.JUDGMENT GIHULAM MUHAMMAD KOUREJO, J.--The appellant Messrs Jamia Indus--tries Limited imported base stock for blending various types of lubricants in the years 1961-66, by sea. Most of such imports were not meant for use and consumption within the limits of Karachi Municipal Corporation and were sent to upcountry. In spite" of that the Karachi Municipal Corporation recovered terminal tax from the appellant. On these goods. The appellant paid the amount of Rs. 1,22,054.75 towards such terminal tax under coercion, and continued to maintain the stand that the Karachi Municipal Corporation was not empowered to charge terminal tax on the goods imported in the Karachi harbour,. But meant for .Upcountry. However, a declaratory suit was filed in the Court of Civil Judge, Karachi who passed a decree on 31-8-1964 to the effect that the terminal tax on goods imported by sea could be levied by the Karachi Municipal Corporation in accordance with the old schedule (b). On 15-5-1969, the. Appellant filed a suit for recovery of Rs. 1,22,054.75 paid towards terminal tax against the respondent. The suit was resisted by the respondent K. M. C. And was dismissed by the learned Single Judge, resulting in the present appeal.
2. The learned Single Judge in all framed six issues as enumerated in the impugned judgment out - -f which issues 2 to 5 were dropped. The appellant examined only one witness. Mohammad Ishaq a clerk from the Karachi Municipal Corporation who produced the challan of payment of the terminal tax (Exh. 7/1), whereas the respondent did not examine any evidence.
3. We have gone through the evidence on the record and have also heard the learned counsel appearing on behalf of the parties at sufficient length. The issues that arise for the disposal of the present appeal are, as to whether the respondent had no power to levy and recover the terminal tax in question and as to whether the appellant is entitled to refund of the amount paid to the respondent as such terminal tax. It is also in question as to whether the suit is barred by res judicata. As regards the plea of res judicata the learned Single Judge came to the conclusion that the suit was not barred by res judicata, and the finding has not been seriously contested in present appeal. We would, therefore, , proceed to discuss as to whether the respon--dents had no power to levy and recover the terminal tax in question and as to its effect and as to whether the appellant is entitled to refund of the amount paid to the respondent as terminal tax We would find that the controversy in that respect now stands settled by the judgment of the Supreme Court in the case of Pakistan Tobacco Company Limited v. Karachi Municipal Corpora--tion PLD 1967 SC 241It was held in that case by the learned Judges of the Supreme Court that consequent upon the conscious deletion of the provisions relating to the imposition of the terminal tax from the Municipal Administration Ordinance, 1960, the Karachi . Municipal Corporation was not competent to charge terminal tax, after the coming into force of this Ordinance, on goods imported to Karachi harbour but in transit to upcountry. After this decision, the Karachi Municipal Corporation Terminal Tax (Validation) Ordinance, 1967 was promulgated. Section 2 of this Ordinance provides that notwithstanding the repeal of City of Karachi Municipal Act, 1933 or anything contained in the Municipal Administration Ordinance, 1960, or in the decision of any Court, the terminal tax (not being terminal tax on goods or passengers carried by sea or air) levied, charged, collected or realized by the Karachi Municipal Corporation for the period from 16th April; 1960 till 13th April, 1967, in accordance with the provisions of clause (b) of subsection (2) of section 96 of the City of Karachi Municipal Act, 1933 and the Terminal Tax Rules frame thereunder (a) shall be deemed to have been validly levied, charges, collecte or realized, as the case may be, and shall not be liable to be refunded ; and (b) where any such tax has not been paid or realized before the coming into force of this Ordinance, the same shall be recoverable in accordance with the provision of the said Act and the said rules It would, therefore, be Ilea that - this Ordinance validates the levy and charge of the terminal tax on goods but only on those goods which do not arrive by sea or air. The good which are imported by sea or air do not come within the ambit of the Ordinance. The result, therefore,. Would be that the Karachi Municipal Cor--poration had no power to levy any terminal tax on goods imported by sea o air after the coming into force of the Municipal -Administration Ordinance, 1960 on 15-4-1960. In the instant case, since the terminal tax was levied and paid by the appellant after the coming into force of the said Ordi--nance the levy on each of the consignments imported by the appellant was, therefore, illegal. The effect of the finding would be that the tax paid under demand which is illegal is liable to be refunded under section 72 of the Contract Act, 1972 as money paid under coercion. It was also held by the High Court of Nagpur in Secretary Municipal Committee Karanja v. The New East India Press Company Ltd. Bombay AIR 1949 Nag. 215, that even if the tax is paid without protest, it is an involuntary payment and must be presumed to have been paid under coercion, because of the unpleasant consequences that will follow if he does not pay. However, the learned Single Judge came to the finding that the appellant was not entitled to the refund of the amount of the tax paid, from the respondent for the reason that the payment was made inpursuance of the decree of the learned Civil Judge dated 31-8-1964 and not under coercion. What we find that the decree passed by the learned Civil Judge was on 31- 8-1964, whereas the payment of the terminal tax was made by cheque, dated 27-2-1967 drawn on United Bank Limited and that according to Muhammad Ishaq Senior Clerk Octroi Department of the Karachi Municipal Corporation examined by the appellant the amount in the cheque was realized on 9th March 1967, after a period of about 21 years. It is . Further clear in the evidence on the record as deposed by Muhammad Ishaque, Clerk Octroi Department Karachi Corporation that on account of non-payment of the terminal tax the respondent Karachi Municipal Corporation levied penalty of Rs. 500 per consignment imported by the appellant. Our attention has been invited to a letter, dated 25-2-1967 on the record by the Collector of Taxes to the appellant for payment of the terminal tax as the Chairman, Karachi Municipal Corporation had considered the appellant's appeal and had rejected the same and had directed that the tax due on imports made by the appellant in 1961 up to date should be paid at once before the question of penalty be taken up. The contents of this letter if taken into account would clearly disclose that the appellant was asked to pay up the amount of terminal tax of Rs. 1,22,054.75 under threat of penalty. This letter was written on 25-2-1967 whereas the payment was made by a cheque, dated 27-2-1967 and the amount was realized on 9-3-1967 immediately after the letter of threat, dated 25-2-1967. In this situation it appears apparent from the record that the payment was made not in pursuance of the decree but under coercion and for such reasons we are unable to agree with the learned Single Judge that the respondents would not be liable to refund the amount paid towards the terminal tax.
4. We, therefore, find that the appellant is entitled to recover the amount of Rc. 1,22,054.75 from the respondent with interest at 6 per cent per annum.
The appeal is allowed accordingly, with costs.