JAVED IQBAL, J.---This petition for leave to appeal is directed against the judgment dated 4-11- 2004 whereby Constitutional petition preferred on behalf of petitioner has been dismissed.
2. Heard Syed Sharifuddin Prizada, learned Senior Advocate Supreme Court, Mr. Aziz A. Sheikh, learned Advocate Supreme Court on behalf of petitioner Raja Muhammad Irshad, learned Deputy Attorney-General, on Court notice, Mr. Muhammad Sarwar Khan, learned Additional Advocate- General, Sindh, on behalf of respondents Nos.1 & 2 and Mr. M. Nafees Siddiqui, learned Advocate Supreme Court on behalf of respondent No,3, at length, scanned the entire record and perused the judgment impugned carefully.
3. There is no denying the fact that petitioner is lessee of the Karachi Port Turst (hereinafter referred to as "K.P.T.") qua Container Terminal Berths Nos. 28-30 located at Dockyard Road, Karachi, for a period of twenty years. The dispute relates to the liability of property tax and according to the petitioner since no rent was being paid for the A utilization of land, hence the question of levying and payment of property tax does not arise. In our considered view, the controversy can only be resolved by examining the Indenture of Lease and Implementation Agreement. After having perused the Indenture of lease with the eminent assistance of learned counsel, we are of the view that the petitioner agreed to pay the average annual rent in the tune ofA Rs,61,430,189 to K.P.T., pursuant to clause 2 of the Indenture of Lease which is reproduced hereinbelow for ready reference:- "Article 14.3 Terms of Lease Agreement The Lease Agreement shall, inter alia, incorporate provisions to the effect that:- (a).....................
(b) ...................
(c) TOC shall be responsible for the payment of all taxes, duties surcharge and levies if and when levied by any Government agency/authorities, whether provincial or federal."
"Article 18 Taxes All present and future federal, provincial, municipal or other lawful income and other taxes, duties, levies other impositions whatsoever applicable to TOC, its Contractors, sub-contractors, the Terminal, T employees and dock labourers, or TOC's other assets shall be paid by TOC, its Contractors, sub-contractors their employees and dock labourers, respectively as the case may be in accordance with the requirements of laws of Pakistan. K.P.T. Will not assume any tax liability, whatsoever on behalf of TOC, nor will TOC assume any tax liability on behalf of K. P T"
Clauses 2 and 3 of the Indenture of lease: "2. The KICT shall pay to K.P.T. As Handling, Marshaling and Storage charges for containers/other specified cargo (hereinafter referred to as HMS charges) at a unit rate of Rs,292 (Rupees two hundred and ninety two only) per square meter per annum payable within the first week of July each year. The HMS charges will be subject to an indexation upto of 15% escalation every three years in accordance with Article 8.2.2 of the Implementation Agreement. The average annual rent comes to Rs,61,430,189.
3. The KICT shall pay all rates, taxes and outgoing whatsoever now levied on or that may during the term of this Lease become legally due and levied in respect of said Premises to K.P.T., or not (hereinabove collectively referred to as an agency) as per Article 14.3(c) of the Implementation Agreement."
