limits of the District Council. ' On the other hand it has been urged by the learned counsel for the respondents that the above rule is not saved under section 120 of the Ordinance in view of the inconsistency between the above rule and the provisions of the Ordinance. It has been further urged by them that under section 3(19) of the Ordinance the District has been defined as 'means a revenue District' and, therefore, the Municipal Council of Hyderabad and the Town Committee, Shahpur Jahania fall within the limits of the District Councils concerned and hence the above rule being repugnant to the provisions of the Act, stood repealed. ' In this regard, it may be pertinent to point out that item 6 of Part III of Schedule V to the Ordinance was amended by Ordinance No.XV of 1981 and in place of the words "tax on the export of goods from the local area" the following words were substituted: "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 in such ratio as and when directed by Government." ' To reinforce their above submissions the learned counsel for the respondents have further urged that under the above-quoted amended item 6, the right to levy toll has been exclusively conferred upon the District Councils and, therefore, even by virtue of the above-amended item the above rule 2(2) (b) of the Export Tax Rules, 1976 stood repealed. ' Mr. Imam Alli Memon has placed on record a copy of Notification No. 1-1-1977 Reve-I(IV) 847, dated 19-7-1977 issued under section 6 of the Sind Land Revenue Act, 1967 defining inter alia District Hyderabad, which inter alia indicates that Hyderabad City is within the Hyderabad District. ' On the other hand Mr. Rasheed Akhund has placed on record a photostat copy of Notification No.60(III) 1-4/74, dated 24-6-1974 indicating that Shahpur Jahania and other Union Councils mentioned therein were upgraded to the staus of Town Committees and their respective boundaries were mentioned therein; whereas Mr. Samiuddin Sami has placed on record two original Gazettes i.e. one dated 2-2-1983 containing Notification No.PEAS/914/83 defining the Constituencies/ Electoral Units of all the Councils of District Nawabshah and Notification No.PEAS/905/1-8/83 publishing the final list of constituencies (Electoral Units) of all the Councils of District Hyderabad. (b) We are inclined to hold that the aforesaid notification, dated 19-7-1977 issued by the Secretary, to the Government of Sind, Revenue Department, Hyderabad under section 6 of the Sind Land Revenue Act, 1967 has no relevancy to the point in issue. The relevant notifications are the notifications issued under the Ordinance. The above conclusion is supported by the provisions of the Ordinance. In this regard, reference may be made to the relevant provisions of the Ordinance namely clause 15 of section 3 defines "council" as means a corporation, municipal committee, town committee, district council, taluka council or union council, as the case may be, clause 21 gives the meaning of the term "district council" as means a district council constituted under the Ordinance, clause 34 defines "local area" as means an area which lies within the jurisdiction or limits of a council, clause 35 gives the meaning of the term "local council" as means a local council
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constituted or continued under the repealed enactment, clause 40 defines "metropolitan corporation" means a metropolitan corporation constituted under the Ordinance, clause 42 gives the definition of the term "municipal committee" means a municipal committee constituted under the Ordinance, clause 43 provides "municipality" means an urban area declared as a municipality under the Ordinance, clause 73 defines "town committee" means a town committee constituted under the Ordinance, whereas clause 76 gives the meaning of "union council" means a union council constituted under the Ordinance. The words "town" and "union" have also been defined in clauses 72 and 75 of section 3 of the Ordinance as mean an urban area declared as town and an area declared as union. Furthermore, clause 60 defines rural area as means any area which is not an urban area in contrast to the definition of the term "urban area" given in clause 77 of the above section 3 of the Ordinance, which defines as means an urban area recognized or declared as such under the Ordinance. (c) It may also be pertinent to mention that section 4 of the Ordinance provides that a council constituted under this Ordinance for any local area shall, unless Government by notification, specifies otherwise, be the successor of the local councils or local councils for that area existing immediatley before the coming into force of the above Ordinance. It may further be pointed out that section 6 lays down that the local areas for the purpose of this Ordinance shall, in the case of urban areas, be a town, municipality or city, and, in the case of rural areas, union, taluka and district. Whereas subsection (1) of section 7 provides any area declared as union, town, municipality or city shall, as far as possible be compact and contiguous with territorial unity. Furthermore, subsection (2) of section 7 lays down that the population of a local area shall in the case of-- (a) a union be such as may be specified by Government; (b) a town be between five thousand to twenty-five thousand; (c) a municipality be between twenty-five thousand to five lacs; and (d) for a city above five lacs. ' It may also be stated that section 8 contemplates declaration of urban and rural areas by the Government after inviting objections, whereas section 9 envisages the declaration of town, municipality and City by the Government by a notification in any urban area other than the area of Cantonment Board. It may also be pertinent to mention section 10, subsection (1) of which provides that as soon as may be, the councils mentioned therein shall be constituted:-- (a) in urban area-- (i) a town committee for each town; (ii) a