Rana Bhagwandas, J.--This judgment shall dispose of Appeal No, 1184 of 1999 arising out of the judgment dated 22.10.1998 of Peshawar High Court in Writ Petition No, 657. of 1994 and Appeal No, 1493 of 2004 arising out of judgment dated 26.2.2003 passed in Writ Petition No, 609 of 2002 as somewhat identical questions of law and fact are involved in both the appeals. In this judgment Province of NWFP shall be referred to as appellant while Pakistan Telecommunication Corporation shall be referred to as respondent Corporation.
2. Briefly stated facts of the case are that after incorporation of respondent Corporation through Pakistan Telecommunication Act XVIII of 1991 (hereinafter referred to as the Act 1991), under instructions from Provincial Government, Municipal Corporation, Peshawar imposed octroi tax on the goods and articles of respondent Corporation brought into the limits of Municipal Corporation.
Respondent Corporation Challenged the levy of octroi tax before the High Court on the premise that respondent Corporation being successor of Telephone and Telegraph, a Federal Government Department was exempt from. payment of ,octroi tax under Article 165 of the Constitution and Rule 136 of the NWFP Local Councils (Octroi) Rules, 1984 (hereinafter referred to as the Rules 1984). It was also claimed that any power, privilege or concession granted to the Pakistan Telegraph & Telephone Department would be fully available to the respondent Corporation by virtue of Section 6(2-A) of the Act, 1991.
3. Stance of the appellant Government as well as Municipal Corporation before the High Court was that, since the respondent Corporation was engaged in commercial activities, it was not entitled to any exemption from payment of octroi tax. With regard to the concession under Section 6 (2-A) of the Act 1991 it was pleaded that it pertained to privileges and not to exemptions.
4. Learned Division Bench of the High Court after detailed examination of case-law on the subject vide its judgment dated 22.10.1998 held that Section 6(2-A) of the Act 1991 was not applicable as it dealt with the privileges and not with exemptions. However, High Court concluded that since the respondent Corporation was in fact performing functions of the State, its assets were required entirely from the Federal Government, its employees being declared as public servants coupled with total control and administration of the Federal Government, it was entitled to the exemptions enunciated under Article 165 of the Constitution as well as Rule 136 of the Rules 1984 and, therefore, not liable to pay octroi tax on its goods brought into the limits of Municipal Corporation Peshawar during the period when the respondent Corporation was established in 1991 until Act 1991 was abolished through Pakistan Telecommunication (Re-Organisation) Act 1996 (hereinafter referred to as the Act 1996). This decision has been called in question in Appeal No, 1184 of 1999.
5. In appeal No, 1493 of 2094 dispute relates to imposition of tax under N.W.F.P. Urban Immovable Property Tax Act 1958 (hereinafter referred to as Act 1958). It so happened that after the creation of Pakistan Telecommunication Company Limited (hereinafter referred to as PTCL) in 1996 Provincial Government of NWFP levied property tax on the urban properties of PTCL. The latter challenged le ,y of property tax before the High Court on the grounds that PTCL being a statutory body created, controlled and owned by Federal Government was exempt from payment of property tax by virtue of Article 165 of the Constitution and Section 4 of Act 1958. Reliance was placed on the judgment of the Peshawar High Court in Writ Petition No, 657 of 1994, subject-matter of Appeal No, 1184 of 1999. It was urged that under Section 12 of the Act, 1991 all assets and liabilities of erstwhile Telegraph and Telephone department were transferred and vested in the Corporation. Similarly under Section 35 of Act 1996, the properties, rights and liabilities of the Corporation were vested in PTCL, therefore, it being successor of the Corporation was entitled to same exemptions and protection of law. It was also contended that according to Section 6(2-A) of the Act 1991, any power, privilege or concession granted to the Telegraph and Telephone Department being available to the respondent Corporation, shall mutatis mutandis be applicable to PTCL, hence it was entitled to the exemptions available to the Telegraph and Telephone Department and later on to the Corporation.
6. Government of NWFP refuted the claim of the respondent on the ground that PTCL, after being registered as a Company limited under the Companies Ordinance 1984, neither its properties were exempt from payment of property tax nor was the protection of Article 165 of the Constitution available to it.
