This judgment will dispose of the writ petitions, the details of which have been provided in Schedule-A, attached to this judgment.
2. In all these Writ Petitions the demand for payment of licence fee has been assailed. There are three types of Demand Notices in this connection., One type of notices emanates from Zila Councils, the second emanates from Town Councils and the third type of notices have come from the Union Councils.
3. The main arguments against demand of licence fee by the Zila Council, Town Council and the Union Council relate to the question of their jurisdiction and in this connection reference is made to Item No, 1, Part V of the Second Schedule to the Punjab Local Government Ordinance, 2001.
4. It is said that with respect to the powers and jurisdiction of Zila Councils, the areas where it may interfere are given in Part II of the said Schedule and as far as the Town Council is concerned, it is given in another separate part of the schedule, all of these areas are distinct and different.
5. Besides, the Demand Notices coming from the Zila Council, we have in a number of cases notices issued by the Union Council itself. A challenge has also been thrown to the notices of the Union Council with respect to the demand of the licence fee on the ground that the Union Council can only have a locus standi to demand such a fee while rendering a service to the person from whom the fee is being demanded, in view of the principle of quid pro quo. While dilating on this aspect, it was said that the service in this respect will be a special service and not a general service which the Union Council is required to perform for all and sundry against public taxes because demand of a fee would relate to the special services and its costs. In this connection, reference has been made to the case of: Pakistan Flour. Mills Association and another vs. Government of Sindh and others (2003 SCMR 162). That another requirement on the part of the Union Council will be to establish a regulatory system for ensuring that the fee so charged is sued for the said special services so offered and the licence is issued in this connection for regulating obligations and duties under the licence.
6. Reference in this connection is made to Para 90 of the Schedule VI to the Punjab Local Government Ordinance, 2001 which is re-produced below:- Conditions which may be attached to licences:--A licence granted to any person under paragraph 89 shall specify the part of the local area in which the licence may carry on his trade, calling or occupation, and may regulate the hours and manner of transport within the local area of any specified articles intended for human consumption and may contain any other conditions which the concerned Local Government thinks fit to impose in accordance with the bye-laws made under this Ordinance."
7. Reference was made to case of M/s. East & West Steamship Co. Vs. Pakistan and two others (PLD 1958 SC 41). While further dilating on the subject, it is said that the fee has also to correspond with the expenditure involved for purposes of maintaining the said regulation and in this connection the case of Ayaz Textile Mills Ltd. v. Federation of Pakistan and another (PLD 1993 Lah. 194) was also referred to.
8. It is said that the present demand made by the Union Council is just a bald demand without informing the petitioners as to who were the recipients of the special services about the performance of special service being provided justifying expenditure to be derived from the demanded fee. That a person to whom a Demand Notice is addressed, has a right of knowing this fact and all the incentives offered in terms of services. That once he is aware of the service, he will rather feel comfortable in paying the fee in terms of the services. Reference was made to the following case law:- (1) Pakistan Flour Mills. Association and another vs-. Government of Sindh and others (2003 SCMR 162); (2) Noon Sugar Mills Ltd. vs. Market Committee and others (PLD 1989 SC 449); (3) Collector of Customs and others vs. Sheikh Spinning Mills (1999 SCMR 1402); (4) Haji Ghulam Zamin and another vs. A.B. Khondkar and others (PLD 1965 Dacca 156) and (5) M/s. East and West Steamship Co. vs. Pakistan and others (PLD 1958 SC Pak. 41).
9. It was said that the demand which is so made is being made as if it were a tax and not a fee and that the Union Council is assuming such a position without realizing its own obligations under the law.
10. In this connection and on the distinction between tax and fee, reference has been placed on the case of: Collector of Customs and others vs. Sheikh Spinning Mills (1999 SCMR 1402).
11. Historically speaking, the Local Government was authorized to levy taxes since 1911 when for the first time the professional and vocational tax was imposed by virtue of Section 61 of the said law.
Section 121 of the same law also authorized the Municipal Bodies to levy taxes on dangerous trades and professions. This necessitated regulation which also included the issuance of licence. A reference in this connection may be made to the case of: M/s. East and West Steamship Co. us.
Pakistan and others (PLD 1958 SC 41).
12. Whereas, 1911 Law through its Section 123 also authorized the Municipal Bodies to prohibit a dangerous trade or vocation, where it found that prohibition order was more suitable.
13. Subsequently, the 1911 Law was replaced by the basis Democracy Order 1959. In this law, the local bodies were divided in four categories in the rural areas. These were Union Committee, Tehsil Council District Council and Town Committee. Whereas, the Municipal Administration Ordinance 1960 brought within its ambit the Municipal Administration of the urban area while categorizing these as Municipal Corporations for bigger towns and Municipal Committees for smaller towns.
