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Petitioner: Metropolitan Corporation, Islamabad through Mayor VS Respondent: Chairman C.D.A. (Capital Development Authority), Islamabad and another
Court Name: Islamabad High Court Judge(s): Mohsin Akhtar Kayani Title:Metropolitan Corporation, Islamabad through Mayor vs Chairman C.D.A.
(Capital Development Authority), Islamabad and another Case No.: Writ Petition No. 4298 of 2019 Date of Judgment:2020-12-23 Reported As: PLD 2021 Islamabad 144 Result: Order accordingly Judgment MOHSIN AKHT AR KAYANI, J.---Through this common judgment, I intend to decide the captioned writ petition as well as writ petitions mentioned in Annexure-A appended with instant writ petition having common questions of law and facts. 2. Through the above mentioned writ petition as well as in Annexure-A, the petitioners have assailed the demand notice of the CDA issued for recovery of property tax. 3. Brief and consolidated facts of above referred writ petitions are that the Metropolitan Corporation Islamabad (MCI) was formed under the Islamabad Capital Territory Local Government Act, 2015 with several political, financial and administrative functions as detailed in Schedule-II and III of the said Act, while section 89 of the Act, 2015 empowers the MCI to collect the property taxes in the district, however the Capital Development Authority in violation of said provision of law is collecting property taxes. On the other hand, the Government is under legal obligation as per section 78 of the Act to transfer and release the funds into the accounts of the local Government on monthly basis, but the Federal Government has neither transferred the financi al funds nor has it devolved the administrative and financial powers upon the MCI. Likewise, the private petitioners, who are residents of different housing societies established in ICT, are also aggrieved with the claim of property tax by the CDA on the grounds that all amenities and basic civic facilities are being made available by the housing societies, as such, the rates imposed on the properties are too high keeping in mind the area of the Islamabad Capital Territory . 4. Learned counsel for petitioners conten ded that the CDA has no power to collect or retain the property tax in Islamabad and any such act on the part of respondents is nullity in the eyes of law, as such, the authority and power to collect taxes, including the property tax in Islamabad, are vested in the MCI; that the Federal Government is under legal obligation to transfer the funds to the MCI in accordance with provisions of the ICT-Local Government Act, 2015, but the defiance thereto on the part of respondents hampers the smooth functioning of the
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local Government, as such, the MCI is also not being allowed to utilize the available funds; that the law clearly specifies that the authority to impose a tax vests with the Federal Government and not with the CDA; that the demand notice issued by the CDA with respect to property tax appear to have been made applicable retrospectively , which otherwise has been assessed without proper assessment of the properties. 5. Conversely , learned D.A.G., A.A.G. as well as learned counsel for CDA opposed the filing of instant writ petitions on the grounds that the MCI has not performed according to the mandate conferred upon it by the residents of the Islamabad; that as per section 118 of the ICT-Local Government Act, 2015 the MCI was required to frame its by- laws and rules to give effect to the provisions of the Act, 2015, but the MCI despite elapse of 04 long years could not undertake the said exercise and failed to utilize huge sum of money collected through Directorate of Municipal Administration for the welfare of the residents of the Islamabad Capital Territory; that section 78 of the Act, 2015 required the MCI to establish a "Local Fund" wherein all the proceeds of taxes, tolls, fees, rates and other charges levied were to be credited to the said fund, but the MCI has not yet established the "Local Fund" in order to meet the requirements of the Act, 2015, therefore, direction needs to be issued to the MCI to have its accounts reconciled/settled with the CDA; that SRO No.805(I)(91), dated 20.08.1991, empowers the CDA to collect property tax from the petitioners whose residences fall within the municipal limits of Islamabad, as such CDA has not imposed any charge on civic amenities on street lights, water supply and janitorial services, rather only a.bill of property tax has been issued by the CDA ; that levy of property tax has been based on Wafaqi Mohtasib findings, dated 16.02.2018 and Presidential Order , dated 13.02.2017, which are equally applicable across all societies without discrimination and entailed after comprehensive dialog with the management of different societies situated within the municipal limits of Islamabad. 