7. Vide judgment dated 26.2.2003, another Division Bench of the learned High Court while interpreting Article 165 of the Constitution held that exemption from payment of tax was available only in cases where trade or business was carried on by the State and income derived through its department was income of the Government. In the present case Federal Government being share holder in the PTCL was entitled to dividend income only and profit and loss of the PTCL would be the profit and loss of the Company and not that of the share holders, therefore, income of PTCL could not be said to be the income, of the Federal Government. Accordingly, it was held that PTCL was not entitled to the exemption from payment of property tax under Article 165 of the Constitution or Section 4 of the Act 1958. Consequently, respondents' writ petition was dismissed leading to Civil Appeal No, 1493 of 2004 with the leave of this Court.
8. Barrister Jahanzeb Rahim, learned Advocate General, NWFP appearing on behalf of the appellant in Appeal No, 1184 of 1999 and respondents in Appeal No, 1493 of 2004 submitted that respondent Corporation is not entitled to protection of Articles 165 & 165A of the Constitution read with Rule 136 of the Rules, 1984, as it is not under full control of the Federal Government. Rather all the powers, management and control were vested in the Board of Directors as per Section 4 of the Act 1991.
Similarly Section 6(2-A) of the Act 1991 does not confer upon respondent Corporation or for that matter on the PTCL, any power, privilege or concession granted to the erstwhile Telegraph and Telephone Department, therefore, veil of incorporation cannot be lifted and the respondent Corporation as well as PTCL cannot be treated as Department of the Federal Government.
9. Conversely, Mr. Hamid Khan, learned Sr. ASC for the appellant in Appeal No, 1493 of 2004 and for Respondent No, 1 in Appeal No, 1184 of 1999 contended that Article 165(1) provides total immunity to property and income of respondent corporation from payment of any property tax and octroi levied under Provincial law. It was further submitted that Rule 136 of the Rules, 1984 would not override Article 165 of the Constitution. He further contended that Section 4 of Act 1958 provides total exemption from payment of property tax to the respondent Corporation and for that matter to the PTCL as it is essentially performing the functions of Federal Government as per Entiy No, 7 of the Fourth Schedule to the Constitution. According to the learned counsel as per S. No, 17A of Schedule II to the Rules of Business, the respondent Corporation and for that matter PTCL are part and parcel of Information Technology and Telecommunication Division and carrying on functions of the State, hence protection of Articles 165 & 165-A would be available to them in entirety.
9-A. Reliance in this regard was placed by the parties counsel on Karachi Development Authority v.
Central Board of Revenue (NLR 2000 AC 53), Union Council Ali Wahan v. Associated Cement (Pvt.)
Ltd. (1993 SCMR 468), Central Board of Revenue v. S.I.T.E. (PLD 1985 S.C. 97), National Fertilizer Marketing Ltd. v. Secretary, Local Government (1992 MLD 1203) Andhra Pradesh State Road Transport Corporation v. Income Tax Officer (AIR 1964 SC 1486), Zila Council v. Daewoo Corporation (2001 SCMR 1012) and WAPDA v. Government of Sindh (PLD 1998 Karachi 209).
10. Before dilating upon the respective submissions of the learned counsel for the parties; it would be appropriate and convenient to trace the history of the respondent Corporation after its establishment under the Pakistan Telecommunication Corporation Ordinance, 1990 (hereinafter referred to as the Ordinance). Under Section 3(2) of the Ordinance, respondent Corporation shall be a body corporate having perpetual succession and a common seal, with power to acquire, hold and dispose of property and shall by its name sue and be sued. In terms of Section 4 of the Ordinance general direction and administration of the affairs of respondent Corporation shall vest in the Board, which shall consist of the Chairman and not more than eleven Directors, of whom not less than two shall be professional telecommunication engineers. The Chairman shall be a whole- time officer and the Chief Executive of the Corporation, who shall normally hold office for a term of three years and subject to such terms and conditions of service as the Federal Government may determine. Likewise a Director shall hold office for a term of three years. Purposes and functions of Corporation are enumerated in Section 6 of the Ordinance, which, inter alia, deals with establishment, maintenance and operations of telecommunications. In performing its functions, the Corporation shall be guided on questions of policy by the instructions of the Federal Government, if any, given to it from time to time, which shall be the sole judge as to whether a question is a question of policy. In terms of Section 8, respondent. Corporation was empowered to employ such Officers and Servants from time to time and appoint such experts or consultants as it may consider necessary for the purpose of its functions. Section 9, inter alia, stipulates that, notwithstanding, anything contained in any law, contract or agreement, or in the conditions of service, all departmental employees, on the establishment of respondent Corporation, shall stand transferred to, and become employees of respondent Corporation, on the same terms and conditions to which they were entitled immediately before such transfer. In terms of Section 10, the Chairman, Directors, Officers and Servants of the Corporation shall be deemed to be public servants within the meaning of Section 21 of the Pakistan Penal Code. As mandated by Section 11, respondent Corporation was required to submit to the Federal Government, as soon as possible after the end of every financial year, a report on the conduct of its affairs for that year, which shall be laid before the National Assembly and the Senate together with a copy of the audit report referred to in Section 18. Respondent Corporation shall brief the Committees of the Senate and the National Assembly about its activities and future plan as and when required. The Federal Government may require respondent Corporation to furnish it with (i) any return, statement, estimates, statistics or other information regarding any matter under the control of respondent Corporation; or (ii) a report on any such matter; or (iii) a copy of any document in the charge of respondent Corporation; and respondent Corporation shall comply with every such requisition.