municipal committee for each municipality; (iii) a corporation for each city. (b) in rural area-- (i) a union council for each union; (ii) a Taluka council for each Taluka; and (iii) a district council for each district except for Karachi Division there was to be one district. ' It may further be stated that section 12 of the Ordinance empowers the Government, after inviting objections from the residents of a council or, as the case may be, councils and after hearing them who wish to be heard, by notification divide the council into two or more councils or amalgamate two or more councils and may specify in the notification the consequences which may ensue upon such division or amalgamation. It further provides that as a result of such division or amalgamation, any council, is constituted in accordance with the provisions of the Ordinance, the existing members of the council so divided or amalgamated shall become the members of such council or councils as the Government may, by notification, specify as if such members had been
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elected to that council. Furthermore, section 13 empowers the Government after inviting objections to extend, curtail or alter the limits of any council. (d) The above provisions read with the above notifications placed by the learned counsel for the petitioners on record clearly negate the contention of the learned counsel for the respondents that for the A purpose of the Ordinance the limits of a district council are the limits of a revenue district. We are inclined to hold that the Ordinance envisages separate areas for the councils referred to in the Ordinance. In other words there is a marked distinction between a "district council" and councils for a district. Every district will have one district council but for a district there are more than one councils in terms of subsection (1) of section 10 of the Ordinance referred to hereinabove in para. 4(c). (5) As regards the second limb of the argument of the learned counsel for the respondents that under the amended item 6 of Part III of Schedule V to the Ordinance only the District Councils have been given the power to levy Rawangi Mahsool, it may be observed that Part III of Schedule V relate to taxes, rates, tolls and fee which can be levied by district councils and union councils and, therefore, it has been provided that only district councils shall be entitled to levy toll on the export of goods to be called Rawangi Mahsool to be shared by the district councils and such councils of the district in such ratio as and when directed by the Government. The words "such councils" referred to in above item 6 mean union councils mentioned under the heading of the above Part III and do not cover matropolitan corporation, municipal committee and town committees, which is evident from the fact that Part II of Schedule V to the Ordinance pertains to taxes, rates, tolls and fee which may be levied by a corporation including the matropolitan corporation, municipal committees and town committees and item No.4 of the above Part II provides the item "tax on the export of goods from the local area" which item is identical to the unamended item 6 of Part III referred to hereinabove. It may be observed that Part II relates to councils covering urban areas, whereas Part III of Schedule V pertains to the councils situated in rural areas. The amendment of item 6 of Part III cannot by implication repeal item 4 of C2 Part II as they are independent from each other. It is also evident from Schedule IV to the Ordinance, which separately defines the functions' of the various councils. ' We are of the view that there is nothing in the Ordinance contrary to rule 2 (2) (f) of the District Council Export Tax Rules or in the above-amended item 6 of Schedule V to the Ordinance as to infer the repeal of the above rule either by implication or on account of repugnancy. The above rule is saved by section 120 (2) (a) of the D Ordinance. With the result that for the purpose of imposition of toll on the export of goods i.e. Rawangi Mahsool the limits of peoples municipalities and town committees are excluded and, therefore, the levy is ultra vires of the power of the respondents district council. ' In this regard, it may be pertinent to point out that in Constitu tional Petition No. D-586 of 1984, respondent No.1 district council did not impose Rawangi Mahsool on the three items referred to hereinabove namely, sugar (refined), bagasse and molasses in their first notification, dated 19-5- 1984. This was in consonance with the stand taken by it in their letters, dated 21-8-1983, 15-5-1983, 26-5-1983 and 20-10-1983. Annexures D, E-1, E-2 and E-3 to the name of petition of Constitutional Petition No. D-586 of 1984. Through Annexure 'D' respondent No.1 Chairman informed the petitioner in the above petition that district council shall not recover export tax on the export of sugar, molasses and begasse till the Government issues notification regarding extension of district council limits. Whereas by Annexures E-1, E-2 and E-3 the respondent No.1 District Council asked the petitioner to furnish the details of the sugarcane received by the mill from the limits of the district council as the same was subject to levy of export tax. la other Words, it was stated that the sugarcane was exported from the limits of the district council to the limits of the town committee. The above documents belie the stand of the respondent district council before us that the limits of
