ABDUL QADEER CHAUDHRY, J.-This judgment would dispose of the Constitution Petitions Nos.
290/1979, 291/1979, 26/1980, 27/1980, 28/1980, 29/1980, 30/1980, 98/.1980, 120/1.080, 121/1980, 154/1980, 155/1980, 157/1980, 195/1980, 241/1980, 242/1980, 295/1980, 303/1980, 311/1980, 56/1981, 59/1981, 62/1981, 68/1981, 69/1981, 81/1981 and 83/1981, as common question are involved in these petitions.
2. The petitioners are carrying the business of import of unserviceable ships for the purpose of scraping and. Subsequently selling the scrap for consumption, used and sale in Karachi. The Ship breading Yard was opened at Gaddani Beach, Tehsil Hub District Lasbela. The petitioners were granted import licences by the Chief Controller, Imports & Exports, Government of Pakistan for import of unserviceable ship for the purpose of scraping Letters of credit was established by the petitioners through their bankers. The vessels purchased .By the petitioners were reached at Gaddani Beach. The import duty and the sale taxes were leviable on the vessels of the petitioners by the Custom authorities and the payment had been made by the petitioners. The respondent No. 4 Dad Muhammad & Company demanded payment of import tax at the rate of half per-cent. Of the import value of the vessel. The respondents are demanding import tax on the basis of alleged authorisation of the respondent No. 2 through his Order dated 30-6-1979 authorising the respondent No. 4 to collect import tax for the year commencing from July, 1979. In pursuance of the aforesaid authorisation the respondent No. 4 is demanding the import tax from the petitioners.
3. This action of the respondents for the demand of tax has been challenged in these petitions.
4. The petitions have been contested by the respondents. It is the case of the respondents that in 1961 the District Lasbela was under the administrative control of Commissioner, Karachi who delegated his powers of sanctioning proposal for taxation to the Deputy Commissioner, Lasbela, within his jurisdiction. Union Council Hub imposed the tax as mentioned in Article 60, Schedule V of the Basic Democracies Order, 1959. These taxes have been retained by the subsequent legislation.
The import tax became leviable when the vessel is put to the process of scrapping. Scrapping and dismantling falls within the `definition of the terms "use, sale and con--sumption". The authority to collect the import tax read as under:-- "Your highest bid for Rs. 10,55,000 for collection of import tax of Local Council Hub for the year 1979- 80 commencing from 1st July 1979, to 30th June, 1980 has been approved by the Controlling Authority.
You are hereby authorised to collect the import tax (Excluding Industries situated in Local Council Hub as exemption granted by the Government vide Notification No. 5-158/78 (P. L. G. B.) Act/16451- 55 dated 29-11-1978. You are further directed to deposit the amount towards 1/10 of the total bid today positively. You are also directed to attend this office to finalize the agreement."
It is stated in Annexure-H that the import tax is leviable and payable under the provisions of clause
(i) of the Baluchistan Local Government Ordinance 1972 and Baluchistan Local Government Act, 1975.