Section 12 of the Act stipulates that as from the commencing day, all assets vested in the Pakistan Telegraph and Telephone Department shall vest in respondent Corporation, and all liabilities of the said department in respect of the said assets shall be the liability of respondent Corporation.
Likewise all contracts made and liabilities incurred by the Pakistan Telegraph and Telephone Department before the commencement of the Ordinance shall be deemed to be made or incurred by the Corporation and shall be enforceable accordingly. Section 17 of the Ordinance provides for tax exemption to respondent Corporation and expressly lays down that, notwithstanding, anything contained in the Income Tax Ordinance 1979, the Wealth Tax Act 1963 or any other law for the time being in force relating to income tax, super tax, or wealth tax respondent Corporation shall not be liable to pay any such tax on its income, profits or gains for a period of three years. Section 18 of the Ordinance providing for audit and accounts of respondent Corporation, inter alia, requires the respondent Corporation to maintain proper accounts and other record to reflect true and fair view of its state of affairs and preparation of annual statement of accounts, including the profit and loss account and balance sheet, which shall be audited by an auditor or auditors, who shall be Chartered Accountants. Irrespective of the above mandate, Auditor General of Pakistan shall have the power to audit or cause to be audited the accounts of respondent Corporation. Copies of the auditors report shall be sent to respondent Corporation and to the Federal Government and shall also be available for public inspection. For the purpose of carrying into effect the provisions of the Ordinance, the Board of Directors with the approval of the Federal Government was authorized to frame such regulations, as it considers necessary or expedient. Although incorporated as a statutory Corporation having perpetual succession and a common seal, special provision has been made in Section 22 of the Act providing that acquisition of any land or any interest in land for any scheme of respondent Corporation under the Ordinance in order to establish, maintain and for working of telecommunications shall be deemed to be an acquisition for a public purpose within the meaning of Land Acquisition Act 1894. Similarly, special protection against liquidation Qf respondent Corporation has been made by Section 24 of the Ordinance laying down that no provision of law relating to winding up of companies shall apply to respondent Corporation and the respondent Corporation shall not be wound up save by order of the Federal Government and in such manner as the Federal Government may direct. This Ordinance was followed by Pakistan Telecommunication Corporation Ordinance X of 1991 published in the Gazette of Pakistan Extraordinary dated 15.4.1991 containing almost the same provisions as in the earlier Ordinance.
Latter Ordinance was again followed by Ordinance No, XXVII of 1991 published in the Gazette of Pakistan on 13.8.1991 with more or less the same provisions. It was on 27.11.1991 that Pakistan Telecommunication Corporation Act 1991 was enacted containing identical provisions with the addition of Sub-section (2-A) in Section 6 laying down that without prejudice to any provision of this Act, any power, privilege or concession granted to Pakistan Telegraph and Telephone Department shall, mutatis mutandis, be deemed to have been granted to the Corporation. In Section 17 of the Act, exemption from payment of income tax and wealth tax was raised from three years to a period of five years and, by inserting sub-section (2), it was stipulated that all goods imported by, or on behalf of, the Corporation shall be exempt from customs duty and sales tax for a period of five years.
