1. IJAZ AHMAD, J.--- Learned counsel for the petitioner through the instant petition challenges imposition of advertisement fee by the city District Government, Rawalpindi on shop boards installed on the front of the shops for advertisement of commercial products of the petitioner- company.
2. 2.Briefly, the facts of the case are that respondent No.1 issued notification dated 19-3-2007 under section 116 of the Punjab Local Government Ordinance, 2001 read with Second Schedule Part-II(11) and Punjab Local Governments (Taxation) Rules, 2001 imposing advertisement fee in continuation of resolution of Zila Council dated 14-3-2007. Respondents Nos.3 and 4 were awarded contracts for collection rights of advertisement within the area of TMA Rawal Town respectively and TMA Murree Town through work orders both dated 2-5-2007.
3. 3.Respondent No.3 issued bill dated 25-5-2007 amounting to Rs.341,550/- demanding the advertisement fee along with details of the shops pertaining to Rawal Town area. A bill/demand notice dated 5-6-2007 for Rs.784,800/- for Murree Town area was issued by respondent No.4. The petitioner in response to the said notices demanded copy of any notification along with the bye- laws from the said respondents on the basis of which the fee was demanded.
4. 4.Learned counsel for the petitioner contends that the petitioner a public limited company, is one of the leading manufacturers and distributors of aerated beverages; that the demand of advertisement fee by the respondents is illegal as no services in lieu of the said fee are being provided; further contends that the respondents cannot levy fee as per notification dated 19-3- 2007 as the same was not published in the official Gazette within the financial years of 2006-2007 and 2007-2008; that the requirements of law i.e. section 116 of Punjab Local Government Ordinance, 2001 (hereinafter to be referred as the Ordinance) and Punjab Local Governments (Taxation) Rules, 2001 (hereinafter to be referred Taxation Rules) have not been complied with as respondent No.1 was under an obligation to draw a preliminary taxation proposal, make publication of the same in the newspapers inviting objections, afford a hearing thereon and thereafter, the said proposal was required to be presented in the meeting of the council for finalisation and sanction. After sanction of the proposal, respondent No.1 was to have the notification published in the official Gazette; further contends that respondent No.1 cannot contract out its functions to an individual as the same can be so awarded only in favour of a public-private, public or private organisation under section 4(2)(a) of the Ordinance and that notice cannot be issued by a private individual. It may be issued by an officer of the local government authorised by Nazim under section 142 of the Ordinance and that a taxation bill can only be issued by the Taxation Officer under Rule 10 of the Taxation Rules. In support of his contentions, he places reliance on judgments reported as 2004 YLR 366 titled "Messrs Shamim and Co. v. Tehsil Municipal Administration Multan City through Nazim and 2 others", 2007 CLC 35 "Messrs ACE Quality (Pvt.) Ltd. through Chief Executive v. Tehsil Municipal Administration, Multan Saddar through Nazim and 3 others", judgment dated 27-6-2006 passed in Writ Petition No.3222 of 2004, judgment dated 2-4-2008 passed in Writ Petition No.1125 of 2004 by Lahore High Court, Lahore, 2005 MLD 1520 titled "Arbab Contracting and Co. through Managing Partner v. Tehsil Municipal Administration Multan and 2 others", 2011 MLD 1987 titled "Messrs Coca- Cola Beverages versus Cantonment Board Chaklala, Rawalpindi and others", 1990 CLC 1732 titled "Rauf Trading Company Limited v. Faisalabad Municipal Corporation through Mayor and another", PLD 1997 Lahore 456 titled "United Business Lines, S.I.E. Gujranwala and another v. Government of Punjab through Secretary, Local Government, Lahore and 5 others", 2005 SCMR 675 titled "Secretary to the Government of Pakistan, Ministry of Finance and others v. Muhammad Hussain Shah and others", 1999 SCMR 1402 titled "Collector of Customs and others v. Sheikh Spinning Mills", 1994 SCMR 1393 based on judgment of the House of Lords titled "McCarthy and Stone (Developments) Ltd v.
5. London Borough of Richmond upon Thames", PLD 2011 SC 347 titled "Government of Sindh through Secretary Agriculture and Livestock Department and Others v. Messrs Khan Ginners (Private)
6. Limited", 2013 SCMR 1511 titled "Lucky Cement Factory v. Government of N.-W..F.P", 2012 CLC 1471 titled "Johar Ali (Raki) and another v. District Coordination Officer (DCO) and 9 others" and 2012 CLC 1124 titled "Exide Pakistan Limited v. Cantonment Board Clifton and another".
7. 5.On the other hand learned A.A.-G. vehemently opposes the instant petition and maintains that respondent No.1 has imposed the advertisement fee in accordance with law under section 116 of the Ordinance read with Second Schedule, Part-II, Item 11 read with Taxation Rules; that the City District Government is empowered to levy advertisement fee; that the necessary bye-laws have also been framed by respondent No.1. It is further contended by the learned A.A.-G. that the collection rights have been contracted out under the Punjab Local Government (Auctioning of Collection Rights) Rules, 2003; that this is tax/fee one of the main sources of income of the respondent local government, thus prays for dismissal of the instant petition.