6. It has been pointed out by learned counsel for the CDA that a similar matter is also pending in the apex Court in HRC No. 318/1993 and C.M.As. Nos. 7645/2018, 2370/2020, 2416/2020, 2417/2020 and 2606/2020, whereby certain directions were issued and a committee was constituted, however , when this situation has been confronted to the representative of the Federal Government, whereby Mr. Ayyaz Shaukat, Deputy Attorney General has taken a categorical stance that instant matter has nothing to do with the subjudice matter of the apex Court and this Court can pass the judgment independently as the committee constituted by the apex Court was with reference to resolve the issues between CDA and MCI in amicable manner for the enforcement of ICT Local Government Act, 2015. On the assurance and undertaking given by the Deputy Attorney General, instant matter was reserved for final arguments and matter was heard at length. 7. Arguments heard, record perused. 8. Perusal of record reveals that question relating to imposition of levy of property tax in the Islamabad Capital Territory has been questioned by majority of the petitioners mainly on the ground that notification dated 17.12.2018, issued by MCI is illegal and all the property tax, bills issued by CDA or in certain writ petitions by MCI is also illegal as the process adopted by the respective authorities for imposition of taxes on property is not in accordance with law, similarly in the main Writ Petition No. 4298/2019 titled Metropolitan Corporation Islamabad v. Chairman CDA, Islamabad and another , the petitioner has prayed for issuance of direction to the respondents to comply with The Islamabad Capital Territory Loca l Government Act, 2015 in accordance with its spirit and any collection of property tax by the CDA is illegal and further prayed that CDA be directed to releas e and transfer the funds already collected by them after the establishment of MCI. 9. In order to dilate upon the issue raised in these writ petitions following core questions are required to be answered:- l. Whether Capital Development Authority in terms of CDA Ordinance, 1960 can impose and levy property tax in Islamabad after enactment of ICT Local Government Act, 2015. 2. Whether in absence of by-laws and rules to give effect the ICT Local Government Act, 2015, the CDA Authorities can proceed under its own regime for collection and demand of the property tax. 3. Whether after the enactment of ICT Local Government Act, 2015, CDA could exercise its jurisdiction in Islamabad Capital T erritory or the same is required to be dissolved by effect of the new legislation.
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10. In order to resolve the entire controv ersy, it is necessary to go through the historical background of the CDA Ordinance, which was promulgated on 27.06.1960, the Authority has been establis hed for making all arrangements for the planning and development of Islamabad within the framework of a regional development plan and as such CDA is also authorized/compelled to perform functions of a Municipal Committee. In terms of CDA Ordinance, 1960, the Authority has been established by virtue of section 6 of the Ordinance, comprising of four (04) Members, whereas three members of the Board have to be appointed by the Federal Government. The Chairman and all other Members shall hold the office under the command of the Federal Government, the Chairman and the Financial Adviser shall hold of fice for a period of five years, if not transferred prior to completion of said period. 11. Chapter III deals with the powers and duties of the Authority , the Authority shall prepare a master plan and a phased master program for the development of the Capital Site in terms of section 1 1. 12. Pursuant to the mister plan and the master program, the Authority can call upon any local body or regime operating in the Specified Areas to prepare the scheme in respect of matters ordinarily dealt with by such local body or agency in terms of section 12 of the CDA Ordinance, 1960 including, but not limited to land use, zoning and land reservation, public buildings, industry and transportation and communications, highways, roads, streets, railways, telecommunications, utilization of water , natural resources, community planning, housing etc. 13. Similarly , section 15 deals with the powers of the Authority and section 15A deals with the levy of tax. In Chapter IV, the concept of land acquisition has been referred. The entire scheme of the CDA Ordinance, 1960 revolves around the development of Islamabad Capital Territory and as such the Federal Government has been empowered to make rules to carry out the purposes of this Ordinance in terms of section 50 and the Authority has also been empowered to make regulation s, which are necessary for expedient and not inconsistent with the rules in terms of section 51 of the Ordinance. At the end the CDA Ordinance also provi des mechanism to dissolve this Authority in terms of section 52, which is the sole prerogative of the Federal Government. 