11. It is in this peculiar and unique perspective of the creation of respondent Corporation by the Federal Government for regulating, maintaining and carrying out telecommunications network within the country that Mr. Hamid Khan, learned Sr. ASC for the respondent was at pains to convince us to lift the veil of incorporation in order to ascertain the true nature, status and composition of respondent Corporation virtually performing sovereign functions of the erstwhile Pakistan. Telegraph and Telephone Department of the Federal Government. In this connection reference may be made to Entry No, 7 of the Fourth Schedule to the Constitution of Islamic Republic of Pakistan providing for Federal Legislative List relating to posts and telegraphs, including telephones, wireless, broadcasting and other like forms of communications; Post Office Savings Bank. Emphasis was laid on Article 165 of the Constitution contemplating exemption of the properties or income of Federal Government from liability to taxation under any Act of Provincial Assembly and vice versa in respect of property or income of a Provincial Government under Act of Parliament or under Act of the Provincial Assembly of any other Province. In the backdrop of this Constitutional provision it was suggested that the properties and goods of the Corporation virtually being owned by the Federal Government would be entitled to total exemption from payment of octroi tax leviable under a Provincial Statute. In this behalf our attention was also drawn to Rule 136 of the Rules 1984, expressly exempting articles specified in appendix B of the Rules from payment of octroi. At Serial No, 14 of the list in Appendix B exemption has been extended from payment of octroi to such articles, which are declared by Government from time to time by notification in the official Gazette to be exempt. It may not be out of context to refer here the directive contained in Letter No, AO-II (LCB) 5-(53)/89, Vol. I of the Local Government department, Government of NWFP dated 23.11.1991, enclosing therewith copies of letters of Government of Pakistan, Ministry of Finance and Communications and to say that, as per directions of the aforesaid Ministries, the status of the taxes and octroi of T&T Department to T&T Corporation shall remain as was before 30.6.1991 and that octroi shall not be 'charged on their goods and articles as before. This letter was followed by another letter of the Provincial Government dated 30.12.1992 enclosing therewith minutes of the meeting dated 14.12.1992 regarding exemption of goods of respondent Corporation from the payment of octroi. It appears that as a result of lengthy discussion between the parties' high-ups, following decisions were made:-- "(i) The concerned stafr-af Northern Telecommunication Region and Municipal Corporation Peshawar will reconcile the octori amount upto 30.6.1992 and after mutual agreement the octori will be paid by Northern Telecommunication Region Peshawar to Municipal Corporation Peshawar after clearance from the Ministry of Communication.
(ii) As far as the octroi payment after 1/7/1992 is concerned Northern Telecommunication Region will pay octroi to the Urban Councils in NWFP, but the authorities of Northern Telecommunication Region will submit a case to the Federal Government for approval to pay octori on PTC goods to Local Councils in NWFP."
There is yet another letter of the Government of NWFP, Local Government Department dated 30.1.1993 addressed to Administrator, Municipal Corporation, Peshawar as well as the Administrator, Municipal Committee, Mardan reflecting that a summary on the subject of octroi on PTC goods was submitted to the Chief Minister, NWFP and the matter was discussed by the Chief Secretary of the NWFP with the Chief Minister of the Province in which following decisions were taken:-- "(i) The goods of Pakistan Telecommunication Corporation, lying outside the Municipal limits shall be allowed to be imported without charging of octroi. Proper record with all relevant documents signed by the representative of Municipal Corporation Peshawar, Pakistan Telecommunication Corporation and Octroi Contractor shall be maintained.
(ii) In future also the goods of the PTC shall not be charged for octroi till 30/8/1993 or the decision of the I.P.C. whichever is earlier. The record as pointed above shall be maintained by all the three parties.
(iii)As the end of the financial year the remission in favour of contractor will be worked out according to the available record and the case submitted to the Provincial Government for decision.
(iv)If the contracts far the year, 1993-94 are being auctioned before the commencement of the next financial year it shall be clearly indicated that the auction is for all the items except PTC goods which will be collected by Municipal Committees departmentally."
12. As the dispute between PTC and the Local Councils, as to whether the goods belonging to PTC were liable to the levy/payment of octori tax under the octroi rules in force since 1964 in different Provinces of Pakistan, could not be amicably sorted out, vide letter dated 27.7.1993, PTC Headquarters approached the Ministry of Communications, Government of Pakistan to seek opinion and guidance on the points raised in the letter from Ministry of Law and Justice. It may not be out of context to observe that the advice, when received from the Ministry of Law, supported the version of the respondent Corporation rather than the Local Government Department or the Local Councils. Since ultimately, Government of NWFP did not accede to the request of the respondent Corporation for exemption from payment of octroi tax, Constitutional Petition No, 657 of 1994 was filed in the Peshawar High Court, which, after contested by the Provincial Government as well as Municipal Corporation, Peshawar, was allowed.
