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Petitioner: SHELL PAKISTAN LIMITED, KARACHI through Attorney VS Respondent: CAPITAL JUDGMENT
Court Name: Islamabad High Court Judge(s): Muhammad Anwar Khan Kasi Title:SHELL PAKISTAN LIMITED, KARACHI through Attorney vs CAPITAL
JUDGMENT
Reported As: PLD 2015 Islamabad 36 Result: Order accordingly Judgment JUDGMENT ' MUHAMMAD ANWAR KHAN KASI, C.J.---This Petition' as well as W.Ps. Nos. 3404/2013, 903/2014, 979/2014, 980/2014, 981/2014, 982/2014, 985/2014, 994/2014, 995/2014, 996/2014, 997/2014, 1001/2014, 1002/2014, 1168/2014, 1222/2014, 1325/2014, 1429/2014, 1892/2014, 2633/2014, 3326/2014, 3423/2014, 3667/2014, 3669/2014, 4074/2014 and 4343/2014, involve virtually common question of facts and law, therefore, being, decided through this Single judgment. 2. Brief facts of the case are that petitioners are commercial entities having their operational outlets within Islamabad Capital Territory and in order to comply with the statutory requirement of Companies Ordinance, 1984 as well as to attract public attention they displayed business identification Sign Boards on their business premises. 3. They are aggrieved of demand notices issued by the respondent No,3 [Contractor of CDA] requiring payment of advertisement fee. 4. In W.P. No, 4074 of 2014 Petitioner-Bank has also assailed Rent collection notice issued by the Contractor of respondent No,3-National Highway Authority whereby rent collection of Promotional Display Board for the year 2014-15 has been demanded. 5. Learned counsel for petitioner submits that the demand notices are illegal because the same have been issued without lawful authority and that the impugned levy amounts to 'tax' sought to
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be recovered without obtaining approval of the Government which was a requirement under the CDA Ordinance, 1960 read with Municipal Administration Ordinance, 1960. 6. Explaining this argument, learned counsel submits that under section 15-A of CDA Ordinance, 1960 the municipal functions have been assigned to CDA in relation to Islamabad Capital Territory and are required to be performed in accordance with Municipal Administration Ordinance 1960. According to section 33 of the last said Ordinance, Municipal Taxation cannot be imposed without taking sanction of Government, but this condition was overlooked prior to imposition of tax while the procedure laid down under CDA (Imposition of Tax) Rules, 1981 was also disregarded. It is also contended that the rates of fee under demand have been increased exorbitantly without obtaining approval. He added that the impugned demand of fee is ultra vires to section 33 of Municipal Administration Ordinance, 1960 and Capital Territory Local Government Ordinance as well as Articles 4, 18, 25, 77, 141, 142 and 143 of the Constitution. 7. Learned Advocate Supreme Court [Raja Muqsit Nawaz Khan] argued that fiscal and taxing statutes are to be construed strictly and an authority cannot clothe itself with powers which have not been expressly granted by the statute itself. He added that imposition of tax on Corporations is subject of Federal Government as the same forms part of Federal. Legislative List at entry No, 48. He submits that amendment in the rate of FEE without approval of Government is violative of sections 20 and 23 of General Clauses Act, 1956 because only an authority, empowered to do an act is competent to alter the same. 8. Learned counsel next submits that imposition of advertisement fee in relation to the signboards displayed on private properties, runs counter to the principle of quid pro quo because no corresponding service is being provided by the CDA. 9. Asserting the stance that compliance of statutory requirement cannot be termed advertisement, he argued that pursuant to sections 144 and 153 of Companies Ordinance, 1984 petitioners are under statutory obligation to display their business-nameplates on their premises and no tax or levy can be imposed upon an activity performed in compliance with rules and regulations. Same position was taken by petitioners who are banking companies and are obliged to show sign boards under Banking Companies Ordinance, 1962 read with Regulation 8.3 dated 12-10-2007 Paragraph 51 issued by State Bank of Pakistan. 10. Relying upon Capital Territory Local Government Ordinance, 1979 read with Union Councils (Taxation) Rules, 1981, petitioners emphatically challenged the authority of private contractor to issue demand notices. It is contended that in case of rural areas only the Secretary Union Council can demand notice for payment of tax and under section 9 of the Advertisement (Control) Regulation .1977 the Director CDA can issue demand notice while a contract qua enfranchisement of statutory obligation is not permissible according to dictums laid down by the Hon'ble Superior Courts of the country. 11. Learned counsel in relation to Writ Petition No, 4074 of 2014 submits that National Highway Authority does not carry mandate to collect advertisement fee for sign boards displayed on the face of private premises in compliance with the statutory requirements. 