14. Besides the above referred law, The Municipal Administration Ordinance, 1960 was also promulgated for the exercise and performance of powers relating to Municipal Committee. LEVY OF PROPER TY TAX WITHIN MUNICIP AL LIMIT OF ISLAMABAD In exercise of powers conferred under section 15A by CDA Ordinance, 1960 read with section 33 of the Municipal Administration Ordinance, 1960 and Capital Development Authority (Imposition of Taxes) Rules, 1981, the CDA levied property tax with the approval of Federal Government on 20.08.1991 vide gazette Notification No. SRO- 806(I)91 dated 20.08.1991. The rates provided in the said notification were revised in 2001 vide SRO 24(1)/2001 dated 11.01.2001 and the same are still operative. Similarly , the Federal Government in terms of the powers referred in section 15A of the CDA Ordinance, 1960 has been pleased to specify the area within the Islamabad Capital Territory in the above referred notification, as the area for which the CDA may exercise and perform municipal functions within the period of twenty (20) years with immediate ef fect. 15. It is important to mention here that a matter was brought before the apex Court through Civil Appeals Nos.1583-1584/1995 and 1026/1996 titled Mrs. Bilquis Anwar Khan and 39 others v. Pakistan through Secretary , Cabinet Division, Governme nt of Pakistan, Islamabad and 3 others reported as 2001 SCMR 809 with reference to levy of CDA fs Proper ty Tax within Municipal limit of Islamabad, the same was decided vide judgment dated 08.11.2000, as a result, the powers conferred under section 15A of the CDA Ordinance were declared within the legal domain of the CDA, whereby apex Court has dealt with the matter in the following manner:- "We have heard learned counsel for the parties and have perused the files. During the arguments, this Court made an inquiry from the learned counsel for the appellants as to whether Urban Immovable Property Tax Act, 1958, is applicable to Islamabad, or the appellants have ever made payment to the concerned agency under the provisions of the Act? Their frank reply was that neither the Act is applicable to Islamabad nor uptill-now they have made any payment towards the urban immovable property tax. In order to resolve the controversy involved in these matters, it is more pertinent to refer here section 15-A inserted to the C.D.A (Amendment) Act, which reads as under:-
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(1) During such period and for such areas within the Islamabad Capital Territory as the (Federal Government) may by notification in the official Gazette, specify , the Authority may, notwithstanding anything contained in any other law for the time being in force, exercise, and perform such powers and functions as a Municipal Committee may exercise and perform in relation to a Municipality under the Municipal Administration Ordinance, 1960. (2) For the purpose of subsection (1), the provisions of sections 18, 33 to 73, 77 to 106, 109, 115 to 118 and 122 of the Municipal Administration Ordinance, 1960 (X of 1960), and the second. Third and Fifth Schedules thereto shall, so far as may be, apply to the Islamabad Capital T erritory as they apply to a municipality , references therein. a) to or to the powers and functions of, the Controlling Authority being omitted; and b) to Municipal Committee and Governm ent being construed respectively as references to the Authority and the (Federal Government). By insertion of the above section it is crystal clear that C.D.A has been authorized to perform functions and exercise powers of a Municipal Committee under the Municipal Administration Ordinance, 1960, the area of Islamabad Capital T erritory . Section 15-A further empowers the C.D.A to act as a municipal body subject to necessary control by the Federal Government. The provisions of Municipal Administration Ordinance, 1960, which have been made part of C.D.A Ordinance under the principle of legislation by reference include sections 33 and 34 of the Municipal Ordinance, read as under:- Chapter 11-Municipal Taxation. -- 33. Municipal Taxation.---A Municipal Committee, 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 the Third Schedule. 34. Notification and enforcement of Taxes . (1) All taxes, rates, tolls and fees levied by a Municipal Committee shall be notified in the Official Gazette and unless otherwise directed by the Government shall be subject to previous publication." The bare reading of the above provisions read with section 15-A make it clear that C.D.A has been empowered to levy various tax etc., which find mention in Third Schedule. Entry No.1 of Third Schedule reads as under:- "TAXES, RA TES, T OLLS AND FEES WHICH MA Y BE LEVIED BY A MUNICIP AL COMMITTEE (Sec section 33). 1. Taxes on the Annual V alue of the buildings and lands." 16. Besides the above referred position, the CDA has performed its lawful duties till the enactment of the ICT Local Government Act, 2015, whereby certain new concepts have been emerged under the new law . 