5. 1t is contended that the taxes imposed under the Basic Democracies. Order, 1959 have been saved under the subsequent legislation namely Ordinance-I of 1972, Act XII of 1975, and Ordinance IX of 1979. In order to determine whether the taxes is leviable, it is necessary to refer to the legislation in this behalf. Under section 3 of the Basic Democracies Order 1959 ; Town Committee, Union Committee, and Union Councils were constituted, under Article 8 of this Order, under section 9 Union Council was constituted for a Union in the Rural area, and a Town Committee for Town, and a Union Committee or a Union in the Urban area. Under Article 60, the District Council, with the previous sanction of the Government may levy any of the taxes mentioned in Fifth Schedule. In Fifth Schedule of B. D. O., Item No. 5 prescribes tax "on the import of goods for consump--tion, use of sale in a local area". Under Article 63, a Commissioner may direct any Union Council to levy any tax which the council is competent to levy Article 60. The functions of the Union Council have been mentioned in the Third Schedule of B. D. O. 1959. Ordinance 1972 (hereinafter referred to as Ordinance-I of 1972) repealed the B. D. O. 1959. The Baluchistan Local Government Act, 1975 (hereinafter referred to as Act X;I of 1975) repealed the Baluchistan People's Local Government Ordinance, 1972. Under section 7 of Act XII of 1975 the Local area shall be a Deh, Halqa, Town, Zilla, Mohalla, Municipality and a City. Under section 10 of the Act, the Local Councils were constituted for each Deh, each Halqa, each Town, each Zilla etc. Under section 138 a Local Council subject to the provisions of any other law, may and if directed by the Government shall levy all or any of the taxes enumerated in the Second Schedule. Under section 139 all taxes levied by a Local Council shall be notified and shall, unless otherwise directed by the Government, be subject to previous publica-- tion. Thus this tax under Act 1975 could not be imposed by the Deh Council and Mohalla Committee or Zilla Council. The Baluchistan Local Government Ordinance, 1975 ;hereinafter referred to as Ordinance IX of 1979) repealed the Baluchbtan Local Government Act, 1975. Under section 145 of this Ordinance, the Local Council subject to the provisions of any other law and after direction from the Government shall levy all or any of the taxes enumerated in the Second Schedule: Part II of Second Schedule of Ordi--nance, 1979, relates to taxes of Tehsil Council, Town Committee; and Item (1) provides a tax on the import of goods and animals for consumption, use and sale. "Similarly Part IV of the Schedule relates to the taxes of the Municipal Committee and Part V relates to the taxes of Municipal Corporation. Item (1) of these parts, provide "Tax on the import of goods and animals for consumption, use or sale in a Municipal Committee/ Municipal Corporation".
6. Having given the history of the legislation regarding imposition of tax on the import of goods for consumption, use or sale in a Local Council ; we have now to consider whether the petitioners are liable to such taxes ?. The admitted feature of the case is that the petitioners brought their vessels in Gaddani Beach. After dismantling the ships they remove the scrap to Karachi.
7. It is the case of the petitioners that the respondents are not competent to demand the import tax which is exclusively within the legislative compe--tency of the Federal Government ; and if the petitioners are made to pay the import tax, it will amount to double taxation. In this behalf reference has been made to Items Nos. 27, 43 and 59 of Fourth Schedule of the Constitution. The import and export across Customs frontiers is within the jurisdiction of the Federal Government. But the contention that the respondent cannot demand the import tax on the goods for the use, consumption or sale is untenable. It does not amount to double taxation, otherwise the imposition of octroi duty on the goods imported in the city would also be hit by term "double taxation". In fact the item has been used in the narrow and limited term and shall mean those goods which are imported into a Local Council for use in that Local Council therefore. This argument has no force.
The import tax was imposed by the Union Council Hub through Notification dated 2-7-1962. The tax at the rate of 50 paisa was imposed on import of Rs. 100 value of goods. According to the respondent this tax has been saved by the subsequent legislation. Section 3 (1) of the Baluchistan People Local Council (Ordinance I o: 1972) had repealed B. D. O., 1959. Under section 3 (2) of this Ordinance ; any tax imposed or assessed or taken under such enactment so far as it is not inconsistent with the provisions of this Ordinance to be deemed to have been made or assessed until superseded under this Ordinance. Section 4 of this Ordinance talks of successor Local bodies; and Union Council was substituted by the People District Council. Under section 4 (2), the District Council took the function of the Union Council. Under section 63 a People Local Council with the previous sanction of the Government may levy any of the taxes mentioned in this Third Schedule.
Item 4 of Schedule IV provides tax on the import of goods for, consumption, use or sale in a Local area. It is therefore, contended that while taxes under Article 60 of the B. D. O. Could be imposed by the previous sanction of a Collector of a District ; a tax under Ordinance I of 1972 could only be imposed with the prior sanction of the Provincial Government. The provision of Ordinance I of 1972 in this respect is inconsistent with B. D. O., 1959 therefore, Notification dated 2-7-1962 has not been saved. On the same anology it is contended that under the provisions of Act XII of 1975, the successor of District Council could not levy the import tax without the previous sanction of the Government. Section 6 of the Act XII of 1975 constituted Zila Council in place of District Council.
