1. SAJJAD ALI SHAH, J. --- Through this common judgment we intend to decide captioned. Five Constitutional petitions containing similar facts and common questions of ' law with the following prayers:--- "(1) Declare that the impugned demand notices and part of the impugned Notification classifying the petitioner as a commercial property is void and of no legal effect and there exists a clear-cut estoppel vis-a-vis the respondents Nos. 1 .To 3 for giving effect to the said demand notices and part of the impugned Notification;
(2) Declare that the (Petitioner) is an industrial establishment for all purposes, until revised as such by the competent authorities: Declare that the respondents Nos.4 and 5 have slept upon the rights of the petitioner and the said respondents may be directed to enforce their executive authority vigilantly;
(4) Restrain the respondents Nos. 2 and 3 perpetually not to levy property tax on the (Petitioner) as a commercial activity but as an industry , until revised as such-by the competent authorities;
(5) Direct the respondent No. 2 to refund excess amount paid inadvertently and under a bbna. Fide mistake by the Petitioner;
(6) Direct the respondents Nos.4 and 5 not to let the respondents Nos. 1 and 2 encroach upon its express jurisdiction under the laws of the land effectuating into hardships by the petitioner and other similar industrial activities; Any other relief/reliefs deemed fit may also be granted under the peculiar circumstances of the case."
2. The facts for the purposes of deciding these petitions though similar but since in some cases the Petitioners had acted upon the impugned classification therefore, are separately summarized with their distinguishing features:- "Petitioner in C.P. No.D-1401/2002 claims to be the owner of Karachi Sheraton Hotel and Tower. It is asserted that the Respondents on 26.06.2002 issued 'Notification No. SO(TAXES)/E&T/3 (310) 2001.PT.II.
3. (hereinafter referred to as the, "said Notification") 'notifying annual value of the properties of various categories situated in various, rating areas of Karachi Division for the purposes of levy of property tax. The Respondents ,on the basis of "said Notification" created a demand against the Petition vide Demand gated 28.01.2002 classifying, the property of the Petitioner for the purposes of levy of property tax as an ordinary commercial property. The Petitioner after payment of said demand realized that the Respondent had created time said demand treating the Petitioner as an ordinary commercial property at the rate of Rs. 5/- per 'sq. Ft. Instead of industrial property at the rate of Rs. 0.70' per sq. Ft. The Petitioner, after realizing such inadvertent payment vide its letter dated 08.04.2002 requested the Respondent to treat the Petitioner's property for the purpose of levy of property tax as an industrial property and to refund the excess amount inadvertently paid.
4. However, the Respondent declined the request of the Petitioner vide their letter dated 07.06.2002.
5. The petitioner therefore invoked the Constitutional jurisdiction of this Court.
6. Petitioner in C.P. No. D-616/2003 claims to be the owner and operator of Pearl Continental Hotel whereas Petitioner in C.P. No. D-617/2003 claims to be owner and operator of Marnot Hotel. It is asserted by the Petitioners that on the basis of "said Notification" a Notice dated 14.02.2002 for reassessm ent was received by the Petitioners which reflected that the property of the Petitioners has been classified as an ordinary commercial property for the purposes of levy of property tax.
7. The Petitioners filed objections to such re-assessment which were rejected by the Assessing Authority vide its Order dated 9th April, 2002 giving rise to an appeal, however, during the pendency of appeal Petition& came to know about filing of C.P.No. 1401/2002, therefore, they also invoked the Constitutional jurisdiction of this Court.
8. Petitioner in C.P. No. D-537/2003 claims to be the owner of Beach Luxury Hotel who paid the demand created on the basis of "said Notification" and after realizing that the said demand was created by treating the Petitioner's property as an ordinary commercial property and further that such classification has been challenged in this Court by filing C.P. No. D1401/2002, therefore petition.