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the District Council includes the limits of the Town Committees as well as of the Municipal Committees. 6. It was then contended by Messrs Khalid M. Ishaque and Imam AU Memon that the above substituted item 6 has in addition to the use of the words "toll on the export of the goods to be called Rawangi Mahsool by the district councils only" --also omitted the words "in the local area" which were employed in item 6 prior to the amendment as has been done in item 4 of Part II of the above Schedule V and, therefore, a district council is not restricted to levy the above Rawangi Mahsool in the local area as defined in clause 34 of section 3 referred to hereinabove. It will suffice to observe that as pointed out hereinabove Part III of Schedule V relates to rural area whereas Part II of Schedule V pertains to urban area. The effect of the omission of the above words i.e. "in the local areas" from item 6 of Part III seems to be that a district council is competent to levy the .Rawangi Mahsool even in the areas falling within the union council as the above amount is to be shared as may be specified by the Government in the ratio to be fixed by the Government between a district council and the councils situated within the rural areas. 7. As regards the second submission of the learned counsel for the petitioners that in view of the Government directive contained in sub para. (5) of the Director-General Rural Development Department, Government of Sind, dated 6-6-1983 the Rawangi Mahsool could not have bap!' claimed or recovered on the goods exported from the area falling outside the limits of the District Councils, it may be pertinent to reproduce hereinbelow the opening para. of the above directive and sub-para. (v) of the above directive which read as follows: "Opening para. of the directive Subject:- DIRECTIVES ABOUT TAXES BY THE LOCAL COUNCILS. In pursuance of the decision taken by the Sind Cabinet which considered the report of the Cabinet Sub-Committeee on 23rd August, 1982, the following directives are hereby issued to all Local Councils in Sind under section 62 (1) of the Sind Local Government Ordinance, 1979 in regard to levy of taxes by them." ' Sub-para. (v) of the above directive. ' District Councils will not be entitled to recover Rawangi Mahsool on the goods 'exported' from the areas falling outside their limits. Hence the goods moving from the urban areas within the District will not be subjected to Rawangi Mahsool by the District Councils." ' A plain reading of the above-quoted para. indicates that the Government has directed the district councils not to recover Rawangi Mahsool on the goods exported from the areas falling outside their' limits, with the result that the goods leaving from the urban areas within the district will not be subjected to the Ranwangi Mahsool by the district council. However, it was urged by Mr. Khalid M. Ishaque that the above directive is beyond the purview of section 62 of the Ordinance, as the above directive was issued prior to the imposition of the levy which was done in both the cases, prior to the above directive i.e. in September, 1983 and June, 1984, and therefore, the same is not covered by clause (c) of subsection (1) of section 62, and, hence, it is ultra vires of the powers of the Provincial Government. It may be pertinent to reproduce hereinbelow above section 62 which reads as follows: "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 direction is issued under subsection (1) the Chief Executive of the Council shall, notwithstanding any thing 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."
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'A plain reading of the above-quoted section indicates that under the above section the Government has been empowered to direct any council inter alia, to levy any tax or toll or to increase or reduce any rate, tax, toll or fee or to suspend or abolish the levy of any tax, rate, toll or fee. It has, therefore, been contended that in order to press clause (c), it is necessary that the suspension or abolition of the levy should be in respect of an existing levy of any tax, rate, toll or fee and as on 6-6-1983 the impugned notifications were not in existence, the above clause (c) cannot be invoked in aid to justify the above directive. In this connection, it may be pertinent to point out that under subsection (1) of section 60 it has been provided that a council with the previous sanction of the Government may levy in the prescribed manner all or any of the taxes, rates, tolls and fees mentioned in Schedule V to the Ordinance. In other words, a council cannot levy any tax, rate, toll or fee without previous sanction of the Government. The above directive of the Provincial Government, dated 6-6-1983 can be construed as withholding of the sanction for the levy of the Rawangi Mahsool on the goods exported from the areas falling outside the limits of the district council. In this view of the matter, it is not necessary to examine the above argument any further. However, it may be stated that the learned counsel for the petitioners have referred to the following cases in order to demonstrate that goods in transit cannot be subject-matter of levy. (i) Pakistan Textile Mill-Owners' Association, Karachi and 2 others v. Administrator of Karachi and 2 others, reported in PLD 1963 SC 137, in which the Hon'ble Supreme Court while considering the legality of the terminal tax charged by the Karachi Municipal Corporation, observed as follows: "The contention of the learned counsel for the appellants is that in respect of the goods whose ultimate destination is outside the Municipal limits of the Municipality the terminal tax cannot be levied merely on the ground that they pass through the Municipal limits in transit to their ultimate destination. He has sought to support this contention of his by a decision of the Supreme Court of India in the case of the Central India's Spinning, Weaving and Manufacturing Company Limited The Empress Mills, Nagpur v. The Municipal Committee, Wardha AIR 1958 SC 341 where it was held that the terminal tax is not leviable on the goods which are in transit and are only carried across the limits of the Municipality', because the word 'terminal' must be 'construed as having reference to terminus and has to be read to connote the idea of the end of something…
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