4. A bare perusal of Indenture of Lease would reveal that an agreement has been executed qua "rent" which cannot be equated to that of "charges" for handling, marshalling and storage for the containers and other specified cargo. The said view is strictly in consonance with the provisions as contained in clause 2 of the Indenture of Lease which inter alia provides that "the KICT shall pay to K.P.T. As Handling, Marshaling and Storage charges for containers/other specified cargo (hereinafter referred to as HMS charges) at a unit rate of Rs,292 (Rupees Two hundred and ninety two only) per square meter per annum payable within the first week of July each year. The HMS charges will be subject to an indexation up to of 15% escalation every three years in accordance with Article 8.2.2 of the Implementation Agreement. The average annual rent conies to Rs,6l,430,189."There can be no other interpretation of Article 14.3(e) and para. 18 of the Implementation Agreement and clauses 2 and 3 of the Indenture of Lease from whatever angle, it may be examined that the petitioner is liable for all taxes enumerated therein irrespective of the fact whether it is levied by the Provincial Government, Federal Government or any other Autonomous Body. It must not be lost sight of that "rent" & "tax" are neither interchangeable nor synonymous terms. Besides that the petitioner has agreed to make payment of all taxes as well as rent who cannot be absolved from its responsibility under the garb of far-fetched interpretation of relevant clauses of the agreement having no reasoning or logic at all. It is worth-mentioning that pursuant to implementation agreement, Indenture of Lease was executed between the petitioner and that of respondents which clearly stipulates that all taxes, rates and cases including the Municipal Taxes already in existence or levied during the terms of this lease, the lessee (petitioner) shall be liable to pay the same. In this regard reference can safely .Be made to clause 3 of the Indenture of Lease. There is no doubt that Terminal Berths Nos.28-30 are owned by K.P.T. And rented out for the purpose of income and profit on rent basis for handling, marshalling and storage in respect of site and commercial operation on different rates as enumerated in the Implementation Agreement executed between the petitioner and that of K.P.T., hence, as per the Indenture of Lease and Implementation Agreement, the petitioner is liable for the property tax to be assessed by the concerned department. The question as to whether particular property belongs to the Central Government and thus exempted from the property tax, cannot be decided by the High Court and such determination falls within the jurisdictional domain of the concerned "Assessing Authority' by whom the exemption from property tax being question of facts shall be determined on the basis of relevant documents and record. The question of exemption given by the Constitution of the Islamic Republic of Pakistan to the property of Central Government has been discussed in case titled Pakistan v. Province of Punjab (PLD 1975 SC 37) relevant portion whereof is reproduced hereinbelow for ready reference:-- "The question that has to be considered next is as to the validity of the tax itself. Now, the tax sought to be levied by the Urban Immovable Property Tax Act is a tax on the annual value of buildings and lands in a rating area specified by the Government by a notification. Taxes on lands and buildings come within item 75 of the Fifth Schedule to the Constitution of 1956, and with regard to these, the Provincial Legislatures had by reason of the provisions of clause (3) of Article 106 of the said Constitution exclusive power to make laws for the Provinces or any part thereof. The taxation was accordingly validly imposed by a competent Legislature in the proper exercise of its powers. The only question was whether a cantonment area formed under Article 106 of the Constitution a part of the Provinces which made the law. If it did, then the law was applicable there; but, on the other hand, if a cantonment area is an island within a Province in respect of which the Provincial Legislatures cannot at all legislate or is an area which is specifically exempted from the operation of such legislation by anything in the Constitution, then the law will have no application at all.
Even in 1940, under the Government of India Act of 1935, taxes on lands and buildings came within Item 42 of the Provincial Legislative List in the Seventh Schedule, with regard to which the Provincial Legislatures had, under section 100, exclusive power to make laws for the Province or any part thereof. The only exemption granted under section 154 of the Government of India Act, 1935, was in these terms:- "Property vested in His Majesty for purposes of the Government of the Federation shall, save insofar as any Federal law may otherwise provide, be exempt from all taxes imposed by, or by any authority within, a Province."
This exemption was continued under the 1956 Constitution by clause (2) of Article 112 which provided:- "Property vested in the Federal Government shall, save insofar as an Act of Parliament may otherwise provide, be exempt from all taxes imposed by, or by any authority within, a Province."
Similar exemption was given to the property of the Central Government by Article 137 of the 1962 Constitution. In the Interim Constitution of 1972, taxes on lands and buildings continued to be a subject in the Provincial Legislative List within the exclusive competence of the Provincial Legislature but Article 167 exempted the property of the Federal Government from taxation under any Provincial Law. In the permanent Constitution of 1973, however, taxes on lands and buildings are not enumerated in either of the two lists given in the Fourth Schedule and, therefore, by reasons of the provisions of clause (c) of Article 142, the Provincial Assembly has exclusive powers to make laws with respect of any matter not enumerated in either of the lists. Article 165 of this Constitution, however, repeats the exemption granted to the Federal Government in respect of its property or income from taxation under any Act of the Provincial Assembly.
The position, therefore, that emerges is that, under all the Constitutional provisions, the property of the Central Government is exempted from taxation, and it is the Federal Legislature which has the power to legislate in respect of a cantonment area but with regard to certain matters only.