13. In view of emphasis of the learned counsel for the appellant that the respondent Corporation is not entitled to any exemption in the light of Article 165 of the Constitution, it would be convenient and proper to reproduce Article 165, which reads as under:-- "165. (1) The Federal Government shall not, in respect of its property or income, be liable to taxation under any Act of Provincial Assembly and, subject to Clause (2), a Provincial Government shall not, in respect of its property or income, be liable to taxation under Act of [Majlis-e-Shoora (Parliament)] or under Act of the Provincial Assembly of any other Province.
(2) If ...................................."
Now in the light of the test laid down in, this Article, it has to be seen whether the goods of respondent Corporation can be treated to be the property or income of the Federal Government. It would be seen from various provisions of the Ordinance 1990 and the Act 1991 that, for all intents and purposes, PTC has been discharging its duties and functions, which were earlier performed by the erstwhile Telegraph and Telephone Department of the Federal Government. For this purpose, we may pierce the veil of incorporation and notice that entire control, administration, management and all the affairs of the Corporation, no doubt, vests in the Board of Directors but all such Directors and the Managing Directors were required to be appointed by the Federal Government and none else. The properties of T&T Department, on establishment of the respondent Corporation, vested in it and, legally speaking, all assets and liabilities of the said department were acquired and incurred by the respondent Corporation y operation of law. All officers working in Telegraph and Telephone department stood transferred to the Corporation with total protection of forms and conditions of their service, including the right to enjoy the status of a public servant. Furthermore, the Corporation was bound in all matters abide by the instructions and directives issued by the Federal Government from time to time and to follow the policy decisions of the Government, who as declared to be the best judge to decide as to which question would be a question of policy. Indeed, entire income from the proceeds of the corporation went to the public exchequer and not to an individual or a juristic person. In this connection reference may be made to the Rules of Business made by the Federal Government, in exercise of its powers conferred by Articles 90 and 99 of the Constitution. The allocation of business, as allocated to Communication Division in the year 1992 at Serial No, 2, includes telecommunications (not including Broade casting and Television). This was the position in the year 1990 as well as in 1996 and later years. In the Rules of Business 1973 published in the year 2002, entry at Serial No, 2 in relation to the Communication Division concerning telecommunications appears to have been omitted by. SRO 119(1)/2000 dated 13.3.2000 and vide Entry No, 17-A, Information and Telecommunication Division was set up, in which at Serial No, 8 of items relating to IPTCL, PTA, FAB, NTC, TIP, CTRL, CTI, Telecommunication Foundation and the Special Telecommunication Organization have been assigned to this Division It may be seen that establishment and maintenance of telecommunication network including PTCL is no longer assigned to this Division of the Federal Government. It would, thus, be seen that prior to the coming into being of PTCL duties and functions performed by the respondent Corporation were allocated to a Federal Government Division and, thus, its properties and B. income would be exempt from Federal as well as Provincial tax regime under the provision of Article 165. Since the Constitution is the basic foundation and mother of all laws and provides general immunity to the Federal Government as well as the Provincial Government from liability to taxation under the Act of Parliament or under the Act of Provincial Assembly of a Province, it would be immaterial whether any notification granting exemption was issued by NWFP Government under the provisions of Rule 136 of the Rules 1984.
14.After the allowing of writ petitions of respondent Corporation by a Division Bench of the Peshawar High Court, three writ petitions filed in the Lahore High Court were allowed vide common judgment dated 15.11.1999. Civil petitions for leave to appeal against the judgment of the Lahore High Court were dismissed by this Court as barred by law vide judgment dated 21.12.2000. In C.P. No, D-1016 of 1994 before the Sindh High Court filed by the respondent Corporation, interim relief was declined by a Division Bench of the Sindh High Court on 22.3.1995 whereas the main petition was dismissed for non-prosecution on 20.1.2003. The Issue was dropped as no restoration application was made to High Court.
15.Adverting to Andhra Pradesh (supra) it may be observed that the case relates to the income of Andhra Pradesh State Road Transport Corporation established under the Provincial Statute.