17. In terms of the ICT Local Governme nt Act, 2015, the new local government system has been established to devolve political, administration and financial responsibility and authority to be given to the elected representatives of the local governments; to promote good governance, effective delivery of services and transparent decision making through institutionalized participation of the people at local level. By virtue of section 3 of the Local Government, working within the existing framework has been planned and a particular limit has been imposed upon the local governments. The section 3(3) of the ICT Local Government Act, 2015 is hereby reproduced:- Section 3(3).--- The development, planning and overall maintenance of the Master plan within the specified area of Islamabad. Capital Territory will continue to vest with the Capital Development Authority and thus the overall master plan shall apply and no action by any authority , body or corporation shall be initiated in violation of the Capital Development Authority Ordinance, 1960 and the zoning regulations duly approved by the government. All powers to be exercised and rules to be enforced shall be subject to the planning framework already set in the aforementioned laws, rules and regulations. 18. Similarly , the concept of local areas has been defined in section 4 as Union Councils, Metropolitan Corporation, Islamabad have been established in terms of sections 11 and 12 and complete Code of Elections has been provided in Chapter V of the Local Body Elections. Chapter-X has been referred for the purposes of Local Government Taxation in terms of section 88, whereby taxes to be levied under this provision, which is as under:- 88. Taxes to be levied .---(1).Subject to this act, local governmen t may, by notification, levy any tax, fee, rate, rent, toll, charge or surcharge specified in Fourth Schedule.
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(2) The government shall vet the tax proposal prior to the approval of the tax by the local government in order to ensure that the proposal is reasonable and in accordance with law . (3) The government shall vet the tax proposal within thirty days from the date of receipt of the proposal failing which it shall be deemed to have been vetted by the government. (4) A local government shall not levy a tax without previous publication of the tax proposal and inviting and hearing public objections. (5) A local government may, subject to provision of subsection (1), increase, reduce suspend, abolish or exempt any tax. 89. Property T ax---(1).The property tax, under this act, shall be collected by Metropolitan Corporation. (2) In matters for which no provision or no adequate provision relating to the proper ty tax has been made under this act, the provisions of the Urban Immovable Property Tax Act (West Pakistan Act XV of 1958), as adopted in Islamabad Capital T erritory , shall apply . (3) The tax collected under this section shall be distributed amongst the Metropolitan Corporation and Union Councils in such a ratio as the government may , by notifications specified. 90. Collection of T axes .---(1). A tax or fee levied under this act shall be collected in the prescribed manner . (2) The government may prescribe the mode of collection of a tax or a fee levied under this Act. (3) If a person fails to pay any tax or fee or any other money payable to a local government, the local government and, if so requested by the local government, the government shall recover the tax, fee or other money as arrears of land revenue. (4) The recovery of tax, fee or other money under subsection (3) shall not absolve the person from prosecution of any offence under this act er any other law . 91. Additional Powers of the Gover nment .--(1). Notwithstanding anything contain ed in this Chapter , the government may, by rules, determine the minimum rate of tax or fee to be levied and collected by a local government. (2) The government may, for reasons to be recorded in writing and by notification, exempt the levy of any tax or fee of a local government for a specified period of not more than fifteen days or any special occasion or in order to alleviate the specific hardship suffered by people at large or a section of people. 19. The above mentioned provisions of levy of the tax could not be enforced unless bye-laws of the Local Government Act has to be framed in terms of section 118 of the ICT Local Government Act, 2015, whereby Local Government may make bye-laws not inconsistent with this Act and the rules to give effect to the provisions of this Act if required by the government. It has been informed to this Court that no such bye-laws have been made in this regard to give effect to the concept of property tax regime, as such this issue discloses the poor management and lack of coordination on the part of Federal Government, who have not yet considered the real issues of the residents of the Islamabad Capital Territory, who are facing numerous difficulties and exploitation at the hands of the CDA officials. 