' MUHAMMAD JUNAID GHAFFAR, J.---Through instant petition, the petitioner has impugned the order dated 12-5-2011 passed in Revision No.8 of 2009 by the Director General, Excise and Taxation Sindh, Karachi ("Impugned Order") whereby the Revision Application has been dismissed which was preferred against the order dated 23-5-2009 passed by the Collector/Director (Taxes-I), Excise and Taxation, Karachi who had also dismissed the Appeal of the petitioner against the levy of Property Tax.
2. Briefly, the facts as stated in the memo of Petition are, that the petitioner is a Hospital under the name of "Liaquat National Hospital Institute of Postgraduate Medical Studies and Health Sciences"
("Hospital") and is registered as an Association under the Societies Registration Act, 1860. The petitioner claims to be an establishment for charitable purposes and accordingly applied for exemption from the levy of property tax in terms of section 4(f) of the Sindh Urban Immovable Property Tax Act, 1958 ("Property Tax Act"). The case of the petitioner was initially examined and considered on 17-4-1967 and the petitioner was recognized as a Charitable Institution within the meaning of section 4(f) of the Property Tax Act and was accordingly issued a certificate by the Director Excise and Taxation Karachi. Subsequently, vide order dated 29-1-1979 the Director / Collector Excise and Taxation (Tax) Karachi granted the exemption from the property tax to the petitioner for the years 1967-68 to 1977-78 and observed that in future the Excise and Taxation Officer shall grant exemption in all cases falling under sections 4(d) and 4(f) of the Property Tax Act, where no rental income was involved. It is further stated that the petitioner has also been recognized as a Charitable Institution by various other Departments at the Federal and Provincial level, including but not limited to, exemption under section 153(4) of the Income Tax Ordinance 2001, letter dated 16-10-2003 of the Law Department Government of Sindh, whereby it has been observed that the petitioner is exempt from the purview of the Industrial Relations Ordinance, 2002 under section 1(4)(e) and certificate of registration dated 23-7-1986 issued by the Director of Social Welfare Government of Sindh. It is further stated that on 29-3-1987 through a letter issued by the Excise and Taxation Officer, the petitioner was informed that vide order dated 28-3-1987 passed by the Director Excise and Taxation, the petitioner's request for exemption under section 4(f) of the Property Tax Act has been rejected and the petitioner was directed to pay the outstanding amount for the year 1982-83 to 1986-87. The petitioner being aggrieved with the aforementioned order, preferred a Revision before the Director General /Commissioner Excise and Taxation Karachi, which was also dismissed and subsequently the petitioner filed a Constitutional Petition bearing C.P. No. 855/1987 before this Court which was allowed vide judgment dated 10-2-2000 by a Division Bench of this Court by relying on an earlier judgment dated 10-2-2000 passed in an identical case in the case of Ziauddin Hospital Trust v. Director General/Commissioner, Excise and Taxation and another in C.P. No. 187 of 1987. Both these judgments were challenged before the Hon'ble Supreme Court by the department and the Hon'ble Supreme Court vide order dated 6-4-2009 passed in C.P.L.,A.
No.472-K/2000 and 487-K/2000 was pleased to remand the matter to the Director, Excise and Taxation Karachi, for assigning the same to the competent authority for determination afresh as to the charitable status of the petitioner on the basis of the evidence to be presented by the petitioner. After remand of the matter, the representation of the petitioner was dismissed vide order dated 23-5-2009 by the Collector /Director Excise and Taxation Karachi against which the Revision Application was also dismissed vide the impugned order which has now been assailed through the instant petition.