Under section 7 of Act XII of 1975, the Government may declare an area not including within the Municipal Committee to be a Halqa and specify the names of Deh comprise therein. Part II of the Second Schedule empowers the Halqa council to impose tax on the import of goods and animal for consumption, use or sale. Part 1V of Second Schedule similarly empowers the Municipal Committee to impose such taxes. A slight departure has been made in Ordinance IX of 1979, which was issued on 13th August 1979, and the tax on the import of goods can be levied by the Municipal Committee and Municipal Corporation as laid down in Part IV and Part V of the Second Schedule. It is therefore, clear that a Union Council or is pot empowered to levy such tax. Under section 144 all taxes levied by a Local Council shall be notified, unless otherwise directed by a Government. The Notification dated 2-7-1962 talks of import tax whereas the Ordinance I of 1972, Ordinance XIII of 1975 and Act XII of 1975 and Ordinance IX of 1979 provides taxes on the import and export of goods for use, consumption and sale. If any good is neither used, nor consumed nor sold in the Local Council, then by no stretch of imagination it can be urged that a Union Council can impose tax under the aforesaid laws. The undisputed fact I that the scrap is taken to Karachi for its use, consumption or sale, only it passes through the Union or Town Committee. As such no such tax.
Can be imposed. It is also necessary to mention that the learned Advocate. General submitted that on 31-3-1980 Gaddani and Hub had been declared as Town Committee. It is also clear that the previous Notification dated 2-7-1962 also is inconsistent with the subsequent legislation and therefore, it was not saved by the successor laws. The learned counsel for the peti--tioner has referred to Ibrahim Khan, Administrator, Union Council, Baluchabad, Tharparkar v. Mirpur Khas Sugar Mills 1980 SCMR 263,and following observation is relevant :- "Mr. Ibrahim Khan then referred us to the rules framed under Basic Democracies Order and to the Sind People's Local Government Ordi--nance of 972 and further submitted that the Deputy Commissioner was the delegatee of the Commissioner and therefore on a proper construction of the relevant rules the petitioner was competent to levy Octroi. And, when we referred him to section 60 of the said Ordi--nance, he submitted that the rules framed under the earlier statutes including the Basic Democracies Order have been saved first by section 4 of the Sind Peoples Local Government Ordinance, 1972 and then by section 120 of the said Ordinance. These sections no doubt contain saving provisions about the rules framed under the repealed statutes. But. These sections expressly prescribe that rules made under any of the provisions of the repealed enactment would be saved only if they were not inconsistent with the repealing Ordinance. Now, the Basic Democarcies Order was repealed by the Sind People's Local Government Ordinance, 1972 and this Ordinance in turn was repealed by the said Ordinance. And, as section 60 of the said Ordinance con--tains an express Provision that tax Proposals by a Union Council can only be levied `with the previous sanction of Government', it is clear that the rules on which Mr. Ibrahim Khan relies, are no longer in force, because they are inconsistent with the express provisions of section
60. We, therefore, agree with the view taken in the judgment under appeal and this petition is dismissed."
This authority applies to the facts of the present case, and, therefore, the Notification dated 2-7- 1962 is inconsistent with the provisions of Ordinance 1972, Act XII of 1975 and Ordinance 1X of 1977.
The same view is taken in Mirpur Khas Sugar Mills v. Deputy Commissioner and Controlling Authority, Tharparker and 4 others PLD 1980 Kar. 237.
8. There is another formidable objection that Hub was Union Council under B. D. O., 1959 but under Ordinance XII of 1972 the Union Council was abolished, therefore, the body which was not in existence could not impose tax. The learned Advocate-General however, has submitted that tnere was no inconsistency. The power to impose taxes under B. D. O., 1959, was with the Commissioner, subsequently it is with the Government. The tax on import of goods can be imposed by Union Council and then it can be imposed by the District Council and the Zilla Council. The learned counsel has referred to Chitaranjan Cotton Mills v. Staff Union (PLD 1971 SC 197where the word "inconsistent" has been interpreted in the following terms :- "The provisions of the two statute are, in my opinion not only dissimilar but also inconsistent and incompatible. It is true that mere dissimi--larity may not be enough to establish inconsistency.