9. Accordingly. Was filed.
10. M/s. Kazi Abdul Hameed Siddiqui and Naveed Ahmed. Learned Counsel for the Petitioners hove contended that the Respondent-Government of Sindh, vide "said Notification" have notified valuation tables for the purposes of determining annual rental ,value of the properties of various categories situated in various rating areas of Karachi Division for the purpose of levy of property tax, the Notification categorizes an ordinary commercial property for the purposes of assessment and levy of property tax at the rate of Rs. 5/- per sq. Ft., whereas industrial property has been notified at the rate of Rs. 0.70 per sq.Ft. It was argued that the classification of the Petitioners' property as an ordinary commercial property instead of Industrial is void and of no legal effect. It was further contended that since Ministry of Industries and Production, Government of Pakistan vide Circular No. 1-129/99-I&V-IV dated 02.08.1999 (hereinafter referred to as 'said Circular') had restored the status of Tourism as an industry and such declaration by the Federation is under the powers derived from Item No. 3, Part II of the Federal Legislative List, therefore the 'said Notification' could not have classified the Petitioners as `commercial property' for the purposes of assessm ent of property tax. It was contended that in the line of said directions various amenities like power and gas are provided to the Petitioners at industrial tariff and further that CBR has classified the hotels as an industry to provide extra-ordinary concession in Customs duties while importing plants, machineries and equipments and, therefore, the Respondents were bound to provide same treatment to the Petitioners by classifying their properties under the head of "Industrial Property". It was next contended that Article 149 of the Constitution of Islamic Republic of Pakistan provides that the Executive Authority of the Province shall be so exercised as not to impeded or prejudice exercise of the Executive Authority by the Federation and since the Federation through 'said Circular' has declared the hotel as an industry, therefore the Government of Sindh has no right to classify the petitioner as an ordinary commercial property. It was, lastly, argued that Government of Sindh vide Ordinance XIII of 2005 has substituted Section 3 of the Colonization of Government Lands Punjab Act, /912 in its application to Province of Sindh and sub- clause (d) to Clause (P) of newly added Section 3 recognizes the hotel as industry for the purposes of disposal of Government land, therefore, such classification is directly in conflict with Ordinance XII of 2006.
11. On the other hand Mr. Ahmed IPirzada, learned-Additional Advocate-General, Sindh for Respondents Nos. 1 to 3 has contended that an industry is always considered to be a productivity unit with installation of machineries and equipments, whereas the petitioners have no productivity at all therefore cannot be categorized as an industry. It was next contended that the notification of the Tourism Department referred to by the learned counsel for the petitioner cannot restrict the application of Sindh Urban.
12. Immovable Property Tax Act, 1958 for the purposes of determining the rental value under the provisions of Act, 1958. It was further contended that the Hon'ble Supreme Court in the case of M/s. Tures Hotel Limited v. Capital Development Authority (2006 SCMR1738) has held that the orders or Notification issued by the Federal Government under other laws declaring business of hotel as, an industry would not affect the nature of the building or use of plot. It was next 'contended that during the general survey, the petitioners in data collection Form PT-VII-A themselves declared their property as commercial unit and not an industrial plot and therefore, the petitioners could not be categorized otherwise. In response to the contention of the petitioners as to amendment in the colonization and disposal of Government Lands (Sindh) Act, 1912. It was contended that Section 5-A of the. Sindh Urban Immovable Property Tax Act, 1958 empowers the Provincial Government to notify the valuation tables for the purposes of determining annual value of the properties of various categories situated in various rating area of Karachi Division and the Colonization and Disposal of Government Lands (Sindh) Act, 1912 has no nexus or bearing on the assessment and levy of Property Tax Act, 1958: It was further contended that the said Notification as well as Section 5-A was assailed in petitions bearing C.P. No. D'-1893/2002. D-251, D-618/2003, and D514/2005 and a Division Bench of this Court has dismissed the petitions by holding that nothing has been brought to our notice Which can be held to be violative of the provisions contained in Section 3, 5 and 5-A of the Sindh Immovable Property Tax Act, 1958." It was lastly contended that the petitioners have failed to exhaust departmental remedies as provided under Section 10 of the Urban movable Tax Act, 1958 which provides the remedy of appeal and revision against the order of the authority, therefore, the petitions being pre-mature as well as incompetent and are liable to be dismissed.
13. Miss Soofia Saeed Shah, learned Standing Counsel, while adopting the arguments of Mr. Ahmed Pirzada, has contended that the imposition of property tax, being a Provincial subject and the 'said Circular' by no stretch of imagination be construed to be an interference in the Provincial autonomy. It was further pointed out that in Federal Capital "Hotels" are being assessed for the purposes of levy of property tax as commercial properties. In rebuttal Mr. Siddiqui has contended that hotel is an industry and recognized as such throughout the world and in modern days the hotels have all kind of plants and machineries fixed therein, and further that since the term "Industry" has not been defined in the Act, 1912, therefore, in 'order to find out its meaning sub- section (17) of Section 2 of I.R.O. Was referred which defines industry as any business, trade manufacture, calling, service, occupation or employment engaged in an organized business activity of producing 'goods or services for sale etc., therefore, the petitioners are to be assessed as industrial plot.