3. Mr. Yousuf Ali Saeed, learned counsel for the petitioner referred to section 4(f) of the Property Tax Act and contended that the words "public charity" includes a hospital. Learned counsel contended that the impugned orders have been passed by the respondents without proper application of an independent mind as they have failed to consider the evidence placed before them by the petitioner. Learned counsel further contended that the petitioner being a registered Association under the Societies Act, 1860 is not an income generating institution and all the earnings of the hospital are attributed to the objects stated in the Memorandum of Association of the hospital. Per learned Counsel, no income of the hospital is distributed to any of its members or offlers; hence the petitioner qualifies as a "Charitable Institution". Learned Counsel also referred to the certificate issued by the office of the Commissioner of Income Tax, Legal Division, RTO Karachi, dated 23-9- 2008, whereby the petitioner has been approved as a "Non Profit Organization" under Rule 212 of the Income Tax Rules 2002 for the purposes of donations being received by the petitioner. Learned Counsel further contended that the respondent No. 3 in its order dated 23-5-2009, which has been upheld through the impugned order, has completely misread the Audited Accounts furnished by the petitioner, and the figures stated in millions have been read in thousands and the learned respondent No.3 has rejected the claim of the petitioner, merely by observing that only a meager amount of Rs.85,374 has been spent on public charity in the shape of discount, rebate and concession in fees to poor and needy patients. Learned Counsel further contented that respondent No. 2 has erred in law while refusing to grant exemption to the petitioner on the ground that the petitioner was receiving charges from its patients, as such the petitioner's hospital does not falls within the ambit of "public charity". However, per learned Counsel receipts in lieu of hospital charges received from those patients who can afford the treatment, does not disentitles the petitioner from being called as a Charitable Institution, as all such receipts/income is not distributed to any of the members or the officers of the hospital, rather it is spent on running the affairs of the hospital, including salaries and other expenditure, whereas a hefty amount is spent on charity in the shape of discount and other rebate to the needy patients as and when -the occasion arises. In support of his contention the learned Counsel relied upon the case of Pakistan Cricket Board v. Director General Excise and Taxation and others reported in 2011 CLC 1894, Pakistan through Secretary Ministry of Defence v. Province of Punjab and others reported in PLD 1975 SC 37, Fauji Foundation and another v. Shamimur Rehman reported in PLD 1983 SC 457, and the case of Resch's Will Trust by House of Lords reported in 514 P.C. (Privy Council) 1969.
4. Conversely, Mr. Saifullah learned Assistant Advocate General, Sindh contended that the impugned order in Revision, as well as in Appeal, have been passed after examining the evidence and other material brought on record by the petitioner and the orders are self speaking, reasoned and unexceptionable. Learned A.A.--G. Further contended that the petitioner is not involved in any sort of charity work, hence does not qualify for the exemption being claimed in terms of section 4(f) of the Property Tax Act. Learned A.A.-G. Further contended that the case of the petitioner is of a factual controversy which has already been determined by the respondents Nos. 2 and 3 and this Court has no jurisdiction to upset any such finding of fact, as recorded by the respondents Nos. 2 and 3. Learned A.A.-G. Further contended that the exemption available under the Property Tax Act is for institutions which are exclusively involved in charitable work and since admittedly, the petitioner, as per its own Audited Accounts, is not rendering the charitable work exclusively, hence, not entitled for any exemption under the said Act. In support of his contention learned A.A.-G. Relied upon the case of Karachi International Container Terminal Ltd. v. Government of Sindh through Secretary Excise and Taxation and others reported in 2005 SCM R 1183, Shaikh Sultan Trust v. Excise and Taxation Officer and others reported in 2006 YLR 573 and the case of Pak Com Ltd. And others v. Federation of Pakistan and others PLD 2011 SC 44.
5. We have heard the learned counsel for petitioner and the learned AAG and perused the record with their assistance. We have also gone through the case-law relied upon by both the learned counsel.
6. It appears that the precise controversy in the instant petition requires proper interpretation of the various provisions of the Property Tax Act, specially sections 3 and 4 of the said Act. In terms of section 3 of the Property Tax Act, the Government through a notification has the authority to specify urban areas where property tax shall be levied under this Act. Subsection (2) of section 3 further provides that the tax shall be charged, levied and collected at the rate of 25% of the annual value of the lands and buildings. Similarly section 4 provides for various exemptions and specifies the categories of properties on which such tax shall not be leviable. For the present controversy the relevant subsection is subsection (f) of section 4 of the Property Tax Act which needs to be examined. This subsection (t) has gone through substantial change in the year 2000, therefore the issue in hand has to be decided after keeping in mind the pre-2000 and post-2000 position of the Act and the issue of exemption from property tax being claimed by the petitioner is to be examined and decided in this perspective. The provision of subsection (f) of section 4 of the Property Tax Act was substituted by the Sindh. Finance Ordinance, 2000 and thereafter was again amended by the Sindh Finance Ordinance, 2001. Prior to the year 2000, subsection (f) of section 4 of the Property Tax Act was as under:-- "(f) building and lands or portions thereof used exclusively for public worship or public charity including mosques, churches, dharamsalas, gurdwaras, hospitals, dispensaries, orphanages, alms houses, drinking water fountains, infirmaries for the treatment and care of animals and public burial or burning grounds or other places for the disposal of the dead: ' Provided that the following buildings and lands or portions thereof shall not be deemed to be used exclusively for public worship or for public charity within the meaning of this section.
