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Official Citation: 2024 PHC 350
Court / Jurisdiction: Peshawar High Court
Year of Decision: 2023
Decision Date: 2023-12-31
Petitioner: M/S Askari Cement Limited (ACL) through authorized JUDGMENT
Ruling Summary: This decision was rendered by the Peshawar High Court on 2023-12-31, officially reported as 2024 PHC 350. In this matter between M/S Askari Cement Limited (ACL) through authorized JUDGMENT and the Respondent, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
Case cited as 2024PHC350
Court Name: Peshawar High Court Judge(s): Syed Muhammad Attique Shah, Syed Arshad Ali Title:M/S Askari Cement Limited (ACL) through authorized
JUDGMENT
Reported As: 2024 PHC 350 Result: Petition Disposed of Judgment
JUDGMENT SYED ARSHAD ALI, J.- This consolidated judgment shall decide the instant as well as the connected petitions having raised a common question of law for adjudication of this Court. Particulars of said petitions are provided in Annexure 'A' to this judgment. The writ petitioners, in these Constitutional Petitions are 11 public limited companies claiming to be registered under Companies Act, 2017 and enlisted with the Security Exchange Commission of Pakistan and twelfth is a firm registered under the Partnership Act, 1932. All the writ petitioners were assessed to levy of Urban Immovable Property Tax ("UIP Tax") on industrial building and land by the respective tehsil administration and local governments notifying it as a rating areas within the meaning of Khyber Pakhtunkhwa Urban Immovable Property Tax Act, 1958 ("KP Act of 1958") read with Khyber Pakhtunkhwa Local Government Act, 2013 ("Act of 2013"). Feeling aggrieved with the said assessment, these writ petitions were brought challenging the very notification of rated areas and notices as well as issuance of challans calling upon the petitioners to pay the UIP Tax. The brief facts of each writ petition, necessarily for present adjudication are recounted herein below: W.P No.371-P/2021 "M/ S Askari Cement Ltd. Vs. Govt. of KP" 2. The petitioner as alleged in the petition is engaged in the business of manufacturing and export of cement with the setup/plant located in village Kahi Nizampur, a rural Union Council. The income
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from its business is utilized for the welfare and rehabilitation of soldiers, families, dependents of martyrs and retired officers/staff of Pakistan Army. The company has installations worth billions of rupees and bring millions of foreign exchange added to national exchequer. The cement industry established by the company is amongst power intensive and highly tax sector, paying eleven (11) different types of taxes to the Federal and Provincial Governments on its products. Despite the fact that the installation / plant of the company is located in village Kahi Nizampur, the respondent No.5 vide Gazette Notification TMA No.435- 45 dated 18.03.2020 in excessive exercise of powers purportedly under section 44 of the Act of 2013 declared the factory area as rating area for the purposes of imposing of UIP Tax under the KP Act of 1958. That pursuant to the impugned Gazette Notification, the respondent No.6 issued a schedule for the survey regarding assessment of UIP Tax in the factory plant vide Notice No. E&T/NSR/9690 dated 21.11.2020 in utter disregard to the sections 2(iv) and 3 of the KP Act of 1958 and that too without any notification from the provincial government as required under section 44 of the Act of 2013 which contemplates the declaration of rating area by respective tehsil council and not by the executive authority of the government. Hence, the notification dated 18.03.2020 was impugned. 3. Comments submitted by Respondents: The respondents No.3 to 5 submitted their parawise comments wherein it is stated that the petitioner does not fall under the definition of aggrieved person. it is further submitted that under section 44 of the Act of 2013, every Tehsil shall be a rating area for the purposes of the KP Act of 1958 and there is no bifurcation of any urban or rural area for levy and collection of UIP Tax under the Act ibid. Moreover, the notified areas as rating area were declared after observance of all codal formalities by the TMA. As far as the mandate of Tehsil Council to levy UIP Tax is concerned, it is submitted that at the relevant time there was no elected Tehsil Council in existence and the Local Government Department possessed powers and authority of Tehsil Council was thus competent to have issued the notification in terms of the Act of 2013. In addition, the Secretary Finance Government of Khyber Pakhtunkhwa in compliance with order dated 18.04.2024, submitted a written statement explaining the question as to whether the UIP Tax which is being collected under the Act of 2013 becomes part and parcel of the Provincial revenue that is to say it is credited to the Provincial Consolidated Fund or it become part of the revenue of the Local Fund and Public Accounts in terms of section 30 of the Act, 2013. The Secretary Finance in the written statement submitted that the UIP Tax is a property tax of Local Government which is collected by Excise, Taxation & Narcotics Control Department, Khyber Pakhtunkhwa on behalf of Local Government Department under object head B01301 as tax receipt. It is further explained that the provincial government retains 15% share in it as collection charges and remaining 85 % share is released to Administrative Department for onward distribution among the Tehsil Municipal Administration in accordance with section 3-A of the KP Act of 1958. That after release of 85% share of UIP Tax to the Local Government, this amount becomes part of the public accounts of TMA's in accordance with section 30 of the Act of 2013. WP No.4218-P/2013 "M/s Premier Sugar Mills & Distillery Company Ltd. vs. Government of Khyber Pakhtunkhwa through its Chief Secretary" 4. The company claims to be one of the largest sugar mill of the country since its establishment in the year 1940. It is averred in the petition that the petitioner company was illegally subjected to UIP Tax under the KP Act of 1958 without first declaring the area as rating area through requisite approval from tehsil council and was issued challan No.MR5119 dated 28.08.2023 requiring the petitioner company to deposit Rs. 23888168/- assessed against it as UIP Tax. It was also stated in the petition that the area where the factory is located is rural one and as such, the notification by the respondents as rated area is void and illegal.