According to the Interim Constitution of 1972 and the permanent Constitution of 1973, the legislative field covers only Local Self-Government in such area; the Constitution and powers within such areas of cantonment authorities, the regulation of housing accommodation in such areas and the delimitation of such areas. Under the 1956 Constitution also, the Federal Legislature had power to legislate with regard to "delimitation of cantonment areas; Local Self-Government in cantonment areas; constitution, powers and functions, within such areas, of cantonment authorities; control of house accommodation (including control of rents) in such areas". Under the 1935 Act, the power given to the Federal Legislature was to legislate for "Local Self-Government in cantonment areas, the constitution and powers within such areas of cantonment authorities, the regulation of house accommodation in such areas, and the delimitation of such areas".
In the 1962 Constitution, however the powers are a little wider. It reads as follows:- "(e) Cantonment areas, including---
(i) the delimitation of such areas;
(ii) Local Self-Government in such areas, the constitution of local authorities for such areas and the functions and powers of such authorities; and
(iii) the control of housing accommodation (including control of rents) in such areas"
Nevertheless, if we read the legislative lists in the manner that they should be read, namely, that if there is a specified provision for a special subject in a particular item of a particular list, then that subject falls within that item of the said list and not under any general item. Since taxation on lands and buildings is specifically mentioned in the Provincial Legislative List as a separate item of legislation, legislation in respect of taxes on lands and buildings comes within the competence of the Provincial Legislature and the law so made would apply in any part of the Province making the law, unless the area sought to be excluded has been specifically exempted under the law or under any Constitutional provision. I have not been able to discover anything in any constitution or any law to show that a cantonment area is not to be included within the territorial limits of a Province in which it is situated. In the circumstances, I have come to the conclusion that the claim of the Central Government that all lands and buildings included in the cantonment area are exempt from payment of the Urban Immovable Property Tax imposed by the Provincial Legislatures of the Provinces of Pakistan is not tenable. The exemption given by the Constitution to the property of the Central Government will of course be available, and it has been made available even under the provisions of the Provincial Acts themselves. What is the property of the Central Government is a different matter and will have to be decided in each case with reference to the relevant documents. If the property is Government property which has been made over to the Cantonment Board or has been leased to the Cantonment Board, then it would be entitled to the exemption granted by the Cantonment as being property vested in the Central Government. The mere fact that a property is situated in the cantonment area does not however, make it a property of the Central Government, because, there may well be other kinds of property vested in the Board which is not property vested in the Central Government.
The other properties of the Boards which are used for public, educational or charitable purposes will also be entitled to the exemption given by the Provincial Taxation Acts. The question as to whether a particular property is exempt under these Acts will be a question of fact to be considered by the Assessing Authority in each case. We regret, therefore, our inability to grant the declaration prayed for by the Central Government in the terms indicated. Since it would neither be possible nor desirable for this Court to get into each particular item of property and to determine its liability, this must be left to be done by the Assessing Authorities concerned with reference to the facts of each individual property in the light of the observations herein made."
5. It is not the location of the property ipso facto which makes it entitled for exemption but it is the ownership which will be decisive factor for claiming such exemption as it cannot be decided in vacuum and it will have to be examined that how the ownership of such property was devolved upon the Central Government and whether such claim has any legal sanctity or otherwise? The competency to levy the tax by the Provincial Government cannot be questioned merely on the ground that it was received by some other authority. In this regard reference can be made to the case titled Ashfaq ur Rehman Khan v. The Government of the Punjab and others (PLD 1975 Lah. 23)".
6. We have carefully examined all the respective contentions agitated on behalf of the parties in the light of relevant provisions of Urban Immovable Property Tax Act, 1958 and record of the case.
The case of petitioner in brief is that the Government of Sindh (respondent No,1) and the Director General, Excise and Taxation (respondent No,2) have no locus standi and competency for the issuance of notice qua recovery of the property tax under section 14 of the Sindh Immovable Property Act, 1958, without having completed the prerequisite conditions as enumerated in section 16 of the said Act which are mandatory in nature and that such notice could not have been issued and moreso, in view of Suit No,1355 of 2003 pending adjudication before the learned High Court involving the same question of facts and law preferred on behalf of K.P.T and the question of liability of property tax is yet to be determined. It is also the case of petitioner that the provisions as contained in section 14 of the Act cannot be made applicable in absence of the relationship of tenant and landlord between the parties and the Indenture of Lease does not provide for any rent and being lessee, the question of payment of property tax does not arise which is the exclusive responsibility of K.P.T being owner. The plea of the Government of Sindh and the Director General Excise and Taxation (Respondents Nos.1 & 2) is that the property tax was due and it could have been recovered by exercising powers as conferred upon them under sections 14 and 16 of the Act. It is also their case that every attempt has been made by the petitioner to avoid his liability for payment of property tax by exploiting various provisions of the Act and for the last so many years, not a single penny has been paid which speaks a volume about their conduct.
