SYED JAMSHED ALI, J. --- This judgment shall dispose of Civil Appeals Nos. 1902/2002 and 1381/2005, filed by ICI Pakistan Limited, and Civil Appeal No. 1382/2005, filed by the Tehsil Council, Pind Dadan Khan. In these appeals with the leave of this Court Lahore High Court , judgments dated 22.8.2001 and 15.10.2003 passed respectively in WPs No. 997/1991 and 3766/2001 filed by the ICI Pakistan Limited have been assailed.
2. The controversy involved in these appeals to the authority of the Tehsil Council Pind Dadan Khan to impose professional/trade tax. The appellant ICI Pakistan Limited manufactures Soda Ash for which the raw material includes the rock salt which is purchased by it locally. In Civil Appeal No. 1902/2002, the then Municipal Committee, Khewra, by notification dated 27.6.1984, imposed trade tax on the rock salt. Purchased by the company at the rate of Re. 0.75 per quintal (100 kg) which was increased to Re. 1 per quintal vide notification dated 2.6.1991. This levy was assailed by the appellant company. The writ petition was-party allowed in as much as that the aforesaid Local Council was held entitled to levy and recover tax from the appellant but not in excess of Rs. 50/- per annum for the period from 1.7.1991 to 30.6.1999 and Rs. 1,00,000/- per annum i.e.f. 1.7.1999. The basis of this conclusion was Section 2 of the Professional Tax Limitation Act, 1941 (as amended).
While the appellant/company has assailed the said judgment (C.A. No. 1902 of 2002), the said Local Council has not challenged it.
3. In Civil Appeal No. 1381/2005, the controversy is the same except that vide notification dated 22.5.2001, the Tehsil Council, Pind Dadan Khan in purported exercise of powers under Sections 137 and 138 of the Punjab Local Government Ordinance, 1979 has further increased the rate of .Professional/trade tax in case of the appellant-company to Rs. 25,00,000/- per annum. This writ petition was also disposed of in the light of the judgment of, the High Court, subject-matter of Civil Appeal No. 1902/2002. In this case, both the parties are before us (C.As. Nos. 1381 and 1382 of 2005).
4. The learned counsel for the appellant-company has strenuously relied on Article 163 of the Constitution to contend that any professional/trade tax could only be imposed by a Provincial Assembly and that too by an Act. According to him, neither the Provincial Assembly could delegate this power to a local council nor such a tax could be imposed by any subordinate legislation such as the Notification impugned in both the Constitutional petitions filed by the company. He submits that such a tax was imposed by Punjab Finance Act (No. XV) of 1977, in pursuance of Article 163 of the Constitution and in presence of the said law levy of the same tax by subordinate legislative instrument was not permissible. He maintains that since 1977, the appellant-company is paying professional/trade tax to the Excise and Taxation Department of the Punjab Government. It was next contended that in the Punjab Local Government Ordinance, 1979 it was item No. 16 in Part-III of the Taxes of the Tehsil Council but in Local Government Ordinance, 2001, this entry has been deleted.
5. Mr. Munir Paracha, Advocate appears in Civil Appeal No. 1902/2002. His contention is that the tax in question was fully supported by Sections 137 and 138 of Punjab Local Government Ordinance, 1979 and the authority for item No. 16 in Schedule-III to the 1979 Ordinance was an Act of the Provincial Assembly itself. Therefore, there was no violation of Article 163 of the Constitution. In the alternative, he submits that it was in the nature of licence fee and in case whole field of authority of the local council was surveyed, there was adequate authority to support the impugned levy.
6. Hafiz S.A. Rehman's, Advocate appears in Civil Appeal No. 1382/2005 and tried to justify the impugned tax on the basis of observations in Province of Punjab through Secretary, Excise and Taxation, Government of Punjab and others vs. Sargodha Textile Mills Ltd., Sargodha and others (PLD 2005 SC 988). He also contended that Sections 137 and 138 of the Punjab Local Government Ordinance, 1979 which authorized imposition of professional/trade tax, was an act of the Provincial Government and, therefore, no exception could be taken to the judgment of the learned High Court.
7. The submissions of the learned counsel have been considered. In fact the learned High Court, although referred to Article 163 of the Constitution, yet did not examine its effect as to the powers of a local council to impose the disputed tax. It will be appropriate to reproduce Article 163 for facility of reference:--- "A Provincial Assembly may by Act impose taxes, not exceeding such limits as may from time to time be fixed by Act of Majlis-e-Shoora (Parliament), on persons engaged in professions, trades, callings or employments, and no such Act of the Assembly shall be regarded as imposing a tax on income."
(Underlining is ours)
The words underlining by us have reference to the Professional Tax Limitation Act, 1941.
8. A bar perusal of the aforesaid Article shows that the repository of the power to impose professional/trade tax is only the Provincial Assembly and that tou by an Act. The article neither empowers the Provincial Assembly to C.L.R. delegate its authority to impose such a tax. In favour of the Punjab Government or a Local Council nor it permits imposition of such a tax by subordinate legislation i.e. The notifications which were impugned in the two Constitutional petitions filed by the appellant-company. The argument of the learned counsel appearing for the local council based on Sections 137 and 138 is totally misplaced because Article 163 stands in the way and any provision in any statute to the contrary will leave to yield in favour of the said Article. Since the impugned tax is being defended on the basis of Sections 137 and 138 of the Local Government Ordinance, 1979, it will be appropriate to reproduce the extracts from the said sections:--- "S. 137. Taxes to be levied.---A local council subject to the provisions of any other law may, and if directed by government shall levy all or of the taxes enumerated in the Second Schedule.
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6. Xxxxxxxxxx S. 138. Notification and enforcement of taxes.--(1) All taxes levied by a local council shall be notified and shall, unless otherwise directed by Government, be subject to previous publications.
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9. Perusal of Section 137 shows that power of a local council to levy impugned tax was subject to any other provision of law. The limitation on the powers of the local government to impose tax is in built in the said provision Article 163 places a complete embargo to levy professional/trade tax except by an Act of a Provincial Assembly. It may also be noted that Provincial Government, in accordance with provisions of Article 163, had already imposed, by way of Punjab Finance Act (No. XV of 1977), tax on professions/trade etc. Which according to learned counsel for appellant, is being regularly paid since its imposition. In 1977. It may also be noted that in the Local Government Ordinance, 2001, the Second Schedule from Parts-III and IV and the clause authorizing a local council to impose professional/trade tax (which existed under the 1979 Local Government Ordinance) has been omitted which clearly demonstrates the legislative intent that its retention in Local Governments Ordinance, 2001 was not considered appropriate or found redundant in view of Punjab Finance Act (No. XV of 1977).
10. In view of the above, we allow Civil Appeals Nos. 1902 of 2002 and 1381 of 2005 of the ICI Pakistan Limited and declare that the Tehsil Council, Pind Dadan Khan (now Tehsil Municipal Administration) is not lawfully empowered to levy any professional/trade tax. In view of the conclusion reached by us, Civil Appeal No. 1382 of 2005 filed by the Local Council is dismissed: .