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5. Comments submitted by Respondents: The respondents have filed their para-wise comments, out of whom, respondent No.1 raised objection to the maintainability of this petition in view of factual controversy involved in adjudication of the matter and non-availing of alternate remedy besides raising the question to jurisdiction of the court. The respondents No.3 and 4 also submitted that the area, where the Sugar Mill is situated, has been competently and duly notified as rating area by exercising the powers conferred under section 44 of the Act of 2013. It is further submitted that the petitioner is precluded from seeking extraordinary relief due to existence of a forum available under the Act of 2013. The Excise Department too also raised the objection of ouster of jurisdiction. W.P No.530-P/2023 "Lucky Cement Limited vs. District Excise, Taxation & Narcotics Control etc." 6. The petitioner company as alleged in the petition is engaged in the manufacture of cement having its plant situated in Darra Pezu Tehsil and District Lakki Marwat, a rural area. The respondents No.1; vide his letter dated 02.02.2023; pursuant to letter dated 23.01.2023 of respondent No.2 on the strength of letter dated 15.02.2022 issued by respondent No.3 and the Recommendations issued by the Office of the Director, Excise, Taxation & Narcotics Control, D.I Khan Region, required the petitioner company to pay UIP Tax. It was further stated that on the basis of Notification dated 01.07.2011, the cement factory of petitioner company was placed in Category B of UIP Tax rating area discriminately as no other factory throughout the province was subjected to UIP Tax at par with the petitioner company. That prior to filing of instant writ petition, the petitioner had challenged the discriminatory action of the respondents by placing the petitioner company/factory in Category B through Writ Petition No. 359-P of 2016 before this Court and the matter went up to the Supreme Court of Pakistan in Civil Appeal No.2092/019, wherein the Supreme Court of Pakistan held the notification as discriminatory vide its judgment dated 24.09.2022 and directed to treat the petitioner company / be placed at par with other cement factory in the province. That in the light of the judgment of Supreme Court of Pakistan in favour of the petitioner, the amount of UIP Tax recovered from the petitioner for the period from 2011-12 to 2022.23 is violative of Article 25 of the Constitution and the respondents are bound to comply with the directions of Supreme Court of Pakistan to remove the discrimination and to adjust all UIP Tax recovered from the petitioner company in excess of UIP Tax imposed on other cement manufacturers which was liable to be refunded to the petitioner. That the petitioner company was also liable to be placed at Category D at par with other cement companies during the said period. That impugned demand letter purporting to levy the UIP Tax on the petitioner company for the year 2020-21 by placing it at Category C and recovery of an amount of Rs.16,331,938/- calculated by the respondents is without any lawful authority. That the KP Act of 1958 as regards to tehsils does not apply by its own force, rather for the application of the said law the declaration by the Tehsil Council under sections 42 and 44 of the Act of 2013 is a sine qua non. It was further averred in the petition that apart from the discrimination pointed out above, the factory is located in a rural area and not duly determined as urban/rated area and as such the demand letter 02.02.2023 is also liable to be withdrawn. Moreover, the assessment of levy of UIP Tax at the rate of Rs.2.5 per sq.ft. for the whole plot area under no canon of law can be adopted for non-urban areas in which large tracts of land or often under cultivation; thus the assessment suffers from unreasonableness. That clause 7 of Schedule II of the KP Act of 1958 is not applicable to the built up premises, quarries and open land in the said area, therefore, the impugned demand letter based on letter 23.01.2023 and 15.02.2022 may be declared to be of no lawful authority. 7. Comments submitted by Respondents: The respondents have filed their respective para-wise comments. The respondents No.1 and 3 raised the objection qua maintainability of this writ petition for non-availing of alternate remedy