Supreme Court of India declared that a Corporation, though statutory, had a personality of its own distinct from that of the State or other share holders, therefore, it could not be said that a share holder owned property of the Corporation or carried on the business with which the Corporation was concerned. Consequently, Supreme Court declared that prima facie, the income derived by the Corporation could not be claimed by the State and, thus, was not exempt from payment of income tax. The precedent, also relied upon by Mr. Hamid Khan, learned Sr. ASC, to say the least, is entirely distinguishable from the issued involved in this appeal and is of a no avail. In WAPDA case (supra) a Division Bench of the Sindh High Court, in view of decision of Inter Provincial Co- ordination Committee to the effect that Provincial Government would exempt WAPDA from payment of property tax and octroi on its equipment and material and, in turn, WAPDA would charge electricity tariff on street lights and water schemes at domestic rates, directed that Provincial Government of Sindh to abide by the decision, which is again beyond the point involved in this appeal. Even otherwise, an appeal against the High Court judgment was filed by Sindh Government before this Court, which was later on dismissed as withdrawn as meanwhile recovery of octroi was abolished across the country. Case in point appears to be the judgment of this Court in Central Board of Revenue v S.I.T.E. (Supra), in which this Court, after lifting the veil of incorporation from S.I.T.E. a company registered under Companies Ordinance, through a resolution of the Sindh Government, held that for all relevant purposes, the company was doing entire business just like a department of Government and would, thus, be exempt from Federal taxation. This case against relates to the income of a Corporation, but the ratio thereof would apply with all force to the case of respondent Corporation. In National Fertilizer Marketing Limited (Supra) decided by a learned Judge in Chambers of the Lahore High Court no doubt it was held that though its shares may be held by the Government but neither its properties nor the income could be said to be the property or income of the Federal Government. It was a separate entity and was not even' a department of the Government. The ratio of the precedent cannot be imported in the peculiar facts and background of this appeal and must be confined alone to the company under litigation. In the case of Union Council Ali Wahan (supra), this Court, while laying down the parameters for, lifting the veil of incorporation and refusing to lift such veil in the case of Associated Cement (Pvt.)
Limited held that where Government owns, controls and manages a Corporation, which is engaged in a commercial activity, competing with other public/private companies, engaged in similar business, such Corporation cannot claim any privilege or immunity to the disadvantage of its competitors. It would seem that this Court had distinguished the case of Karachi Development Authority versus Central Board of Revenue (NLR 2000 A.C. 53) and did not allow exemption to the Associated Cement Company for the reason that it was competing in commercial activities with other private companies. The ratio of the case would not be attracted in the present case as respondent Corporation, after its incorporation and till its conversion into Pakistan Telecommunication Company Limited through PTCL through Act 1991 had the monopoly in the Telecommunication field and was not competing with any other private, company working in the same field. It would, thus, be legitimate and safe to conclude that after unveiling the veil of incorporation and ascertaining true role and actual nature and status of respondent Corporation virtually serving as an organ of State performing duties and functions primarily to be performed by the Federal Government, would be entitled to the benefits, concessions and exemptions, which were available to the erstwhile Telegraph and Telephone department before its inception. Position might, however, be different after the Corporation turning out to be a public limited company registered with the Registrar of Companies under the Companies Ordinance 1984 with its Board of Directors to be elected by its share holders. Indeed impugned judgment of the Peshawar High Court also has acknowledged the entitlement of the respondent Corporation to such extent and has not extended scope of exemption after the repeal of Act 1991 and enactment of Act XVII of 1996.
Last in the line of reference is judgment in Karachi Development Authority (supra) which deals with the liability of a statutory juristic person for payment of sales tax and exemption from payment thereof, under the provisions of Articles 165 & 165-A of the Constitution, which essentially deal with the exemption of tax on income of Federal Government and levy of tax by Parliament on such Corporations. The case, in our view is beyond the point and does not lead to solution of the controversy. Again Zila Council (supra) is a case essentially relating to levy of export tax on goods produced within area of a District Council but taken outside the District. The dispute between the parties raised a question relating to the construction of the expression "produce". It was held that District Council was competent to levy export/goods exit tax and accordingly schedule of export tax issued by it was lawful. Ratio of the decided case to observe the least does not appear to be relevant in the peculiar facts of this appeal.
16.In the light of the resume of the case-law, the nature and composition of the respondent Corporation, though styled as such by virtue of various duties and functions performed by it under different provisions of Act 1991, we are firmly of the opinion that PTC essentially and primarily performed functions of Telegraph and Telephone Department of the Federal Government and would, thus, be entitled to exemption from payment of octroi tax, which was available to Telegraph and Telephone Department before coming into existence of this Corporation. The view taken by Peshawar High Court, thus, does not suffer from any error of law or want of jurisdiction and is unexceptionable. We would, therefore, endorse the same and dismiss Appeal No, 1184 of 1999 with no order as to costs.