(i) Buildings in or land on which any trade or business is carried on unless the rent derived from such buildings or lands is applied exclusively to religious purposes or such public charitable institutions as may be prescribed:
(ii) Buildings or lands in respect of which rent is derived, and such rent is not applied exclusively to religious purposes or to public charitable institutions; and"
7. Thereafter an amendment was made in the year 2000 in section 4(f) of the Act vide Sindh Finance Ordinance, 2000 and section 4(0 was substituted in the following manner:- "(0 Building and lands or portions thereof used exclusively for mosques, churches, synagogues; temples, gurdwaras, dharamsalas, drinking water fountains, public burial or burning grounds or places earmarked for the disposal of dead."
' Through this amendment clause (f) was substituted and the exemption from property tax was restricted only for worship places, drinking water fountains and burial places. The words, "public worship or public charity' was also deleted. In pre-2000 position, the type of charitable institutions mentioned in section 4(0 of the Act ibid also included "hospitals", whereas in post-2000 the said category was missing. However, while carrying out amendment in subsection (0 the proviso was kept intact which provided a further classification that as to what buildings and lands shall be deemed to be used exclusively for public worship or public charity, if the rent received from such buildings and lands is riot exclusively applied for charitable purposes. It is pertinent to observe, that perhaps, due to oversight on the part of the draftsman, the proviso was not deleted or amended, as it had become redundant after the deletion of the words "public worship and public charity" from the main subsection. However, realizing such mistake, through Sindh Finance Ordinance 2001, section 4(0 was once again amended whereby once again the words "public worship or public charity: were inserted; however the word "hospital" was again missing from the type of Charitable institution explained earlier in section 4(f) of the said Act. The proviso was also substituted, bringing it in conformity with the subsection itself. The amendment carried out through the Sindh Finance Ordinance, 2001 reads as under:--
(b) In section 4---
(i) In clause (f), after the word "for", the words "public worship or public charity including" shall be inserted and for the existing proviso, the following shall be substituted; --- "Provided that the exemption to the charitable institution shall be allowed in the prescribed manner"
After the amendments in the year 2000 and 2001, now the provision of section 4(f) stands in the following manner which is reproduced as under:- "4. Exemptions.---The tax shall not be leviable in respect of the following properties, namely:- (a)
(b)
(i)
(ii)
(c)(i) -------------------------- (ii)
(iii)
(d)
(e)
(f) ' building and lands or portions thereof used exclusively for [public worship or public charity including] mosques, churches, synagogues, temples, gurdawaras, dharamsalas, drinking water foundations, public burial or burning grounds or places earmarked for the disposal of the dead:] [Provided that the exemption to a charitable institution shall be allowed in the prescribed manner.]"
8. As can be seen from the above, the exemption as contemplated in section 4(1) of the Act is on such buildings or lands or portions thereof, which are used exclusively for public worship or public charity including mosques, churches, synagogues, temples, gurdawaras, dharamsalas, drinking water foundations, public burial or burning grounds or places earmarked for the disposal of the dead. The proviso therein stipulates that the exemption to a charitable institution shall be allowed in the prescribed manner. Similarly there are rules issued in terms of section 23 of the Property Tax Act known as the Sindh Urban Immovable Property Tax Rules, 1958 ("the Rules"). Rule 24 of these rules provides the manner and mechanism under which an exemption is to be granted to a Charitable Institution. Therefore it is to be kept in mind that in the instant matter property tax is leviable on all such properties as are defined in section 2(d)(a) of the Property Tax Act; but except those which are exempt in terms of section 4 of the said Act. The Property Tax Act is a fiscal statute which imposes tax on the annual value as prescribed under the Act on the immovable property, whereas in the instant matter the petitioner is seeking exemption from the levy of such tax. The principles of interpretation in relation to an exemption clause and its application are well established. Firstly, the onus is on the taxpayer or the person who is claiming exemption from the levy of such tax to show that he is entitled to the benefit of such exemption. A Secondly, if two reasonable interpretations of the exemption clause are possible, then the one that favours the revenue authorities, though it may go against the taxpayer, has to be adopted. It is also to be kept in mind that if an exemption is available to a person on complying with certain conditions, then the conditions have to be strictly complied with. The present controversy is to be resolved by keeping in view the above settled principles of interpretation.
