FAZAL-E-MIRAN CHAUHAN, J.--- Through the instant writ petition, the petitioner has called in question the order, dated 21-5-2003 passed by the Secretary, Local Government and Rural Development, Civil Secretariat, Lahore.
2. Brief facts of the case are that the Tehsil Municipal Administration, Dera Ghazi Khan vide notification, dated 16-2-2002 levied tax @ Re.1 per bag on the cement. Similarly, Tehsil Municipal Administration, Tribal Area, D.G. Khan through Notification No.179/TO, dated 22-10-2001 levied local tax on cement stone @ Rs.20 A per ton after inviting objections through the press. Against the said levy, D.G. Khan Cement Factory filed separate appeals which were accepted by respondent No.1 vide order, dated 7-7-2003 and Tehsil Municipal Administrations were directed to withdraw the notification and levy the taxes/fees after getting approval from the Government as required under section 116 of Punjab Local Government Ordinance, 2001.
3. It is argued by learned counsel for the petitioner that consequent to the promulgation of Punjab Local Government Ordinance, 2000, respondent No.1 issued notification dated 6-10-2000, whereby, the Revenue Estate including existing De-excluded are of D.G. Khan was declared as Tehsil. The Tehsil Council proposed certain taxes on different items under Local Government Ordinance, 2000.
It got published citation in daily Nawa-e-Waqt dated 27-8-2001 calling upon the objection as required under the rules. Respondent No.2, D.G. Khan Cement Factory filed its objection and requested for withdrawal of` proposal regarding levy of taxes on gypsum, lime stones and other mineral being lifted or excavated from within the jurisdiction of De-excluded, which are being used in the manufacturing of cement. This objection was rejected by the Committee and notification regarding charging of taxes was issued, against which appeals were filed before respondent No.1, who vide impugned order directed the petitioner to withdraw the notification. He further argues that the petitioner can propose and levy tax under the Punjab Local Government Ordinance, 2000.
According to the definition Municipal Services defined under section 2(xxii) are:-- "Municipal Services include, but no limited to intra city or intra or inter-town or Tehsil network of water supply, sanitation, conservancy, removal and disposal of sullage, refuse, garbage, sewer of storm water, solid or liquid waste, drainage, public toilets, express ways bridges, flyovers, public roads, streets, foot-paths, traffic signals, pavements and lighting thereon public parks gardens, arboriculture, landscaping, bill boards, hoardings, fire-fighting land use control zoning master planning, classification declassification or reclassification of commercial or residential area, markets, housing urban or rural infrastructure environment and construction, maintenance or development thereof and enforcement of any law or rules relating there to."
Similarly the taxes have been defined in subsection (xxxi) of section 2.
Section 18 and section 39 are relatable for propose of taxes by Zila Council/District Government specified under Part-I of the Second Schedule.
Section 54(1) empowers Tehsil Municipal Administration to propose taxes, cess. User fees, rates, tolls charges, levies, fines and penalties under Part-II of the Second Schedule for approval of the Tehsil. Council and notify the same after such approval.
Sub (in) of section 54 empowers the Tehsil Municipal Administration to collect, all these approved taxes etc. Notified after such approval.
Section 57 deals with the powers of functions of Tehsil Council, wherein, the same powers have been conferred on the Tehsil Council.
According to Second Schedule, Article 111(1) of unamended Local Government Ordinance, 2001 the petitioner rightly approved the taxes on the excavation of the limestone, gypsum and other mineral and even on the other items. All these taxes fall within the ambit of the services being provided by the Tehsil Administration to the public at large which has been elaborated under subsection (xxii) of section 2 and have nothing to do with other taxes paid by the tax payee to other Government departments.
Keeping in view the above mandatory provisions of law and even keeping in view the amendment in Second Schedule in Part-I of the Punjab Local Government (Fifth amendment) Ordinance XXXV of 2002 dated 24-6-2002, the order passed by respondent No.1 is not only oppose the basic spirit of law, but was also without consideration of the relevant provisions of law. Keeping in view the rules of interpretation, respondent No.1 did not take into consideration any of the submissions made before him. He did not meet with the situation that the petitioner had been providing services within the peculiar jurisdiction of Tehsil for which the Tehsil Council has been specifically empowered to levy the taxes on the services prescribed under the law. It was further argued that the tax on the excavation and use of stone by the respondents was levied in accordance with the provisions of section 54 of the Local Government Ordinance and was duly approved by the Tehsil Council on 25-10-2001. It was levied on the services being provided to the respondents in the area by the petitioner such-like roads, sewerage, water supply and sanitation. He further argues that as respondents are using the territory which falls within the jurisdiction of the petitioner, they are liable to pay tax under section 54(1) subsection (xxii) of section 2 and in terms of item I of Part-III of the Second Schedule of the Local Government Ordinance which was imposed on the basis of the definitions provided under the provisions of law the petitioner can impose tax.
