M/s. Pearl Continental Hotel through its Executive Manager, has filed the instant Constitutional petition and thereby questioned the vires of N.W.F.P. Hotel Tax Rules, 2003 insofor as they are inconsistent with Section 4 of the N.W.F.P. Finance Ordinance, 2002 (Finance Ordinance No, XXIII 2002) and the authority of the respondents to initiate the process of assessment and orders passed there against pursuant thereto.
2. It was argued by the learned counsel for the petitioner that after deletion of Section 12 of the West Pakistan Finance Act, 1965 (Act I of 1965) from the West Pakistan Hotels Tax Rules, 1966 by virtue of N.W.F.P. Finance Ordinance, 2000 (Ordinance No, II of 2000), the Excise and Taxation Department is left with no authority to assess or collect tax, therefore, the very assessment is abinitio void. He by referring to the Pearl Continental Hotel Peshawar Room Segment for 2002-2003, argued that when despite fixed rates the classes of occupants enumerated therein are charged differently, the Assessing Authority could not levy tax on fixed rates in derogation of what is actually charged by the petitioner. The learned counsel by referring to the expression "total number of lodging units available" used in Section 4 of the N.W.F.P. Finance, Ordinance, 2002 (Ordinance No, XXIII of 2002), argued that it excludes a room from being taxed which is under repair, therefore, Rule 4 of the N.W.F.P. Hotels Tax Rules, 2003; providing "maximum number of lodging units" which tends to increase the magnitude of tax being in conflict with the charging provision of the substantive statute and ultra vires is liable to be struck down, moreso when, in view of Article 163 of the Constitution of Islamic Republic of Pakistan, 1973, the power to impose or increase tax is vested in the Provincial Assembly and not in the Government. The learned counsel by concluding his arguments, stressed that where a provision of law being vague or ambiguous is susceptible to two interpretations, the one which is in favour of the person taxed is to be adopted. The learned counsel to support his contention placed reliance on the cases of Messrs Firdous Spinning and Weaving Mills Ltd. and others vs. Federation of Pakistan and 2 others (PLD 1984 Karachi 522), B.P. Biscuit Factory Ltd. Karachi vs. Wealth Tax Officer and another (1996 SCMR 1470), Messers Micropak (Pvt.)
Ltd. Lahore us. Income Tax Appellate Tribunal Lahore and 2 others (2001 PTD 1180), L.T. Col. Nawabzada Muhammad Amir Khan vs. The Controller of Estate Duty and others (PLD 1961 Supreme Court 119) and Province of West Pakistan and another vs. Mahboob Ali and another (PLD 1976 Supreme Court 483).
3. As against that, Barrister Jehanzeb Rahim, learned Advocate General appearing on behalf of the respondents argued that despite deletion of Section 12 of the Finance Act No, 1 of 1965, the rules framed there under will continue to be operative unless repealed, therefore, the authority of the respondents to assess and collect tax cannot be said to have been married by the aforesaid deletion. He while controverting the argument with regard to a conflict between the substantive statute and the rules made thereunder submitted that there is absolutely no conflict between the two and in case there is any, that is capable of being reconciled. He by referring to that rates as given in the Pakistan Hotels Guide submitted that the petitioner has rightly been charged according to the rates mentioned therein, therefore, the segment referred to by the learned counsel for the petitioner, is nothing but a disguise to evade tax. While commenting on the expression 'available' used in Section 4 of the Ordinance, 2002, the learned Advocate General contended that it has no nexus with the room under repair as it clearly refers to the number of lodging units present in the Hotel.
4. We have gone through the record carefully and considered the submissions of the learned counsel for the parties.
5. Before discuss the arguments of the learned counsel for the parties, it is worthwhile to refer to Section 4 of Ordinance No, XXIII of 2002: "(4) Tax on hotels:--There shall be levied and collected every year a tax on hotels. payable by the owner or management there at the rate of five per cent of the room rent per lodging unit per day on the basis of fifty per cent of the total number of lodging units available in the hotel concerned; provided that the assessm ent in relation to a hotel at a hill station shall be made at the aforesaid rate for four months only in a year, that is from 1st day of May to 31st day of August (both days inclusive).
Explanation:--In this section, unless there is anything repugnant in . the Subject or context:--
(a) "hotel" means an establishment where lodging with board or other service is provided for a monetary consideration, but shall not include--
(i) any home or hostel maintained exclusively for aged or sick persons or as the case may be, for students, by or under the control of charitable, medical or educational institution;
(ii) any rest house, mess or other premises belonging to or in the possession of the Federal or a Provincial Government where lodging, board or other service is provided for Government officials or members of the Defence Forces;
(b) "lodging unit" means a bed or other sleeping accommodation which is, or is intended to be provided to a person staying over night in a room for lodging; and
(c) "room rent" ' includes fans, air-conditioning, light, heat, telephone, bedding and all other payments connected with lodging unit, except the portion, if any, directly attributed to supply of foodstuff.
6. Another provision of the Ordinance though inserted subsequently by virtue of N.W.F.P. Finance Amendment Ordinance, 2003 (Amendment Ordinance No, 7 of 2003), which also runs as under:-- "5. Power to make rules.--Government may make rules to carry out the purposes of Section 4 of this Ordinance."