20. The important question which emerg es at this occasion is as to whether there is a need to continue with the CDA Ordinance, 1960 in any manner or to regulate its affairs by virtue of the Islamabad Capital Territory Local Government Act, 2015 simultaneously . 21. While dilating upon this issue, I have gone through the concept of transitional provisions provided in Chapter XV of the Act, 2015, where section 127 demonstrates interim authorities and the legislation has not provided any timeline or a cut-of f date, rather the previous authorities were directed to continue discharging functions and providing services without any interrupti on until a local government is established under this Court for the local area. Similarly all duties shall continue to be performed by the respective Departments and its officials unless the matter has successfully been transferred to the local government in terms of section 127(2) of the ICT Local Government Act, 2015. The Federal Government has to transfer the management of the institution to the local government compulsorily in terms of section 128 of the Act, similarly the concept of financial transition has also been embodied in the law in terms of section 129 of the act, which is as under:-
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129. Financial transition.---(1). All taxes, cesses, fees, rates, rents, tolls or charges which were being charged, levied and collected by any office of a local government or any authority shall continue to be charged, levied and collected under this Act by the successor local government or the authority and every person liable to pay such a tax, cess, fee, rate, rent, toll, charge or any arrear of the tax, cess, fee, rate, rent, toll or charge shall continue to make the payment until such tax, cess, fee, rate, rent, toll or charge is revised, withdrawn or varied under this Act. (2) Where any local government established under the Federal Capital Local Gove rnment Ordinance, 1979 (XIII of 2001) was receiving any grant or any compensation in lieu of Octroi or Zila tax, the successor local government under this Act shall continue to receive such grant or compensation. (3) Where a local government assumes the office under this Act for the first time: (a) the Government shall transfer grants to the local government on the basis of a formula notified by the Government; and (b) its budget for the financial year durin g which it assumes the office shall relate to the remaining period of that year and provisions regarding budget under this Act shall, as far as possible, apply to- such a budget. (4) On allocation, re-allocation or transfer of the employees of the Government or any other body of any local government or any other organization established under the Federal Capital Local Government Ordinance, 1979 or the Capital Development Authority Ordinance, 1960, the salaries, emoluments and pensions of such employees shall not be reduced on such allocation, re-allocation or transfer . (5) The Government shall ensure payment of salaries and other emoluments of the employees referred to in subsection (4) till such time as the Government may deem appropriate. 22. At last, the timeframe fixed by the legislature for the transfer and handing over the entire working of the Municipal functions to MCI of the Local Government is within one hundred and eighty days in terms of section 130 of the act, whereby all rights, assets and liabilities would be transferred and conditio ns have been imposed in terms of section 130(2) upon the government to bring all bye-laws, rules, regulations, notifications or any other legal instrument, issued under any law in force on the date of commencement of this Act, in conformity with this Act within a period of two years from the date of commencement of this Act, but surprisingly the Federal Government has acted in negligent manner in this legal regime of transformation and transfer of powers from CDA to local government, which demonstrates the lack of will at the part of those persons, who are sitting at the helm of af fairs. 23. The entire scheme of Local Government Act also reveals that a local governm ent fund has to be established under section 78 of the Act, whereby all the revenues received by the local government from the taxes, tolls, fees, rates or charges shall be credited even all the grants, gifts, contributions, income, fines, penalties and monies have to be transferred to said fund under this Act. Similarly , complete scheme has been provided as to how to manage these funds even the concept of budget, its transfer and spending of accounts have been given in detail, but all these provisions could not have been given effect by the political insuf ficiency on the part of Federal Government, who are not interested to wriggle out from sphere of the CDA, though there is no cavil to the proposition that CDA has become a white elephant at the present time, who is not able to cater growing needs of the Islamabad Capital Territory , rather the Authority destroyed the beauty of this city in a systematic manner with corruption, ill…
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