14. Section 92 of the Municipal Administration Ordinance 1960 catered for dangerous profession and vocation. This Act by virtue of Section 121 also authorized the Municipal Bodies to regulate through prohibition such trade and vocation which was dangerous. The Dangerous and Offensive Articles and Trades Rules 1960 were promulgated which bestowed powers of issuing licences to the Municipal Bodies to regulate the trade under the caption "Dangerous Trade and Vocation". In this connection, more details were provided under the 4th Schedule pertaining to Section 121 of this old law.
15. Whereas, Section 33 of the Urban Municipal Administration Ordinance 1960 related to the powers to levy taxes, fees etc. for the 3rd Schedule and for the first time, tax on trade, on taxation, on profession and calling was introduced, whereas, Section 122 pertaining to the licence fee. The modalities of charging fee was left for the Municipal Bodies to be regulated through their by-laws as per matters pertaining to their jurisdictions given in the 5th Schedule of the Ordinance, 1960.
16.The next law on the subject referred to was the Punjab Local Government Ordinance 1979. This Ordinance in the matter of categorization of the local bodies for urban areas extended the number of such bodies to four and these were Town Committee, Municipal Committee and 'Municipal Corporation and their Metropolitan Corporation.
17. In the said Ordinance of 1979, Section 73 pertained to the Dangerous and Offensive Articles and Trades read with its 1st Schedule. Whereas, Section 137 of the 1979 Law pertained to the powers of taxation given to these bodies and 2nd Schedule mentioned the areas where this taxation was possible.
18.In Section 137 of the Ordinance 1979, the word "tax" was only mentioned whereas, its definition was given in Section 3(45) of the Ordinance and this included tax and fee.
19.Part 2 of the 2nd Schedule to the Ordinance 1979 authorized the Zila Council to issue licence/permits and charge fee, the tax on professional trade and calling was given in Items 12 of this Schedule.
20.Reference is made to Section 137 of the Ordinance of 1979 and the two Notifications which were issued under the same Ordinance, one of which was Notification No 9055 of 15th October, 1992 which was subsequently amended through Notification No, 592 dated 26th January 1995 to be published in the Gazette on 21st June 1995 taxing or bringing under the licensing .power of the Government trades and callings and factories.
21.After 1979 Law ceased, we have the Presidential Ordinance under the Punjab Local Government Ordinance 2001 which was enforced on 14th August 2001, which recomposed the Local Government at various tiers. It is for the first time that the Nazim and his administration have been distinguished from the legislative council and both have been ascribed different functions. The administration has been made as the body corporate which can be sued in its name.
22.In its 2nd Schedule, Part I, the powers with respect to levy of fee, for licences and for specific services rendered by a District Government are reflected in its Paragraph Nos, 6 & 7. Whereas the powers of Zila Council in City/District which is the council itself, are reflected in Part II.
23.Section 116 of the present Ordinance provides the methodology for fixing of fee and taxes. This also grants powers to the Zila Council to make changes in the taxation and fee already levied and also to withdraw the same. One novel part of the scheme based on the rules of natural justice is that even the proposals for new taxation or changes in the taxation and fee are to be given publicity through gazette Notification and objections invited as per the amended Section 116(2).
24.Section 180 of the Punjab Local Government Ordinance 2001 has also brought about a substantial change in the previously existing situations. For instance, in the case of previous law i,e, 1979 Law only the Urban Bodies of the Local Government were allowed taxation in .respect of the dangerous trades but this now .has been spread over different bodies including Zila Council.
25.Section 185 of the Ordinance also allows different Local Governments to be successors of the Urban Administration for purposes of tax fee, rates etc. as long as they were valid and not withdrawn through any Ordinance. Whereas, Section 195 allows the various councils to function and to make their by-laws and rules. The transitory period is covered by Section 195. According to which, only those by-laws which were made the by-laws as given in the 6th Schedule, will be followed by them.
26.We may again advert to Section 180 of the Punjab Local Government Ordinance, 2001 which speaks of the successors to the previous system and we find that Metropolitan Corporations or Municipal Corporations are to be succeeded by the City District Government. The District Government is to succeed the District Council, Tehsil Municipal Administration in the case of Municipal Corporations, Municipal Committees and Town Committees in Tehsil. The Union Administration is to succeed Union Councils. Therefore, when read with Section 185 of the Ordinance, we have the succeeding units to the previous units of the Local Government.