7. The case of K.P.T revolves around the provisions as contained in clause 14.3 (c), clause 18 of the implementation of agreement executed between the parties on 6-1-1996 and clauses (2) and (3) of the Indenture of Lease. The main plea of K.P.T is that being lessee, it is obligatory for the petitioner to make payment of the property tax pursuant to the provisions as contained in section 14 of the Act. The K.P.T had also filed a suit seeking declaration that the petitioner was responsible to make payment of the property tax and in case of failure, it could have been recovered from the lessee by Taxation Department, Government of Sindh by invocation of the provisions as contained in sections 14 and 16 of the Act.
8. Syed Sharifuddin Pirzada, learned Senior Advocate Supreme Court on behalf of petitioner has laid much stress on the point that no such tax could have been levied by the Provincial Government as the matter falls within the jurisdictional domain of the Federal Government pursuant to Entry No,21 of the Fourth Schedule of the Constitution of the Islamic Republic of Pakistan. In order to support the said pica, reference has been made to S.R.O. No,6 (KE)/85 which is reproduced hereinbelow for ready reference:- "MINISTRY OF COMMUNICATIONS (Ports and Shipping Wing)
NOTIFICATION Karachi, the 29th January, 1985 S.R.O 6(KE)/85: In pursuance of section 43B of Karachi Port Trust Act, 1886 (Bombay Act, VI of 1886), It is hereby notified that the following further amendment has been made by the Board of Trustees of the Port of Karachi, with the sanction of the Federal Government, in the Karachi Port Trust Scales of Tolls, Dues, Rates and Charges framed by the said Board under sections 43 and 43A of the said Act, namely:- In the aforesaid scales of Tolls, Dues, Rates and Charges in Table U, in Scale 'A', under the sub- heading "Exceptions", after item (i) and the entries relating thereto, the following new item and entries relating thereto shall be added, namely:- (i)Container (handling, And storage)Charges marshalling10 days'
Dwell timeRs.215 per square Meter per annum (levied against Container operators (F.No, P.III-3/(5)/80-PTC) M. Naeem Beg, S.BT. Commodore P.N. Joint Secretary and Director-General."
9. It is worth-mentioning that it is altogether a new plea which was never argued before the learned High Court and besides that the above reproduced SRO was never placed before the learned High Court. The question of its applicability should have been decided at first instance by the learned High Court. Be as it may, the above SRO would have no bearing on the merits of the case because the agreement executed between the petitioner and that of K.P.T. Was not simply for handling, E marshalling and storage charges. The controversy qua levying of such tax has already been set at naught by this Couit in PLD 1975 SC 37.
10. Syed Sharifuddin Pirzada, learned Senior Advocate Supreme Court on behalf of petitioner has also taken the plea of res judicata by referring judgment of the High Court of Sindh, Karachi dated 29-8-2002, concluding portion whereof is reproduced hereinbelow for ready reference:-- "10. We are therefore of the opinion that the taxes under the Act can only be recovered from the owner of the building. Any agreement as to the payment of the tax between the party in occupation and the owner is an internal matter between them. In this regard reliance can be made to Trustees of Port of Karachi v. Secretary Excise (1990 CLC 92). We would consequently allow this petition only to the extent that the impugned demand has been wrongly addressed to the petitioner and would therefore set aside the same on this basis alone."