14. We have heard the learned counsel for the respective parties and have gone through the record placed-before us as well as the case-law relied upon.
15. A minute perusal of the 'said Notification' reveals that the Respondent-Government of Sindh. For the purpose of determining annual value of the properties of various categories situated in various rating areas of Karachi Division, has notified a Schedule (Valuation Table) which not only prescribes the mode of which the annual value of the properties is to be determined but. Further categorizes the properties in the following three heads i.e.:
(i) Residential Properties: (a), Residential plots; (b). Residential houses;
(c) Regularized Katchi Abadies.
(ii) Commercial Properties: (a) Ordinary Commercial Properties;
(b) Commercial Properties in regularized Katchi Abadies;
(c) Concessionary specified Commercial: Properties' i.e. Educational Institutions, Hotels, Clinics, Entertainment Places/Cinemas, Sport Complexes, Petrol Pumps and licensed Warehouses.
(iii) Industrial Properties: '(a) Industrial However, neither the said Notification nor the Schedule (Valuation Table) annexed, thereto specifies the kind of properties to be assessed under each head except the properties falling under the head of concessionary specified commercial properties.
16. Examining the case of the Petitioners in This background, specially when the Petitioners have not challenged the authority of the Respondent (Provincial Government) to levy the property tax on the properties, 'categorized above, and have only impugned the 'said Notification' to the extent of classifying the Petitioners as a `commercial property', however, neither the learned counsel for the Petitioners was able to point. Out nor we could find `Hotel' classified under the head of commercial properties, therefore, the contentions of the learned counsel for the Petitioners that by virtue of 'said Circular' the Respondents were bound to classify the Petitioners under the head of Industrial Property instead of commercial or the classification of the Petitioner's property under the head of 'Commercial Properties' is against the executive authority of the Federation appears to be totally misplaced. It is further important to observe that per learned counsel, the authority to issue 'said Circular' was derived from item No. 3 Part-II of the Federal 'Legislative List, whereas perusal of Item No. 3 reflects that it envisages development of Industries under the Federal control only if declared by a Federal Law to be expedient in public interest and that too in respect of Institutions, Establishments, Bodies and Corporations administered. Or managed by the Federal Government, Consequently, the contention of the learned counsel appears to be mis-conceived. Even otherwise, a circular, whatever its nature may be, cannot upset the provisions of a Statute duly promulgated within the competence of a Province. Similar view was taken by this Court in the case of Farough Ahmed Siddiqui v. The Province of Sindh (PLD 1.9.96 Kar. 267).
17. As to the status of 'Tourism' as 'Industry', it appears that by giving 'Tourism' the status of Industry' in accordance with the said Circular' the Government of Pakistan in its Investment Policy had provided the following incentives:-- Incentives: (i) 10% custom duty on import of plant, machinery and equipment.
18. Tax relief; First year Allowance 75% of machinery cost..
(iii) Tourism 'Projects to be allowed the -status of industry.
(iv) 50% of income tax exemption be allowed to tour operators who bring in at least 500 inbound tourists in the form of group tours in that calendar year.
19. Number of taxes covering the Hospitality Sector will be restricted to a maxim of six or seven taxes at the Federal and Provincial levels.
(vi) On the recommendations of the Ministry of Tourism, land for hotels, motels recreation . Parks, fun lands, athletic clubs, cultural centers etc ., to be provided on non-commercial rates and on long lease basis by the development authorities at the Federal and Provincial levels. and none of the incentives reflects that there were any directions from the Federal Government to the Provinces to assess the hotels as 'industrial property' instead of their original status of being 'commercial. It would further,' be-pertinent to observe that in the Federal Capital, even the Capital Development Authority, itself, with the sanction of the Federal Government through it's Resolution No. 3 had classified commercial and business plots in the following terms: "(2) Commercial and Business plots: Plots located,. In .Commercial area meant for use as markets, departmental stores, shops, business offices, restaurant, cafees, hotels, cinemas, theatre, motels, marriage hall, petrol filling stations, incidental shops corners and included flat-sites in such area whether or without shops and offices etc."