4. Conversely, learned counsel for the respondents argues that in the notice published in daily Nawa-e-Waqt dated 27-9-2001, showing intention to levy a local tax on stones, Bajris, gypsum and lime stones. Notice was issued under rule 4(2)(a) of the Punjab Local Government Taxation Rule, 2001. According to these rules clear 30 days time had to be given for filing of objections, but the notice published in the daily Nawa-e-Waqt fixed last date for filing of objections as 16-10-2001 i.e. Only within 18 days. The notice in question was violation of the rules. Objections were filed on 10-10- 2001, within 12 days contending that the petitioner has no authority in law to levy the proposed tax were rejected in the meeting held on 20-10-2001. The petitioner notified the levy w.e.f. 1-11-2001 vide notification dated 22-10-2001. Contract was awarded to the contractor for Rs.43 lacs to collect the said tax. The contractor issued notices on 5-1-2002, 7-1-2002 and final notice dated nil was issued for exorbitant demand of Rs.150,00,000 for the period of five months only. This notification was challenged before the Secretary, Local Government of Punjab, who vide his order, dated 7-7-2003 accepted the appeal, holding that the petitioner is not competent to levy tax, no rules had been prescribed on the basis of which the said tax on service could be levied. Even otherwise, (without prejudice) under licensing permit rules, it was the power of the District Government and not of the approval of the Government as required by law. The petitioner has no jurisdiction or authority under the law to levy tax on stone, Bajri, gypsum and limestones either under section 116 or any other provision of the Punjab Local Government Ordinance, 2001. Tehsil Council is authorized to levy such taxes which have been specified in Part-III of Second Schedule of Ordinance, 2001. None of the entries, in the Second Schedule authorized the petitioner to levy tax oh gypsum, stones and Bajri etc. He further argues that if it is to consider as service then it should be prescribed by the rules.
5. The definition of word "service" prescribed under subsection (xxvii) of section 2, means "prescribed by rules". Such tax can only be levied by the District Government after getting approval of the Provincial Government, the said levy does not fall within the Entry No.1 of Part-III of the Second Schedule (local tax on services as prescribed). The word `service' has been defined by the superior Courts that, "it is performance of labour for the benefit of another or another's command". (Reliance is placed on PLD 1997 Kar. 62). It is further argued that the stones, Bajri and gypsum are goods and not services; hence no tax can be levied on these goods.
6. No service is provided by the petitioner with regard to limestone, gypsum and cement stone used by the respondent No.2. Stones, gypsum and limestone are excavated from mountains which are a lease with respondent No.2 and they are paying heavy amount of lease/rent and surface rent. They are also paying royalty to the Government on these items, such-like limestones and cement stones. The limestones and cement stones are delivered to the respondents factually through a 6 Km. Long conveyer belt which is built and maintained by the respondent No.2 itself, whereas, the gypsum is brought through trolleys which are also managed by respondent No.2. All the labour at the site and for transportation is employed by respondent No.2. Respondent No.2 had also constructed and is maintaining a 6 Kms. Road from the leased area up to its factory.
Absolutely no service is provided by the petitioner in any shape regarding excavation and transportation of limestone, gypsum and cement stones.
7. He further argued that, on the other hand, respondent No.2 is providing various services to the residents of the petitioner Tehsil Council, as well as, to Tehsil Council D.G. Khan where the factory and residential area of labour are located. Sections 54(1)(m), 57, 2(xxii)(22)(26)(118) are not relevant as no such service is provided relating to use or even excavation of tax on each goods. He further argues that Entry No.1, Part III of Second Schedule of Local Government Ordinance, 2001 as amended on 24-6-2002 the `local tax on services as prescribed' defined under sub-clause (xxvii) of section 2 of the Punjab Local Government Ordinance, 2001 means `prescribed by rules made under this Ordinance'; meaning thereby that tax on services can only be levied if the rules prescribing the tax on services are made by the Provincial Government. No such rules have been framed, lience, levy of tax on services by the petitioner is without lawful authority and was rightly held so by the Secretary, Local Government vide his order, dated 7-7-2003.
8. It is further argued that the petitioner even otherwise has no authority in law to impose the impugned levy. The tax is being levied on goods like limestone, gypsum, cement stones etc. Meaning thereby, the impugned tax is thus, in pith and substance an excise duty covered under Entries Nos.44 and 49 of the Federal Legislative List, Fourth Schedule of the Constitution of Islamic Republic of Pakistan, 1973. Under Article 142(a) of the Constitution power to levy excise duty vests only with the Federal Government and not with the Provincial Government or its delegatees.
Reliance is placed on 1999 SCMR 1402, 1993 SCMR 1342, PLD 1971 SC 401, PLD 1975 SC 506, PLD 1958 Lah. 887, PLD 1994 Lah. 175 and PLD 1963 Kar. 319.
9. It is urged that, respondent No.2 falls within the definition of `Corporation', therefore, the petitioner has no jurisdiction to levy tax on the respondent under Item No.48 of the Federal Legislative List.