9. It appears that initially somewhere in 1967 the petitioner was recognized as a Charitable Institution within the meaning of section 4(f) of the Property Tax Act and was also issued a certificate to this effect by the then Director Excise and Taxation. Subsequently, it was once again reiterated in the year 1979 by the Director Excise and Taxation that the petitioner is exempt in respect of the property tax and also observed that exemption in all cases under sections 4(d) and 4(f) should be granted where no rental income is involved. It must be kept in mind that these exemption orders were issued prior to the year 2000, as thereafter the provisions of section 4(f) has been substantially amended. It is in this context and the law which was prevalent (i.e. Prior to the year 2000) that such an observation was made by the Director, Excise and Taxation, as the proviso had further explained that as to what properties shall not be deemed to be used exclusively for public worship or public charity on the basis of rent derived or received from such properties and their exclusive application towards religious purposes or to public charitable institutions. However, in the year 1987 the request of the petitioner for exemption from the said levy of tax under section 4(f) ibid was rejected and it was observed that the petitioner does not qualify thereunder. The said order of the Director Excise and Taxation was further challenged in Revision before the Director General Excise and Taxation Karachi, and such revision was also dismissed. Having left with no other departmental remedy, the said order was impugned through a Constitutional Petition bearing No. 855 of 1987 before this Court which was allowed by a Division Bench of this Court vide order dated 10-2-2000. However, the judgment dated 10-2-2000 was challenged before the Hon'ble Supreme Court and the Hon'ble Supreme Court vide its order dated 6-4-2009 passed in Civil Appeal No.346 of 2001 after setting aside the impugned judgment dated 10-2-2000, remanded the matter to the Director Excise & Taxation Karachi for disposal the same afresh. Thereafter, the petitioner made a detailed representation to respondent No. 3 and placed on record material, including the Audited Accounts of the Hospital to establish its case that the hospital being run by the petitioner, was for charitable purpose as well. The respondent No. 3 did not agree with such contention of the petitioner, and vide its order dated 23-5-2009 dismissed the appeal of the petitioner, whereby the exemption sought in terms of section 4(f) of the Property Tax Act was regretted. The petitioner thereafter challenged the said order in revision before the respondent No.2 who vide impugned order dated 12-5-2011 refused to interfere with the order passed by the respondent No. 2.Consequently, the petitioner has now impugned the same before this Court through instant petition.
10. The case of the petitioner is primarily based on the ground that the income and or the profit earned by the petitioner is not distributed for the benefit of the individuals as the petitioner is registered as a Society under the Societies Act, 1860, therefore the same falls within the meaning of public charity or is to be called as a Charitable Institution. The documents placed on record by the petitioner's Counsel, however, reflect that the hospital being run by the petitioner, is not exclusively a charitable organization, rather, provides subsidies and discounts to deserving patients for medical and diagnostic services according to their needs and in accordance with the policy of the petitioner's management. It is the case of the petitioner that the surplus over expenditure is not distributed to any of the members of the Association, and is rather utilized in the expansion, modernization and development of facilities at the hospital. Based on these submissions the petitioner claims to be a Charitable Organization and seeks exemption under the category of "Public Charity" in terms of section 4(f) of the Property Tax Act.
11. When the provisions of section 4(0 of the said Act are examined and perused, it appears that the above contention of the learned counsel for petitioner does hot have any merits. The reason being, that section 4(f) provides exemption to buildings and lands or portions thereof used "exclusively for public worship or public charity." The use of the B word "exclusively," restricts and or narrows the scope of the exemption available under section 4(1) of the said Act. This would mean that only such buildings and lands or portions thereof are exempted under clause (f) of section 4 of the said Act, which are used "exclusively" for public charity, whereas admittedly in the instant matter, the building and B land of the petitioner is not being used exclusively for public charity, but in a limited manner as is reflected from the Statements of Accounts placed on record by the petitioner. A somewhat similar controversy i.e. Whether the property in question was being used exclusively for the purposes of charity or not was brought before this Court in the case of Shaikh Sultan Trust v.
Excise and Taxation Officer reported in 2006 YLR 573, wherein the petitioner who claimed to be a Charitable Trust had challenged the levy of property tax in respect of a building owned by it. The case of the petitioner was, that the Charitable Trust was formed with the object of construction and rendering financial assistance to the institutions of Healthcare, Education and Socio-economic well being of the people, whereas the income of the Charitable Trust had also been exempted from the operation of Income Tax Ordinance by the then Central Board of Revenue. The learned Division Bench speaking_through late Sabihuddin Ahmed, J (as his lordship then was), examined the provisions of section 4(f) of the Property Tax Act and came to the conclusion that the exemption therein, is in respect of only those properties which are used exclusively for the purposes of public charity. It would be advantageous to reproduce the relevant findings of the learned Division Bench which are as under:- "As regards the contention premised on section 4(i) of the Act, it may be stated that even if the property was entitled to statutory exemption up to 27-3-1999 the same came to an end when the properties belonging to public charities ceased to remain entitled to such exemption. In any event the petitioner never acquired a right in perpetuity to the exemption from the levy of tax and the exemption could always be taken away through a specific legislation. When it was made available to public charity though the Finance Act, 2001, it was subject to the proviso that it would only be allowed in the prescribed manner. Learned Assistant Advocate General argued that under rule 24 of the Rules made under the Act, benefit of section 4(1)(f) could only be claimed by a Charitable Institution upon issuance of a certificate by the respondent No. 1 upon being specified that the income of the property being spent for a purpose for which exemption could be allowed. He contended that no information whatsoever in this respect was ever furnished to the respondent.