11(sic.) Following case-laws have been relied upon by the petitioners' side; (i) Messrs Coca-Cola Beverages v. Cantonment Board Chaklala etc. [2011 MLD 1987 Lahore] wherein the Hon'ble High Court holds that "Using of shutter gates or sign boards on shops by petitioners for displaying name of their products or logo had no relation with any advertisement made through hoarding boards, bill boards or any other mode of advertisement...Cantonment Board under S. 60 of Cantonment Board Act, 1924 could impose taxes permitted to be imposed under any enactment of any municipality of the Province...Tehsil Municipal Administration Under S. 116 read with item No, 5, Part 3 of Second Schedule, of Punjab Local Government Ordinance, 2001 could levy tax or fee on advertisement other than on radio television and bill boards... Fee would
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mean to defray cost of particular services rendered to a particular individual on principle of quid pro quo. Tax would be levied as a part of common burden and for public purpose...No rules had been framed under Cantonment Act, 1924 to provide for collection of fee for use of borrowed space of sign boards of shops on an internal arrangement between borrower and lender...Impugned demand could not be termed as a 'fee' in absence of providing any service or facility by Cantonment Board to petitioners for displaying name of their products and logo on their shops... Cantonment Board could not impose Tax without satisfying pre-condition of drawing proposals, fixation of liability and publication of notification... Impugned Tax was not prevalent in collateral Local Councils... Contracts permissible under S. 112 of the Act, were those necessary for purpose of the Act... Such purpose would include duties and discretionary functions of Cantonment Board laid down under Ss. 116 and 117 of the Act... Collection of fee and taxes could be means for ensuring accomplishment of such purposes, but not a purpose itself ..Cantonment Board could not collect fees and taxes through contractor...Impugned demand was an illegality in itself and its collection through a contractor was a contempt." (ii) Abdul Hameed v. District Coordination Officer Multan and another [2014 MLD 16 Lahore] wherein it is observed that "it was necessary for local government administration to indicate in draft notification/advertisement, the class of persons or categories of property proposed to be taxed. Advertisement of tax proposal in newspaper did not contain the class of persons, whereas in the notification class of persons was added at the end of the notification, note at the end of the notification made the whole process illegal and against Punjab Local Government (Taxation) Rules, 2001, as the same had provided a complete procedure to be followed for imposition of tax/fees etc. By the local councils." (iii) Haji Muhammad Saeed v. Municipal Corporation Cheechawatni [2006 CLC 1582 Lahore] explaining the point that "Mandatory provision of law for imposing license fee having not been complied with, imposition of license fee was declared to be illegal." (iv) Dubai Islamic, Bank v. Federation of Pakistan [2013 CLD 2202 Lahore] in said case the Hon'ble High Court held that. "Cantonment Board before demanding charges was legally obliged to provide places of uniform size within its limits for displaying names and boards by persons and companies desiring so." (v)... Messrs Shamim and Co. v. Tehsil Municipal Administration, Multan City through Nazim and 2 others [2004 YLR 366 Lahore] wherein it is held that "Notice for the recovery had been issued by the contractor under S.142 of the Punjab Local Government Ordinance, 2001 which could only by issued by an officer authorized by the Nazim who was under his administrative control... Contractor being not under the administrative control of Nazim, notices issued by contractor were without lawful authority." (vi) Shabbir Hussain v. Tehsil Municipal Administration, Rahim Yar Khan through two Nazim and 3 others [2008 YLR 1889 Lahore] the ruling is on the point that "heading has clearly provided power and jurisdiction to Tehsil Municipal Administration to collect fees on billboard which is ultra vires to the powers conferred. By the Statute." (vii) Messrs ACE Quality Pvt. Ltd. Through CEO v. Tehsil Municipal Administration Multan etc. [2007 CLC 35 Lahore] this case is on the point that "Authorities were required to regulate affixing of sign board and advertisements by framing bye-laws under S.192 of Punjab Local Government Ordinance, 2001, but Authorities had levied the fee without framing said bye-laws." (viii) Excide Pakistan Ltd. v. Cantonment Board Clifton and others [2012 CLC 1124 Sindh] in this case the Hon'ble Sindh High Court that "Power of the Cantonment Board under section 200 of the Cantonment Act, 1924 to impose "stallage, rent and fees" was not unqualified, but could only be used with the prior approval and sanction of the competent authority (the Chief of Army Staff or any other Officer appointed by the Government as per section 2(viii) of the Cantonments Act,