27.A perusal of Section 196 further suggests that the dangerous trades and occupations which were left under the previous law, have been saved. Section 192 of the new law authorizes various tiers of the Local Government to make their bye-laws and until they make their bye-laws. they have to be guided by the paradigm, which is given in Schedule fifth 28.A perusal of 5th Schedule reflects that dangerous and offensive trades and articles are shown in Item No, 17 and No, 21 speak of licensing. whereas, Item No, 43 empowers Zila Council to levy licence in new areas which in its opinion ought to be burdened with a license fee.
29.Incidentally, we find that the dangerous and Offensive Articles and Trades are also embodies in the 6th Schedule of the new Ordinance and in its paragraph 44 licensing fee is to be paid by the premises which such a trade is to be carried on irrespective of its corporate status.
30.In these cases, there are six categories of the petitioners who are assailing the licence fee and their categories are as follows: (1) Spinning Mills, (2) Electric Manufacturing Units, (3) Paper and Tissue Papers Units, (4) Shows Manufacturing (5) Banks, and (6) Petroleum and Petroleum Products.
31.Whereas, in the writ petitions, the writ petitioners also referred to other subjects but at the time of the arguments confined themselves only to the question of levy of licence fee because some of the subjects indicated were already subjudice before the Supreme Court or related to other writ petitions which have been separated from these.
32.Taking the matter category-wise, the learned counsel for the Zila Council, Sheikhupura, referred to the Second Schedule to Punjab Local Government Ordinance 2001 and Item No, 6 which reads: fees for licenses or permits and penalties fines for violations" and states that the Zila Council can ask for fee for licences which are covered by the Dangerous and Offensive Articles and Trades as reflected in Paragraph 44 of the 6th Schedule.
33.A perusal of which shows that in its para 8, manufacturing by any process whatever for cloth or yarn is included, thus empowering the Zila Council in this respect.
34.It is said that paper manufacturing is also covered by Dangerous and Offensive Articles and Trades. But a perusal of the Schedule reflects that only the business of storing or selling papers is reflected there and not the manufacturing part, which, therefore, will exclude the area where manufacturing of papers is involved.
35. The next question is whether production of electricity is also covered within the ambit of powers bestowed on the Zila Council. That a perusal of the Dangerous and Offensive Articles and Trades reflects that manufacturing of electricity is not covered under the Schedule. However, it was learnt that this matter is already subjudice before the Hon'ble the Supreme Court of Pakistan and, therefore, this Court is not inclined to discuss it here but shall rather await the judgment of the Hon'ble Supreme Court on the subject.
36.The next ' category is manufacturing of jute. The reading of relevant portion of the Schedule in the presence of the parties reveals that the manufacturing of jute is also not covered under the Schedule empowering the Zila Council to ask for a licence fee. So this is excluded.
37.The next category is the petrol and petroleum products. A perusal of the relevant Schedule reflects that this is covered under the Schedule as a dangerous and offensive trade and exempted as per paras 89 and 90 of the 6th Schedule.
38.Regarding shoe and shoe trade, the matter may not be gone into after the learned counsel for the respondent's side stated that they were not subjecting this industry presently to any fee.
39.So, the overall discussion reveals that the areas allegedly covered for purposes of fee at the local council level are now short-listed after what has been stated above and regarding the matters reflected in Paragraph 17 we have to await the decision of the apex Court.
40.Para 44(2) of the 6th Schedule of Local Government Ordinance 2001 reads as follows:-- "Except under and in conformity with the conditions of a licence granted by the concerned Local Government:--
(a) no person shall carry on any dangerous or offensive trade;
(b) no premises shall be used or offered to be used to any dangerous or offensive trade; and
(c) no person shall store or keep in any premises:--
(i) any dangerous or offensive articles for domestic use; or
(ii) any dangerous or offensive articles in excess of such limits and quantity as may be fixed by by- laws."
Which requires the grant of license and the conditions required to be observed under the licence and the services required for purposes of enforcing the licence, entailing a cost and providing the justification for recovering the cost through the licence fee.
41. A reference is made to Paragraphs 89 and 90 and the sixth Schedule which speaks of grant of licence for carrying on trades and occupations and conditions which may be attached to the licence. The relevant portion of Paragraph 89 is reproduced below:- "89(1)(a) to 89(1)(m) ...........................
"89(1)(n) any other trades and occupations specified in the bye-laws, . or through public notice by local council from time to time; shall carry on his trade, calling or occupation in such part of a local area as may be designated by the local council unless he has applied for and obtained-a licence in this behalf from the concerned Local Government.
(2)..........................