8. 6.I have heard the learned counsel for the parties and have also gone through the record.
9. 7.The main contention of the learned counsel for the petitioner is that though respondent No.1 may levy fee on advertisement but such a right has a precondition and a corresponding duty cast on the Local Council that such specific service must be provided. To resolve this issue, the terms 'fee' and 'tax' have to be defined and distinction has to be drawn inter se the two terms. Tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered whereas fee may be generally defined to be a charge for a special service rendered to individuals by some governmental agency or a Local Council under the principle of quid-pro-quo. In this regard, I seek support from the judgments cited as 1999 SCMR 1402 titled "Collector of Customs and others v. Sheikh Spinning Mills", 1994 SCMR 1393 based on judgment of the House of Lords titled "McCarthy and Stone (Developments) Ltd. v. London Borough of Richmond upon Thames", and 2013 SCMR 1511 titled "Lucky Cement Factory v. Government of N.- W.F.P". The City District Government is not providing any service to the petitioner for displaying the name of its product or logo on the facade of shops of private persons. This in fact is a private arrangement between the petitioner and the shopkeepers. The petitioner uses the facade of shop to display his logo. The shops name also appears on the board or the neon-sign at the expense of the petitioner. The money demanded by the respondents cannot be termed as 'fee', thus, the respondent City District Government cannot demand advertisement fee from the petitioner and the said demand is declared illegal.
10. 8.Notification dated 19-3-2007 was not published in the official Gazette during the financial years 2006-2007 and 2007-2008. Such a notification has no legal effect. Respondent No.1 has appended Notification No.416/EDOR/TAX dated 12-7-2008 published in the official Gazette on 4-11-2008 with the report and para-wise comments. Demand of the advertisement fee for the year 2006-2007 from the petitioner is also illegal on the ground that the said notification cannot take retrospective effect as the same adversely affects the rights of the petitioner. In this regard I seek support from the judgments cited as 2005 SCMR 675 titled "Secretary to the Government of Pakistan, Ministry of Finance and others v. Muhammad Hussain Shah and others" and PLD 2011 SC 347 titled "Government of Sindh through Secretary Agriculture and Livestock Department and others v.
11. Messrs Khan Ginners (Private) Limited".
12. Further, the respondents have failed to place on record any document substantiating that they have complied with the requirements of section 116 of the Ordinance which reads as: "Taxes to be levied: (1)A Council may levy taxes, cesses, fees, rates, rents, tolls, charges, surcharges and levies specified in the Second Schedule through a notification in the official Gazette.
13. (2)No tax shall be levied without previous publication of the tax proposal and after inviting and hearing public objections.
14. (3)
15. They have also failed to comply with Rules 3, 4, 5, 6, 7, 8 and 9 of Taxation Rules providing for the publication of the proposal, notice inviting public objections and suggestions, hearing of objections, finalisation of the proposal and subsequent sanction by the local council. Failure of the respondents in this regard renders Notification No.416/EDOR/ TAX dated 12-7-2008, as illegal.
16. Reliance is placed on 1990 CLC 1732 titled as "Rauf Trading Company Limited v. Faisalabad Municipal Corporation through Mayor and another".
17. In the instant case impugned notices have been issued by the contractors under section 142 of the Ordinance which reads as under:--- "Notices and Authorisation ... Each Nazim shall authorise an officer or officers under his administrative control.
(a) To issue legal notices on behalf of the respective administration for violation or commission of any offence under this Ordinance, rules or bye-laws.
18. (b)
19. Under the said provision, such a notice can only be issued by an officer of the Local Government authorised by its Nazim whom a contractor might make a request. The contractors are certainly not under the administrative control of the Nazim, therefore, notices issued by them are also without lawful authority.
20. 9.Under section 54(2)(a) of the Ordinance, TMA may assign or contract out its functions to public- private, public or private organisation. In the said provision word organisation has been used and not a person. Thus, it is evident that TMA cannot contract out its functions to an individual. The award of contract to an individual is also an illegality and violative of the above provision of law.
21. Reliance is placed on judgments reported as 2004 YLR 366 titled "Messrs Shamim and Co. v. Tehsil Municipal Administration Multan City through Nazim and 2 others" and 2005 MLD 1520 titled "Arbab Contracting and Co. through Managing Partner v. Tehsil Municipal Administration Multan and 2 others".
22. 10.Although the respondent City District Government has framed bye-laws but the same are of no help to them as even then the City District Government could not demand advertisement fee from the petitioner for the reason that no services are being provided by the City District Government to the petitioner as the boards in question have been installed on private shops/offices in consequence of some mutual arrangement between the petitioner and the shop owner.
23. 11.For the reasons discussed above, the imposition of fee by the respondents without satisfying the preconditions without providing any corresponding service or facility and issuance of the recovery notices by the contractors are declared illegal, ineffective on the right of the petitioner.
24. Consequently, Notification No. 416/EDOR/TAX dated 12-7-2008 allegedly published in the official Gazette on 4-11-2008 and demand notices dated 25-5-2007 and 5-6-2007 are declared illegal, unlawful having been issued without lawful authority, hence ineffective on the rights of the petitioner. The same are set aside. This petition is accepted.