(Relied on 2000 CLD 1010(sic). It is further argued that Secretary, Local Government has rightly set aside the impugned levy, as under Ordinance, 2001 (section 116) amended vide notification dated 17-8-2002, the proviso of subsection 3 was added according to the proviso. The proposals of Local Government shall first be vetted by the Government prior to approval of these proposals by the respective council. Secondly under notification dated 3-9-2002, the said levy can only be levied by the District Government and not by the petitioner (Tehsil Council).
10. The petitioner is not defined as Tehsil Council and has no jurisdiction to impose the impugned tax under section 7 of the Local Government Ordinance, 2001. Government had to declare Tehsil and' District under sections 12, 49, 65 and 116 of the Ordinance, 2001 Tehsil Council is constituted for each Tehsil. The Government has issued a notification dated 15-8-2001 notifying the Tehsil Councils but this notification does not include the name of Tehsil Council Tribal Area. This defect in the notification having been noticed by the D.C.O., who conveyed to the Government vide letter dated 27-8-2001, but so far no amendment has been made in the notification to declare the petitioner as Tehsil Council. Hence, no tax can be levied by the petitioner. The notification dated 6-10-2000 relied upon by the petitioner in its writ petition is not relevant as the same was issued prior to the Local Government Ordinance, 2001 under section 2(1) and 3 of the Punjab Local Government Elections Ordinance, 2000 and was for the purpose of that Ordinance only as provided under section 3 of the said Ordinance and does not declare the petitioner as Tehsil Council for the purpose of Ordinance, 2001.
11. The writ petition is not maintainable as factual controversy regarding the alleged supply of service, his claim by the petitioner is involved, which cannot be determined without recording evidence, hence, writ petition is not maintainable.
12. Lastly, learned counsel for the respondents before concluding his arguments stated that some further developments after filing of the writ petition took place which rendered the instant writ petition infructuous. It is stated that the petitioner after filing of the writ petition, the petitioner informed respondent No.2 vide letter, dated 20-12-2003 that in variance of the order, dated 7-7- 2003, the D.G. Khan Cement Company has been exempted from the taxes at category-i.e, which was only to be recovered from the D.G. Khan Cement Company Respondent No.2. The T.M.A. Has fully implemented the order issued by respondent No.2. The same position was confirmed by the letter dated 22-12-2003 written by the petitioner to the respondent No.2. However, later on in the publication dated 26-5-2004, only conveyor belt was exempted from tax, and the order dated 31- 7-2003 was also issued in which transportation by conveyor belt has been exempted. Respondent No.2 vide letter, dated 11-6-2004 filed his petition demanding that the petitioner shall honour his commitment made to the respondent No.1 in his letter, dated 20-12-2003, whereby the respondent- Company has been exempted from all kinds of taxes on cement stone, marble stone, limestone, gypsum etc. And made also mention that no tax shall be recovered from respondent-Company in respect of the above mentioned items through conveyor belt, truck, tractor trolley to the cement factory, B whereas, in your auction notice dated 26-5-2004 made mention that no tax will be charged from the respondents in respect of the above items carried out through conveyor belt only. No reply to the said letter was given by the respondent-Company and respondent No.2 again filed appeal before respondent No.1. Respondent No.1/Secretary, Local Government accepted the appeal vide his order, dated 24-1-2005 and again held that the subsequent levy by the petitioner is illegal and without jurisdiction and declared that since the Local Government are not competent to levy excavation tax so its levy as well as leasing out the collection rights is against rules and the petitioner/T.M.A. Is directed to comply with the order dated 7-7-2003. This subsequent order, dated 24-1-2005 of the Secretary, Local Government has not been challenged in the writ petition and the same has attained finality, hence, the writ petition has become infructuous.
13. I have heard the learned counsel for the parties at length; perused the record and documents filed on the writ petition. In view of the latest development which took place during the pendency of this writ petition as the petitioner itself wrote a letter dated 20-12-2003 to respondent No.1 admitting therein that levy of tax of all kinds of cement stones, marble stones etc. Excavation and transportation through conveyor belt, trucks and tractor trolley, cement factory has been exempted from the tax category (i.e). It was further conveyed that T.M.A./petitioner has fully implemented the order dated 7-7-2003 impugned by the petitioner in the instant writ petition. In view of the admission on the part of the petitioner vide letter, dated 20-12-2003 the impugned order, dated 7-7-2003 was implemented in letter and spirit by the petitioner. Later on, the petitioner while in the auction notice dated 26-5-2004 published in daily "Khabrain" tried to resile from its letter conveyed to the Secretary/respondent No.1 mentioned that only transportation through conveyor belt is exempted and issued work order by imposing tax on all kinds of cement and marble stones etc. And on its excavation and transportation. The respondent-Company challenged this action of the petitioner by filing an appeal before Secretary, Local Government, Rural Development/respondent No.1, who vide his order dated 24-1-2005 again set aside the action taken by the petitioner-Company and declaring that Local Governments are not competent to levy excavation tax so its levy as well as leasing out the collection rights is against rules. This order has not been challenged by the petitioner nor any amendment has been sought in the writ petition.
Hence this writ petition is dismissed having become infructuous.