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available to the petitioner and further submitted that the impugned notification was competently issued after the observance of codal formalities. The respondents No.9 and 10 also raised the similar legal and factual objections. Hence prayed that writ petition is without any force and shall be dismissed. W.P No.4204-P/2021 "M/s Chashma Sugar Mills Limited Vs. Government of KP through Chief Secretary" 8. In this writ petition, the petitioner company is claiming to be one of the largest Sugar Mills in the country having two units known as Chashma-I & Chashma-II alongwith Chashma Ethanol Fuel Plant. That the company is bringing huge foreign exchange to the country. That the company has also launched Assistance Technical Support to local farmers in developing of land measuring 75,000 acres by bringing the same under cultivation. That 2,500 permanent and seasonal employees are working in the company and more than 10,000 families are dependent on the employment offered by it. That the industrial unit in Chashma-I is located at village Council Malaria, University Road, D.I Khan and Chashma-II is situated in village Council Miran, Ramak, D.I Khan, which are rural areas but the respondents through Notification No.2947 dated 23.10.2020 have declared the same as rating area for the purpose of imposing UIP Tax. That pursuant to the said Gazette Notification, an assessment of UIP Tax Notice No.12350 dated 24.08.2021, Notice No.12351 and Notice No.12352 of even date for CEFP (Chashma Ethanol Fuel Plant) at the rate of Rs2.50 per sq.ft were issued. It was further mentioned that the total land owned by company is not used for industrial purposes and substantial area owned by the petitioner is agricultural land, but the office building, industrial building and vacant land were treated alike for the purpose of levy of UIP Tax. That the UIP Tax under the KP Act of 1958 is restricted only to urban areas as envisaged in the Preamble and section 3(1) of the KP Act of 1958. That the urban area is defined in section 2(iv) of the KP Act of 1958. That according to section 44 of the Act of 2013, approval of respective Tehsil Council is mandatory before imposition of the UIP Tax. It was hence, prayed that the impugned notification and notices of levy of UIP Tax be declared as illegal. 9. Comments submitted by Respondents: The respondents filed their para-wise comments wherein, besides raising the objection qua maintainability of writ petition under section 111 of the Act of 2013, it is submitted that they were justified in the extension of rating area for imposition of UIP Tax due to the municipal services provided by the TMAs in the area and the impugned notification has been issued by observing all the codal formalities. Hence prayed that writ petition is without any force and shall be dismissed. W.P No.2016-P/2022 "MS Khyber Foods and others Vs. Government of Khyber Pakhtunkhwa" 10. It is alleged that the petitioners firm is associated with manufacturing units of small scale food products i.e. Cakes, Snacks Poops and nimko etc. The petitioners are aggrieved from Gazette Notification TMA No.435-45 dated 18.03.2020 declaring the Petitioner's Ceramic factory located in UC, Shaidu, District Nowshera as urban area for imposing of UIP Tax under the KP Act of 1958. (It appears that the mentioning of ceramics factory in the petition is due to clerical mistake, which is infact a food factory). That pursuant to Gazette Notification, schedule for survey regarding assessm ent of UIP Tax in the factory plant of petitioners, was issued by respondent No.6 on 26.11.2020 followed by demand Notice (PT10 Challan) dated 21.05.2022. That legally the UIP Tax under section 44 of Act of 2013 is restricted only to the urban areas. That as per list of Village/ Neighborhood Councils issued by the Khyber Pakhtunkhwa Local Government, Election and Rural Development Department, the Village Council Shaidu, where the factory of the petitioners is located, is divided in three Neighborhood Councils namely Shaidu-1, Shaidu-2 and Shaidu-3, therefore, without complying with requirements of section 44 of the Act of 2013, the very notification
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declaring the area as rating area is unlawful and void-ab-initio; hence prayed that writ petition shall be allowed and impugned notification shall be held as cancelled. 11. Comments Submitted by Respondents: In the para-wise comments filed by the respondents, it was submitted that the impugned notification was validly issued by invoking provision of section 44 of the Act of 2013, where under every Tehsil Council is a rating area for the purposes of collection of UIP Tax recoverable irrespective of the location of the factory being a rural area. The locus standi of the petitioner, being not an aggrieved person, has also been questioned. Hence prayed that writ petition being without any force shall be dismissed. W.P No.204-D/2023 "M/S Almoiz Industries vs. Government of Khyber Pakhtunkhwa and others" W.P No.577-D/2021 "M/S Almoiz Industries vs. Government of Khyber Pakhtunkhwa and others" 12. Both