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1924...Nothing on record was available to show that such levy had the approval of the Competent Authority." (ix) Muhammad Youssof Khan Khattak v. SM Ayub and 2 others [PLD 1972 Peshawar 151] wherein it is concluded that "Statute providing for doing a thing in particular manner that thing could not be done in any other manner". (x) Province of East Pakistan v. Noor Ahmed [PLD 1964 SC 451] setting the principle that "Rule making authority cannot clothe itself with powers which statute itself does not give." (xi) Glaxo Laboratories Ltd. v. Union Council Dulu Khurd through Chairman and 4 others [1991 CLC 354 Lahore] wherein it is elaborated that "Tax being a compulsory exaction of money from public there was no equity in favour of a Tax. Disregard of procedure prescribed for levy of tax could not be looked at with disfavour...Default or failure to comply, with the legal formalities would necessitate that benefit must go to the citizens." (xii)PakCom Limited v. FOP [PLD 2011 SC 44] Which is on the point of distinction between the expression of 'fee' versus 'tax' and that "Principle of quid pro quo is used in law for giving one valuable thing for another and it is nothing more than mutual consideration which passes between the two parties to a contract and which renders the contract valid and binding. (xiii) Messer AZGARD NINE Ltd. v. Pakistan through Secretory and others [2013 PTD 1030 Lahore] where the Hon'ble Court sets that "Distinction between a tax and the fee lay primarily in the fact that a tax was levied a part of a common burden, while a fee was a payment for a special benefit or privilege...Tax was levied to raise funds for meeting the "necessary expenses" of the State, therefore, a tax was not co-related to services rendered or special benefit or privilege conferred on the taxpayer and accordingly the taxpayer was sharing/discharging his obligation under a common burden without being a beneficiary of a corresponding, benefit, whereas in contrast, a fee was not part of the common burden but was payment made in lieu of a benefit, service or privilege by the payer of such fee." (xiv) Hirjina Salt Chemicals v. Union Council Gharo and others [1982 SCMR 522] to elucidate that "word used in statute not defined therein...Should be understood to have been used in its dictionary meaning or even its ordinary or popularly understood meaning." (xv) Arbab Contracting v. Tehsil Municipal Administration Multan etc.--- [2005 MLD 1520 Lahore], it specifies that "mode of determination of reserve price was also provide by R.9 of the Punjab Local Government (Auctioning of Collection Rights), Rules, 2003 and earnest money according to R.16 of said Rules was also to be calculated on the basis of price so determined and was to be mentioned in the publication...Similarly the very basis regarding reserve price was not available on record, entire proceedings of auction conducted without that basis, was of no legal consequence... Person to whom contract was granted, was an individual, who was not competent under S.54(2) of Punjab Local Government Ordinance, 2001 to have any contract of the any of functions of Local Council." (xvi) Azad Government of the State of Jammu and Kashmir v. Haji Mir Muhammad Naseer and others [1999 PLC (CS) 1173 Supreme Court AJ&K] Which states that "Fees Chargeable from students were challenged before High Court in constitutional petition alleging that fees amounted to 'tax' which under provisions of S.31(4) of Azad Jammu and Kashmir Interim Constitution Act, 1974 could be imposed only by legislative assembly and not through an executive action...High Court accepting constitutional petition concluded that fee chargeable from students was "tax" because no part of said fee was earmarked necessarily for rendering service in return to those from whom it was to be recovered...High Court had failed to take note of the fact that tuition fee was being received from only . Those students who were to receive education from teachers in educational institutions...Student was paying money and in return was getting education... "Tax" was a compulsory exaction of money by a public Authority for a public purpose and was not a payment
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for any specific service rendered...In respect of "fee" there was "quid pro quo" which means "something for something" while in "tax" it was absent...In case of payment of fee not only there was "quid pro quo" but was absence of compulsory exaction because tuition fee was to be paid by one who would go to the educational institution and not by one who would not go there...Tuition fee as well as admission fee charged from students was a fee and could not by any standard be construed as tax." and others [2010 YLR 2543 Lahore]. Wherein it was held that "Holding of cattle-market was not a function or duty of the Cantonment Board under S.116 of Cantonments Act, 1924 instead Tehsil Municipal Administration was tasked with holding of such markets under Punjab Local Governments Ordinance, 2001... Under S.112 of the Cantonments Act, 1924 the Board could enter into those Contracts only which were necessary for the purposes of said Act... Station Head Quarter could not award contract to the petitioner because a contract for holding cattle-market was not necessary for the purposes of the Cantonments Act, 1924... Cantonment Board or the Station Head Quarter could not supersede the right of the Tehsil Municipal Administration which was responsible for holding cattle markets." (xviii) Johar Ali (RAKI) and others v. District Co-ordination Officer etc. [2012 CLC 1471 Peshawar] the case-law is on point that "Collection of tax under S. 127 of Khyber Pakhtunkhawa Local Government Ordinance, 2001 was meant for Provincial tax levied by Provincial Government... No publication before levying of tax had been produced vide which objections from public were invited nor any legal procedure for imposition of disputed tax had been brought on record... Government had abolished Octroi/Zilla tax on transportation of articles so transported within the country from one district to another...High Court in exercise of Constitutional Jurisdiction declared Kohistan Development Fee-Cess, illegal and void." (xix) Ms. Nargis Moeen v. Government of Pakistan etc. [PLD 2003 Lahore 730], wherein it was held that "section 60 of Cantonment Act, 1924 was governed by principles of legislation by reference whereunder Cantonment could impose only such taxes which were legally permissible in municipal areas where such Cantonment was situated...Intention of legislature and rationale behind such imposition was based upon rule of equality i.e, Municipality and Board areas had been considered and brought at par for purposes of imposition of local taxes...Referred legislation the moment same was amended omitting imposition of tax on property in municipality, power of Board to impose and claim omitted taxes would diminish automatically... Item No,5 in Second Schedule of Punjab Local Government Ordinance, 1979 had been omitted through Punjab Local Government (Amendment for Abolition of Certain Taxes) Ordinance, 1999 with effect from 28-9- 1999... Board , thus, had no jurisdiction to claim tax qua the transfer of property, after promulgation of the amending Ordinance." (xx) Multiline Associates v. Ardsher Cowasjee etc. [PLD 1995 SC 423], wherein it was observed that "Regulations made by the authority, are supposed to be not inconsistent with the provisions, of the Ordinance and rules framed thereunder. If there is inconsistency between any provisions of the Ordinance and the Regulations, to that extent, Regulations, being inferior and subordinate legislation, will yield to the provision of the Ordinance and the rules framed thereunder. In the instant case, amendment brought about in section 6 of the said Ordinance, empowering the Government to suspend or cancel no objection certificate and then reprocess it, shall hold the field for two, reasons, firstly, that provision of Ordinance is substantive law, which has preference over the Regulations which are procedural in nature and made by the authority which is created under the Ordinance, and secondly, that the amendment in the Ordinance was made after coming into force of the Regulations, hence to the extent of inconsistency, if any, Ordinance shall prevail and not the Regulations." (xxi) Messer Dadex Eternit Limited v. Government of Sindh etc., [2005 CLC 305 Karachi] the ruling lays the principle that "conservancy charges leviable by the respondent No,2 are only in the nature
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of fee for rendition of specific services and cannot be levied in case no service is being performed." (xxii) Messrs United Bank Ltd. Karachi v. Messrs Mohib Ali Tannery etc. [PLD 1994 Karachi 275] which amplifies the point that "Rule making power conferred by a statute cannot override postulates of the statute itself; it is to be confined to the parameters within which the parent statute has circumscribed its field of operation. Such power does not extend to supply omission or fill lacunas in the legislation from which it has emanated for being exercised...Even when those requirements of competency are satisfied the end product viz, the rules framed have to be just, reasonable, in consonance with the law of the land, in accord with public policy and totally free of apprehension." (xxiii) Fauji Sugar Mills v. Zilla Nazim [2007 MLD 302 Lahore], wherein it is held that "Professional Tax imposed by Zilla Council was illegal, and tax on corporation could only be imposed and levied by Federal Legislature and levy of professional tax/permit fee/license fee by local government on a corporation was not constitutionally permissible." (xxiv) Abdur Rasheed v. CDA [PLD 1979 Lahore 803], wherein it is observed that "Regulations, otherwise non-statutory in character, requirement of publication, held cannot make non-statutory regulations statutory." (xxv) Calcutta Soft Drinks v. Calcutta Municipal Corporation [AIR 2007 Calcutta 136] the principle set therein is that where situation warrants application of two provisions, non obstante clause prevails. (xxvi) Aradhana Drinks and Beverages Pvt. Ltd. v. State of Punjab and Orissa [AIR 2012 Punjab and Harryana 201 wherein it is held that "Dealer Boards erected or displayed by Company on outlet, shops or building were one of activity of 'business' or 'trade', carried out by a company which included sale of product marketed or distributed by a company, no advertisement tax can be levied on such dealer boards." 