7. Rule 4 of the N.W.F.F. Hotels Tax Rules 2003 being germane also merits a reference as the whole controversy devolves around that and is thus reproduced as under:-- "4. Maximum charges for lodging units in a hotel.-- ( 1) The lodging units in a hotel on which the tax is worked out for the year shall be maximum number of lodging units or the maximum charges made for a lodging unit on any day during the year for which the tax is assessed.
(2) Subject to such general or special instructions as may be issued by the Government, the District Excise and Taxation Officer, himself or through any sub-ordinate officer not below the rank of an Inspector of the Excise and Taxation Department may make physical or on the spot verification, of the number of lodging units or of the maximum daily charges for a single lodging unit in a hotel, on any day during the year, keeping, however, in view the convenience of the persons occupying the lodging units.
(3) If it is found at any time during the year that actually the number of lodging units in a hotel is more or the maximum daily charges on the basis of which the tax for the year was assessed are lesser than the daily charges being charged from the customer, the District Excise and Taxation Officer shall, after giving an opportunity to the owner of being heard, enhance the amount of the tax already assessed on the hotel and shall determine the additional tax for the year accordingly."
8. According to the above quoted section of the Ordinance, a mode has been prescribed for the levy and collection of tax on hotels payable by the owners or management thereof at the rate of 5% of the room rent per lodging unit per day on the basis of 50% of the total number of lodging units available therein. The mode suggested by the above quoted rule is also the same except this that the expression 'total number of lodging units available' used in the section has been phrased as "maximum number of lodging units", in the rule with the addition of the words "maximum charges made for a lodging units on any day during the year for which the tax is assessed".
9. The question which arises for our decision is whether the difference in the phrase with the addition of the words mentioned above, will ever constitute a conflict which is not capable of being reconciled? A careful perusal of the section and the rule would reveal that there is no such conflict between them. As a matter of fact, the latter explains and qualifies the expression 'total number of lodging units 'available' and the expression `room rent' used in the former. Similarly a mountain cannot be made out of a mole hill when even according to the ordinary dictionary meaning, the A word available means present or at hand and thus cannot be stretched to exclude a unit under repair when there is nothing either express or implied in the statute to justify any such inference, moreso when the formula of taxing 50% the total lodging units is primarily meant to obviate such needs and eventualities. Needless to say that the Courts of law are not supposed to wrest the language of a statute to create casus omisus by assuming that the legislature intended to include it but omitted to do so and thus read what is not there.
10. It is true that the rules being a product of sub-ordinate legislation can neither override nor over-reach a provision of the substantive statute but if they explain the latter and provide aid to facilitate its understanding, it shall in certain cases be quite legitimate to read and refer to them especially when they on all counts conform to and are sub-ordinate to the substantive statute. In this view of the matter, we have no doubt in our mind that there is no conflict between the two and in case there is any, that is capable of being reconciled.
11. The argument that after deletion of Section 12 of the Act, 1965, the respondents are left with no authority to assess or collect hotels tax notwithstanding being ingenious is not legally respectable when the rules under the Ordinance have since been framed and the officials of the Department have been empowered and authorized to do the needful.
12. The argument that when despite fixed rates the classes of I occupants enumerated in the segment are charged differently, the Assessing I Authority could not levy tax on fixed rates in derogation of what is actually charged by .the petitioner is also without force, firstly because it has never been averred anywhere in the writ petition muchless specially that the rates shown in the Hotels Guide or displayed in the hotel itself are not the ones which are actually charged, secondly because such construction is not warranted by the statute or the rules made there under, thirdly because it opens room for discretionary powers of the officials of the Department which almost invariably tend to open flood gates for corruption and fourthly because the taxing statute in the third world countries are now so enacted and enforced as would ensure transparency in the process of assessm ent and collection of tax and thus eliminate such powers which tend to facilitate its evasion, therefore, the room rent mentioned in the Hotels Guide or displayed in the hotel itself shall be considered to be the one as charged unless of course it is altered or modified.
We have already highlighted this aspect of the case in the case of Zafar Ali Khan and another vs. Government of NWFP through Chief Secretary and 3 others (PLD 2004 Peshawar 263) in the following words:-- "14. A look at the above quoted provisions of the Act and the amendments introduced therein will indicate that a significant change has been brought about by the legislature in the mode and method of charging and assessing the property tax. Before the amendments it was the sole discretion of the E.T.O. and the other officials in the hierarchy to fix any amount as annual rental value of a land or building for assessing the property tax. But this mode not only resulted in heavy tax evasion but also defeated the very purpose of taxation as it, instead of enriching the State, enriched those who resorted to its evasion and those who helped it. A fool proof system for charging and assessing the property tax was thus imperative to curb corruption and ensure transparency in the process. The law in force, before the amendments, had many holes and as such was ,at the verge of becoming a dead letter. The legislature after collecting the requisite data having bearing on the matters of taxation rose to the occasion and introduced; the amendments which not only classified the urban and rating areas; lands and buildings therein but also prescribed the property tax levied there."
13. The argument that where a provision of taxing Statute being vague and ambiguous is susceptible to two interpretations, the one which is in favour of the person taxed is to be adopted is also devoid of force when, as discussed above, there is nothing vague or ambiguous in the statute, therefore, the judgments cited at the bar by the learned counsel for the petitioner will not have any perceptible relevance to the case in hand.
14.Having thus considered against this backdrop, we do not find any merit in this petition which is, therefore dismissed.