20. A perusal of Regulation 3 as reproduced above reflects that 'hotels' for the purposes of assessment and levy of property tax were classified under the head of 'commercial and business plots' and such classification was upheld by the apex Court in the case of M/s. Tures Hotels (supra). It is further pertinent to observe that a Division Bench of this Court in the case of Karachi Properties Investment Company (Pvt.) Limited v. Government of Sindh (C.P. No. D-1893 of 2002) has not only upheld the legality of the said Notification and the valuation table but also the powers of Provincial Government to issue said Notification".
21. As to the contentions of the learned counsel for the Petitioners that various amenities are being provided to the Petitioners at industrial tariff and further that the Central Board of Revenue.
22. Government of Pakistan has also classified the hotel as any industry in order to provide extraordinary concession in Customs duties etc., suffice it to observe that such concession/incentive being part of investment policy made in consequence to grant of such status and further that such contentions were raised before the Hon'ble Supreme Court in the case of M/s. Tours Hotel Islamabad (supra) and were responded in the following terms:- Several Office Memorandums or Notifications being relied upon by the appellants would show that concerned authorities like WAPDA, Ministry of Oil and Gas or the Ministry of Tourism have included the hotel/motels in the term "industrial" for the application of relevant laws. On the other hand, it is also evident that no statutory enactment has been made in the C.D.A. Rules whereby hotels/motels situated in the Jurisdiction of C.D.A. Have been included in their term "industry", "industrial" or "institution", as such appellants cannot claim such relief. The appellants were allotted commercial plots for .The construction of hotels: The orders or notifications issued by Federal Government under the laws declaring business of hotel as industry would not affect the nature of building or use of plot as defined in the Regulation No, 3 of C.D.A."
23. It may be true that in order to promote tourism the Federal Government has provided certain concessions to the tourism including hotels etc., to attract investors. However, such concessions or the change of status was only for the purposes of providing specified concessions and incentives and it cannot be said that it has changed the status of the property even for the purposes of assessm ent of property tax.
24. It appears that in the instant case, too, the Petitioners, were granted commercial properties and during the general survey, they declared their property as commercial and consequently were assessed under the head of Commercial Properties by the Assessing Authority, some of the Petitioners without objecting ,to such classification by the Assessing Authority paid the tax so assessed as they were paying the property tax, as "commercial property" since many years whereas the Petitioners in C.O. No. D-616/2003 and D-617/2003 challenged such . Assessment by filing objections which were rejected by the Assessing Authority vide Order dated 10.04.2002 against which an Appeal under Section 10 of the Urban Immovable Properties Tax Act, 1958 was filed before Director of Excise and Taxation Division, however pending such appeal the petitioners switched over the remedy by filing the present petition without any compelling or justifiable reason and such practice of switching the remedy was deprecated by the Hon'ble Supreme Court in the case of Al-Akram Buildings (Pvt.) Limited v. Income Tax Appellate Tribunal (1993 SCM R 29) holding that:--- "In the present case the appellant had opted to avail of the hierarchy of forums provided for under the 'Ordinance up to the stage of filing of appeal before the Tribunal and, therefore, it would have been proper on the part of the appellant to have invoked Section 136 of, the Ordinance for making a reference to the High Court instead of filing a Constitutional petition. In our view, once a party opts to invoke the remedies provided for under the relevant, statute, he cannot at his sweet will switch over to Constitutional jurisdiction of the High Court in the mid of the proceeding in the absence of any compelling and justifiable reason."
25. As to the effect of Ordinance XIII of 2005 on the status of the property of the Petitioners, it appears that the. said Ordinance was promulgated on 08.11.2005 and under clause (al) of sub-Article (2) of Article 128 of the Constitution of Islamic Republic of Pakistan had a life-time of three months which had expired on 07.02.2006 and it appears that neither it was re-promulgated nor was laid before the Provincial Assembly and therefore, it stood repealed. Learned counsel for the Petitioners could not controvert this position. The record further reflects that the Ordinance was neither in existence when the assessm ent order was passed nor at the time of filing the instance petition, it appears that the said Ordinance was promulgated during the pendency of these petitions and had lapsed well before the Petitions were taken up for final adjudication and since assessment of property tax is a recurring process, therefore, neither it was urged nor it can be held that the Petitioners had acquired any right or privilege in perpetuity to be enforced accordingly. .