(3) Notwithstanding anything contained in sub-paragraph (1)--
(a) no person who was, at the commencement of this Ordinance carrying on this trade, calling or occupation in any part of local area shall be bound to apply for a licence for carrying on such trade or occupation in that part until he has received from the concerned Local Government not less than three months' notice in writing of his obligation to do so, and if the concerned Local Government refuses to grant him a licence, it shall pay compensation for any loss incurred by reason of such refusal;
(b) no person shall be required to take a licence for the sale or storage of petroleum or for the sale or possession of: poisons or white arsenic in any case in which he is required to take a licence or such sale, storage or possession under any Federal or Provincial statute.
(4) A local council may charge fees for the grant of licences under this paragraph."
42. Para 90 of the 6th Schedule reads as follows:-- "90. Conditions which may be attached to Licences. licence granted to any person under Paragraph 89 shall specify the part. of ' the Local Area in which the licensee may carry on his trade, calling or occupation, and may regulate the hours and manner of transport within the Local Area of any specified articles intended for human consumption and may contain any other conditions which the concerned Local Government thinks fit to impose in accordance with . the bye-laws made Under this Ordinance."
43. The basis arguments therefore, relevant to the disposal of these writ petitions can be summarized as follows: That-a regulatory body has to be established before demand of a fee and this regulatory body has to set the terms of the licence, the local areas where dangerous trade or calling is to be allowed in a premises. That as the matter would involve dangerous trade and calling and a licence was required for regulating the said trade, there was also a requirement for providing special services to meet dangers in connection with such trade and these services are required to be indicated to the persons liable for the fee. Another argument 'which was raised was whether those bodies who have been previously paying the licence fee shall continue to do so.
44. The argument that the general facilities are to be provided in any area and also to a licensee of such trade or calling, has no persuasive value because such like general services are even otherwise to be provided by the local councils to the inhabitants of that locality and which expenditure is to be met through taxes and not through fee where the principle of quid pro quo will always be taken into account.
45. We find that the new law has changed the entire spectrum of the local bodies while re- distributing areas and re-assigning duties and 'powers, therefore. the bodies so created have now to meet the requirements reflected in Paragraph. Nos, 89 & 90 of the 6th Schedule to the- Ordinance 2001. We also see that the fee to he charged is against premises and some standard or yardstick has to be set for charging fee on the basis of the size and area of the premises, therefore, a de-nova exercise is required and has to A be done even with respect to the old payees.
Therefore, the old payees of the fee who are some of the petitioners before this Court have a right to demand what has been stated above .under. the law without being barred by Section 185 of the Local Government Ordinance 20th in view of the changed circumstances and they have to be treated equally with the new licensee who have to be enrolled under the new dispensation. This answers the question with respect of the old payees.
46. Since the fee under reference is specific to dangerous trade and calling and Paragraph Nos, 89 & 90 of the 6th Schedule to the Ordinance requires certain regulations and there may also be yet other requirements vis-a-vis public safety, protection of environment and attending to the safety aspects and the risks involved, the local bodies have to, therefore, formulate a policy through by- laws in this connection or decide to adopt the model of the by-laws already given in the schedule after so declaring.
47. But, of course, the extent of obligations which the local bodies may like to burden themselves with, will also require an arithmetic calculation and the formulation of a formula on the basis of such calculation for fee to be charged against special services to be rendered.
48.For, therefore, meeting the new dispensation and the new requirements in the public interest, the local bodies have, therefore, to come out with a proper regulatory system and having done-so, they have the locusstandi to ask for the fee from the beneficiaries.
49. The demand notices are just bald notices which have been issued on the basis of resolutions without keeping in view the requirements and policy of law under the new dispensation. We also find that the local bodies have as yet to make their own by-laws specific to the licence for dangerous trade while either adopting the model given or formulating their own. So, therefore, this Court holds that in the area where the fee under reference is chargeable, it can only be charged after observance of the exercise, pointed out above, and which exercise may be performed as early as possible for regulating and streamlining the entire system envisaged under the new dispensation.
50.These 53 Writ Petitions reflected in Scheudle-A attached to this judgment, are therefore, disposed of in these terms which no order as to cost.
51.The services of an amicus curiae became necessary keeping in view the circumstances of this case and the number of writ petitions which were involved, therefore, this Court engaged Di M.
Mohy-ud-Din Qazi, Senior Advocate who is author of many books on Local Government, to act as such. This is to acknowledge the good services rendered by him, for which he deserves a minimum fee of Rs, 25,000/- which is to he equally 'shared by the Zila Council Sheikhupura and Zila Council Kasur, and is to be paid within the next. 15 days by the respondents-local bodies under intimation to the Deputy Registrar (Judicial) of this Court or the amount will be recoverable from them in law.