these petitions were originally instituted before the D.I Khan Bench of this Court but in view of pendency of the other identical petitions, these petitions were directed to be clubbed with the other petitions pending at the Principal Seat. Both the petitions are emanating from the initial Notification dated 03.08.2018 and have a chequered history. In the earlier round of litigation, the notification was challenged in the writ petition No.521-D of 2019, which was disposed of on 17.11.2020 in the terms to file the objections in the hierarchy of concerned department. That consequently, the petitioners filed objections before respondent No.6, which were rejected vide order dated 19.01.2021. Against which order, appeal was preferred under section 111 of the Act of 2013 before respondent No.4, but the same also met the same fate vide decision of respondent No.4 dated 16.09.2021. That during the pendency of said appeal before respondent No.4, the respondent No.3 demanded the petitioner company to pay an amount of Rs.45,196,814/- vide letter dated 30.08.2021 as UIP Tax despite the fact that the petitioners have already paid millions of rupees as UIP Tax in the light of impugned notification dated 03.08.2018. In this writ petition, the petitioners have challenged the Notification No.1037-TMA, dated 03.08.2018 and subsequent Letter No.72/TMA dated 19.01.2021 & Letter No.12579-81/ET&NC dated 30.08.2021 of respondents No.3 & 6 and impugned order dated 16.09.2021 of respondent No.6. It is asserted that UIP Tax is governed by section 42 of the Act of 2013 read with the relevant provisions of the KP Act of 1958. It is further averred that Item No.5 of Part III of Third Schedule and section 2(h) of the KP Act of 1958 defines `tax' as the tax leviable under the provision of section 3 of the KP Act of 1958. The charging provision i.e. section 3, levies tax only on residential and commercial properties to the exclusion of industrial properties. Besides, it has no retrospective effect in imposition of the UIP Tax without specification of date for enforcement under section 42(4) of the Act of 2013. Legally a taxing provision requires to be mentioned in unambiguous manner and purpose of law shall be taken into consideration while interpreting the statute. That the orders of the respondents are lacking reasonability, fairness and justification as required by Article 24A of the General Clauses Act, 1897. Hence, the present petition and lastly prayed that impugned notification shall be cancelled being unlawful and void in nature. 13. Another pending writ petition No.577-D, the third Writ Petition No.204-D was filed challenging the vires of amendment in the schedule under the KP Act of 1958, through the Khyber Pakhtunkhwa Amendment of Certain Fiscal Laws Act, 2021 ("Act of 2021"). It is claimed that the petitioner is aggrieved of insertion of section 2(4) of the Act of 2021, whereunder Item No.7 of Schedule-II of the KP Act of 1958 was modified and under section 2(4) of the Act of 2021, industrial lands and buildings were also included as Item No.7 subject to the imposition of UIP Tax upon industrial land and building at flat rate of Rs.2.50 per sq.ft of the whole plot area, which is ultra vires to law. It is averred in the petition that the charging provision of the KP Act of 1958 levies UIP Tax on residential and
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commercial properties only and the same cannot be extended to industrial properties. It is further added that the petitioner's industry pays a significant amount of Rs.36 million annually on account of UIP Tax, which is discriminatory as compared to the other provinces. Therefore, prayed that the amendment in the schedule under the KP Act of 1958 through the Khyber Pakhtunkhwa Amendment of Certain Fiscal Laws Act, 2021 ("Act of 2021") shall be held as Ultra Vires to Law. 14. Comments submitted by Respondents in Writ Petition No.577-D/2021. In response to writ petition No.577-D/2021, the respondents have submitted their parawise comments where in Paras No.4 and 5 of the grounds it is pointed out that the UIP Tax is leviable by virtue of amendment in section 3 of the Act of 2013. It is further submitted that according to the schedule of Finance Act, 1997 read with sections 4(2) and 3(2) of the KP Act of 1958, the categories of building are to be reckoned from the list provided in the schedule and further under section 44 of the Act of 2013 read with amendment in the Finance Act 1997, the petitioner company is liable to levy of UIP Tax. While in the subsequent writ petition, the parawise comments were returned with the office objection but the same were still not resubmitted. W.P No.2289-P/2021. "Al/S Cherat Cement Co. Ltd. vs. Govt of KP" 15. The petitioner in this writ petition statedly invested billions of rupees by installation of cement manufacturing units / production lines in Khyber Pakhtunkhwa since 1984, contributing to national exchequer by paying taxes in billions of rupees, which included 11 types of taxes paid to the Federal and Provincial Governments. That the factory is located at Lakarai, a Rural Union Council Shekhai (Pahari Kati Khel), but the respondents through the impugned Notification TMA No .3064- 71/UIP.Tax/TMANSR dated 20.04.2020 with reference to section 44 of the Act of 2013 declared the factory area as rural area without seeking approval from Tehsil Council. It was also averred in the petition that the factory area which forms part of Village Council Shekhai, Pahari Kati Khel is included in the list of Village/Neighborhood Council issued by Khyber Pakhtunkhwa Local Government, Election and Rural Development Department. Hence, the present petition. 16. Comments submitted by Respondents: Parawise comments have been submitted by the respondents, wherein it is stated that there is no bifurcation of Urban and Rural areas in respect of levy and collection of taxes and under section 44 of the Act of 2013, all the Tehsil Councils shall be a rating area within the meaning of the KP Act of 1958. W.P No.1092-P/2021 "M/S Swat Ceramics Ltd. Vs. Government of Khyber Pakhtunkhwa and others" 17. The petitioner is a registered company under the Companies Laws of Pakistan and is a manufacturer of ceramic tiles having its manufacturing unit at Shaidu, Nowshera. That the premises, where the factory is situated, falls within the territory of Village Council Shaidu, which has been divided in three Neighborhood Councils i.e. Shaidu-I, Shaidu-2 & Shaidu-3, therefore, prayed that the impugned Notification is illegal. Hence, the present petition. 18. Comments submitted by Respondents: The respondents duly submitted their parawise comments wherein it is stated that as per section 44 of Act of 2013 every Tehsil Council for the purposes of the KP Act of 1958 shall be considered as a rating area and the notification in question was competently issued. It is also submitted that the petitioner does not come within the definition of aggrieved person. W.P No.4205-P/2021 "Ms Tandianwala Sugar Mills Ltd vs. Government of Khyber Pakhtunkhwa through its Chief Secretary and others" 19. The petitioner M/s Tandianwala Sugar Mills is also one of the largest Sugar Mills of the country, which is located in Tehsil Paroa, D.I Khan, which besides, producing the sugar products, is also
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providing assistance/technical support to the local growers by bringing 75,000 acres of land under cultivation and also employed 1,500 permanent and seasonal employees on whom almost 10,000 families depend. That it was in the year 2020, when the respondents issued Notification TMA No.2947 dated 23.10.2020 under section 44 of Act of 2013, whereby the petitioner's Sugar Mills located at Meran Tehsil Paroa, D.I Khan, in Village Council Meran, was declared as a rating area under the KP Act of 1958. That pursuant to said Gazette Notification, the respondent No.6 issued assessm ent Notice No.12353 dated 24.08.2021 to the petitioner at the rate of Rs.2.50 per sq.ft as per revenue record. It is alleged in the petition that the entire land owned by the petitioner company is not underutilization for industrial purposes and substantial area is still agricultural in nature. That the taxes meant for the urban areas, are hardly applicable to the declared rural areas unless the prerequisite of section 44 of Act of 2013 is meted out. That the notification dated 23.10.2020 and subsequent notices do not fulfill the requirement of section 44 of the Act of 2013 for issuance by the competent authority; hence, prayed that the same are liable to be withdrawn. 20. Comments submitted by Respondents: The respondents contested the writ petition by filing their para-wise comments, wherein question of availability of alternate remedy has been raised and it is insisted that the factory area is urban in nature which is duly notified as rated area where the TMA is providing municipal services. W.P No.831-P/2022 "MS Khazana Sugar Mills Ltd vs. Govt of KP and others" 21. The manufacturing unit of petitioner namely M/s Khazana Sugar Mills (Pvt) Limited is located at Charsadda Road, Peshawar within the precincts of Village Khazana Payan, a declared Village/Neighborhood Council by the Khyber Pakhtunkhwa Local Government, Election and Rural Development Department. It is averred in the petitioner that the power to declare any area as rural area rests with Chief Secretary of the Province and not with respondent No.5 but the respondents issued a…
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