Moreover, we have noticed that section 4(1) (f) does not exempt all properties owned by a public charity from tax liability but only those properties which are used exclusively for the purposes of a public charity. Indeed there is nothing to indicate that the building is exclusively used by the petitioner for its charitable objectives. For the foregoing reasons we find no force in this petition and dismissed the same." (Emphasis supplied)
12. We are respectfully in agreement with the aforesaid decision of the learned Division Bench of this Court and are of the opinion that in so far as the exemption contemplated under section 4(f) of the Property Tax Act is concerned, the same is only available to such lands and buildings and or properties which are exclusively used for public charity and not otherwise. This observation of ours is also in line with the settled principles of interpretation of an exemption clause, whereby it is required that one who claims the exemption must fall within the four corners of such exemption and not otherwise. Here in the instant matter the petitioner, though claims that the income from the hospital is not distributed as profit to any of its members, however admits that only part of such income is attributed towards charitable purposes by means of giving discounts and rebates to needy patients. Hence, admittedly the case of petitioner is not that it runs the Hospital for Public Charity exclusively.
13. In so far as the case-law relied upon by the learned counsel for the petitioner is concerned, we may observe that the facts of the instant matter are entirely on a different footing as compared to the facts as discussed in the various case-laws relied upon by the learned counsel for the petitioner. In the case of Pakistan Cricket Board (supra) the matter required interpretation of sections 4(a) and 4(e) of the Property Tax Act, wherein the question was in relation to "public parks and playgrounds," and the findings arrived at in the said case are quite distinguishable, hence not applicable to the case of the petitioner. In so far as the case of Resch's Trust (Supra), from the House Lords vehemently relied upon by the learned counsel for the petitioner is concerned, we are of the view that the same is also of no assistance to the petitioner's case, as it relates to deciding of various codicil of the bequest and has not interpreted any taxing statute or an exemption clause of a statute. Further, with respect, we may observe, that the same being of foreign jurisdiction cannot be considered as a binding precedent, when our own Court has already interpreted the relevant statute in the case of Shaikh Sultan Trust (supra). Lastly the case of Fauji Foundation (Supra) is also of no assistance to the petitioner as the same was in respect of examining as to what is exactly meant by "public purpose" which is not the case before us.
14. Therefore, after a careful examination of the relevant provision, including its amendments, the intention of the legislature is very clear. During the brief period of 2000-2001, neither the words "public worship or public charity" nor the words "hospitals" were on the statute. It therefore, impliedly means, that during this period no exemption from property tax was available to any hospital or other charitable institution except those mentioned in section 4(f) of the Act. Even the hospitals engaged in charitable work exclusively, were not entitled to any exemption from tax during the year 2000-2001. By deleting the word "hospitals" from the definition of public, charity, the inference which could be drawn is that the legislature has withdrawn the exemption of Property Tax on "hospitals", even if they are working exclusively for public charity. Therefore in our candid view, during the brief period of 2000-2001, the exemption from Property Tax on "hospitals", even though exclusively working for public charity, or as a Charitable Institution, was no more available. It is a settled law that while interpreting a statute the intention of the legislature has to be kept in mind and each and every addition or deletion of a word in an amending statute has to be assigned a reason. Since the word "hospitals" did not appear anymore in section 4(f) as a "public charity" during the year 2000-2001, hence it could be safely concluded that during this period the hospitals were liable to pay property tax under the Property Tax Act. Whereas, for the period prior to the year 2000 and after the year 2001 onwards, the exemption from property tax in terms of section 4(f) of the Property Tax Act would only be available to such properties which are exclusively used for public charity as already decided by this Court in the case of Shaikh Sultan Trust (Supra).
15. In view of what has been discussed hereinabove we are of the view that the instant petition is devoid of any merits, hence it is dismissed with all pending application (s), however with no order as to costs.