12. On the other hand, learned Counsel for respondent CDA vehemently opposed the petitions by submitting that the same are not maintainable in presence of alternate remedy of Appeal, provided under the Islamabad (Control of Advertisement) Regulations, 1977, and that appropriate course has not been adopted by them prior to invoking constitutional jurisdiction of this Court. He contended that the 'Authority' [CDA] under section 15 of Capital Development Ordinance, 1960 is empowered to take necessary measures and enter into contracts for carrying out the purposes of the Ordinance. He added that under S.15-A of the CDA Ordinance, 1960 the powers and functions of 'Authority' are at par with Municipal Committee under Municipal Administration Ordinance, 1960. In support of this argument learned Counsel placed reliance on case-law titled as Mrs. Bilquis Anwar Khan and 39 others v. Pakistan through Secretary Cabinet Division etc. [2001 SCM R 8091. 13. Learned counsel next submits that in exercise of powers conferred under section 51 of the CDA Ordinance, 1960 the Authority made the Islamabad (Control of Advertisement) Regulations, 1977 which were notified in official Gazette by the Government of Pakistan on 3-5-2008 whereby no advertisement in the ICT could be displayed without permission of the Authority and for such permission the Authority can levy and recover fee. He added that rate of fee was altered from time to time through notification in the official Gazette. 14. Learned counsel also apprised that many petitioners have installed huge Sign Boards for advertisement of their products, Schemes etc. For attraction of the general public, therefore, such advertisements are liable to charges. He submitted that the Islamabad (Control of Advertisement) Regulations, 1977 has been in promulgation for years and vires of the same have been challenged by the petitioners after a significant delay. He added that the demands of fee have not been made for the first time and previously petitioners were paying the charges on the same count, therefore, by their own conduct they are estopped from raising objections at this belated stage.
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15. Learned, counsel for respondent No, 3 [Contractor of the Authority] while adopting the above arguments added that he was awarded the contract after public notice in the newspaper, through open auction and committee in accordance with rules and law on the subject selected his bid of Rs,9 Crores being highest, amongst the other contestants. 16. Defending the demand notice issued on behalf of NHA learned counsel for NHA submits that the authorized regulatory body can take appropriate measures for corridor management and under the rules can authorize collection of levies through the private contractor. 17. Learned counsel for petitioner clarifying the alternate remedy of appeal submits that under S.13 of the Islamabad (Control of Advertisement) Regulations, 1977 an order issued by the Director has been made appealable while the impugned Notice has been issued by a Private Contractor, therefore, said remedy of appeal before the authority cannot be said to be available. He further explained that an action in violation of legal and Constitutional provisions is not sustainable on the basis of a subordinate legislation which is ultra vires to the Constitution as well as law. 18. Heard and record perused. 19. Primarily it is pertinent to observe that the judgment passed by the Hon'ble Lahore High Court in case of Messrs Coca-Cola Beverages, supra does not entirely correspond to the questions of law in the instant case, due to peculiar legislative position in Islamabad Capital Territory, therefore, this case is to be decided on the basis of separate reasons. 20. In order to resolve the controversy involved in the present case, following questions require determination; (a) Whether Islamabad (Control of Advertisement) Regulations, 1977, has been issued without authority of law and Constitution? (b) Whether the petitions are not maintainable due to alternate remedy of appeal? (c) Whether Fascia Sign Boards fall within the definition of `Advertisement' where the same have been displayed on private properties in compliance with statutory obligation and can CDA demand levy of fee thereupon even in rural areas? (d) Whether a fee can be levied…
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