C.A.No, 1493 of 2004 17.Position in this appeal is, however, altogether different inasmuch as, after the repeal of Act 1991 through Act 1996, PTCL has been incorporated under Section 34 of the Act 1996 under the Companies Ordinance 1984 with the principal object of providing National and International Telecommunication and related services consistent with the provisions of Act 1996. It may be pertinent to notice that for re-organisation of telecommunication system in Pakistan not only the PTCL has been established under the Act 1996 but in addition Pakistan Telecommunication Authority, the Frequency Allocation Board, National Telecommunication Corporation and the Pakistan Telecommunication Employees Trust have been also set up. Now Federal Government has been authorized to nominate seven persons to subscribe to the Memorandum and Articles of the Company. Initially all shares of the Company were issued and held in trust for the President of Islamic Republic of Pakistan but soon after the listing of the Company with the Stock Exchanges of the Country the Company floated 12% of the total share holding in open market to the general public by way of initial public offer. At the moment 88% of the total share holding is held by the Federal Government while Expressions of Interest having been invited through out the world and six strategic investors have shown deeper interest in the purchase of 26% share holding of the Government in the Company, thus for all intents and purposes PTCL is a public limited company with shares performing the functions relating to establishment and maintenance of telecommunication but no longer an organ of the Government. Now the view that by virtue of Section 35 of the Act 1996 all or an property, rights, and liabilities of the PTC, to which respondent Corporation was entitled, by order of the Federal Government may vest in the Company or the same shall be deemed to be the properties of the Federal Government and, therefore, by virtue of Article 165 of the Constitution exempt from Federal as well as Provincial taxation does not hold the field with the grant of licenses to a large number of private companies. PTCL is no longer the only service provider in the field of telecommunication network and essentially being a company involved in trade, business and commerce cannot be equated with a Government Department by any stretch of reasoning and logic. It would, therefore, be not entitled to claim the benefits of exemption from Federal as well as Provincial taxation within the meaning of Articles. 165 & 165-A of the Constitution.
18. It was agitated that Federal Government being holder of lion share holding in the company virtually the properties of respondent Corporation become the properties of the Federal Government but we are not persuaded to agree with the point formulated at the Bar. By virtue of its composition as a limited juristic company with private participation in the. share holding and after listing on the stock exchanges of the country, for all intents and purposes it remains a limited company with public participation and not the sole ownership of the Federal Government as misunderstood. The assets and liabilities of the company now permanently vest in the company and not in the Federal Government, as erroneously canvassed at the Bar. We are clear in our mind that the case of PTC decided hereinabove in relation to the levy of octroi charges stands entirely on different footing and is not at par with the liability of the company for payment of property tax on its urban immovable properties. In our considered view, neither the provisions of Article 165 of the Constitution nor the provisions of Section 4(a) of Act 1958 advance the cause of the company. A limited company with private partition can hardly be construed to be a Government Department and even after unveiling the veil of incorporation, it remains a juristic person absolutely different from a natural person or a Government Department. Case-law cited earlier heavily leans in favour of liability for payment of tax rather than exemption from payment of tax and there can be no second opinion but to hold that on the basis of the available record and data, after incorporation of the respondent Corporation as a public limited company it is no longer immune and exempt from the payment of property tax. Learned Members of the Division Bench have recorded elaborate reasons rightly differentiating the case from Writ Petition No, 657 of 1994 decided earlier by another Division Bench of the High Court and rightly come to the conclusion that the PTCL is not the successor of the former PTC. In all material particulars, its properties and income cannot be construed to be the property and income of Federal Government by any stretch of argument.
19.Lastly, in order to reinforce his submissions, learned counsel for the respondent company placed on record annual report of the company for the year 2004 and copies of paid-up challan reflecting huge amount of dividend paid into the public exchequer in the account of the Federal Government by way of income consequent upon share holding of the Government but suffice it say that while the Federal Government is entitled to receive the dividend income, the properties held and acquired by the company are neither owned nor possessed by the Federal Government within the meaning of the term.
20.For the aforesaid facts, circumstances and reasons, we find no merit in this appeal, which must fail and is hereby dismissed.