11. A bare perusal of the above-reproduced para. Would reveal that only a limited question was adverted to and decided by the learned High Court. The provisions as contained in sections 14 & 16 of the Act and Implementation Agreement executed between K.P.T and that of petitioner and Indenture of Lease were never discussed in the above suit. The petitioner had not challenged the competency of the Provincial Government for levying such tax but it was urged that the property was under the control of Federal Government by virtue of sections 79 and 82 of K.P.T. Act,1886, which point was never urged in the second round of litigation (see arguments of Mr. Aziz A. Shaikh, learned Advocate Supreme Court on behalf of petitioner in C.P.No,D-1042 of 2004) and the only plea raised was that pursuant to implementation agreement and Indenture of Lease dated 1-10- 1996, the petitioner was not required to make payment of property tar being a lessee for twenty years. In fact a deliberate attempt appears to have been made by the petitioner for the evasion of property tax. It is amazing that the assessment being unfair was challenged under section 8 of the Act and without waiting for decision of the competent authority availing departmental remedies, the Constitutional jurisdiction of the learned High Court was invoked. It is really difficult to reconcile such a contradictory mechanism which was evolved to get itself absolved from the liability of payment of property tax. It does not depend upon the whims and wishes of the petitioner to seek relief in piece-meal from different forums simultaneously.
12. We have also observed that there are various controversialiff questions while cannot be determined by the High Court while exercising its Constitutional jurisdiction as conferred upon it under Article 199 of the Constitution of the Islamic Republic of Pakistan which are as follows:
(i) What is the exact location of. Berths 28-30 to find out as to whether the same are located inside or outside the area of the Port?
(ii) What is the exact area of the Port and how it was determined?
(iii) Whether it can be termed as "rating area" by virtue of Notification No,TAX-III/13(3)/85 dated 23- 10-1958 and whether any deletion, amendment, insertion or addition has been made in it, if so, what would to be its effect?
(iv) Whether the provisions as contained in Rule 6 of Sindh Urban Property Rules are applicable in this case or otherwise?
(v) Whether assessm ent of the entire area including constructed area and vacant plot has been made pursuant to the agreement executed between the petitioner and that of K.P.T. Or otherwise?
(vi) Whether K.P.T. Had been paying property tax in similar cases?
(vii) Whether the entire port area can be considered urban area as defined in section 2(1) of the Act?
(viii)Whether Breths in question are located within the area covering pillars Nos.120-144 of Site as defined in the Schedule of the West Pakistan Urban Immoveable Property [Validation of Valuation List and Tax Ordinance 1969 (XXXV of 1969)]?
(ix) Whether the property is located within the area covering Pillar No,1 as notified vide S.R.O. No,307 (KE)/91 dated 5-10-1991, if so, to what effect?
(x) Whether the area in-question has been defined as "Rating Area" pursuant to Section 3 of the Act of 1958,, if not, what would be the impact of Sindh Finance Act, 1987 whereby the limits of "Rating Area" were extended by including the entire Karachi Division?
(xi) What would be the effect of Notification No,12-P(85)/39-II dated 2-5-1940 whereby the Federal Government had already declared limits of the Port of Karachi under section 3 of the Karachi Port Trust Act, 1886?
(xii) Whether the Port is under jurisdiction of the Federal Government and K.P.T. Being local authority controlled and owned by the Federal Government can claim property tax of the buildings and lands ownership whereof is vested in the Federal Government and are exempted from the levy of such tax?
13. There is no doubt in our mind that being owner of the property till proved otherwise K.P.T is liable to make payment of property tax at first instance and in case of its failure undoubtedly notice for recovery of property tax could be issued under section 14 of the Act and further action for attachment can be taken pursuant to the provisions as enumerated in section 16 of the Act against the petitioner who is responsible to pay property tax in view of Clause 14.3(c) and Clause (18) of the Implementation Agreement dated 1-6-1996 and Clauses (2) and (3) of Indenture of Lease executed between the petitioner and K.P.T. Syed Sharifuddin Pirzada, learned Senior Advocate Supreme Court on behalf of petitioner has stated categorically that the petitioner is willing to make payment of property tax without prejudice to his, legal rights to further pursue the matter subject to adjustment with K.P.T. The statement of Syed Sharifuddin Pirzada, learned Senior Advocate Supreme Court being genuine is accepted which otherwise is not opposed by the respondents. The property tax as assessed by the Assessing Authority be deposited within a period of sixty days subject to adjustment with K.P.T. And without prejudice to the legal rights of the petitioner to further pursue the matter before the forum concerned available under the hierarchy of Excise and Taxation Department to be approached first for the redressal of the grievance, if any, as such, the matter being ticklish, tedious and controversial cannot be set at naught by invocation of the Constitutional jurisdiction.
14. The petition is disposed of in the above terms. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.