Inconsistency involves incompatibility in substance and in, spirit, and not merely in form. As defined in Black's Law Dictionary, `inconsistent' means, inter alia, `mutually repugnant . . . . . . So that both cannot stand, but the acceptance or establishment of the one implies the abrogation or abandonment of the other'.
In an English case reported as In re: An Arbitration between John Knight and Taberanacle Permanent Building Society, Fry. L. J. Observed while interpreting the words `inconsistent with the Act' that `incon--sistency would result if the obligations imposed by the subsequent Act' would be so at variance with the machinery and procedure indicated by the previous Act that if that obligation were added, the machinery of the previous Act would not work."
He has also referred to Province of West Pakistan v. Mahboob Ali and another (PLD 1976 SC 483wherein the word "inconsistent" has been defined and it has been observed that things are said to be inconsistent when they are contrary the one to the other. It is contended on the strength of these authorities that is no difference in substance of the legislation on the subject and therefore, it is not inconsistent. We have already referred to the authorities on the point and, therefore, seen force in the contention raised by the learned counsel. The broad principle has been laid down in these authorities, but Ibrahim Khan, Administrator Union Council, Baluchabad, Tharparker v. Mirpur Khas Sugar Mills is on all four to the facts of the present case. The learned Advocate-General has further stated that the Ordinance I of 1972 and Act X11 of 1975 were not in field as People's Local Council were not constituted under the aforesaid laws, therefore, there is no inconsistency. We do not see any force in this contention as the Act I of 1972 came into force at once and had repealed the Basic Democracies Order, 1959.
The learned counsel for the respondent No. 4 has submitted that this tax has been saved throughout, and different agencies were created from 1959 to 1978 for collecting the taxes. He has referred to B. H. Begum Syed v. Afzal than Begum and others (PLD 1970 SC 29wherein at page 35 the following observa--tion has been made".
"It is true no doubts that where the statute says that you must imagine the state of affairs ; it does not say that having done so you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs But at the same time it cannot be denied that the Court has to determine the limits within which and the purpose for which the Legislature has created the fiction."
We do not consider that the interpretation made by us is in any way inconsistent with the rule laid down in this authority. He has also referred to Mohreen Zaibunissa v. Land Commissioner, Multan and others (PLD 1975 SC 397). "Wherein it is held that "when a statute contemplates that a state of affairs should be deemed to have existed, it clearly proceeds on the assumption that in fact it did not exist at the relevant time but by a legal fiction we are to assume as if it did exist. In the same authority it has been held that it could not be denied that the Court has to determine the limits within which and the purposes for which the Legislature has created the fiction. The learned counsel referred to Pakistan Textile Mills Owners Association v. Chief Commis--sioner of Karachi and others (PLD 1961 Kar. 474) wherein it is held that terminal tax levied by the Municipality on the goods of the Mills was validly levied. The words "Import" and "Export" used in various Municipal Acts was based only on its liter4l meaning. In the instant case the two Textile Mills situated on the outskirts of the Municipal Limits of Karachi had their business premises within the-Municipal Limits Karachi Municipal Corporation and whatever business was carried on by them with foreign countries was done through those offices. This matter went up in appeal before the Supreme Court and reported in Pakistan Textile Mill Owners Association v. Administrator of Karachi and 2 others (PLD 1963 SC 137) wherein it is held that "import" and "export" in their ordinary and natural sense mean to bring into or to take out of or away from a particular place. The introduction of the notion that there must also necessarily be a mixing up in mass with other goods within those limits seems to us to impose an unjustifiable restriction upon the meaning of the word "Import". It is further held that the goods merely in transit are not liable for such a terminal tax, as their journey has-really no terminal point within the Municipal limits. The appeal was partly accepted and it was held that the levy of terminal tax inoperative so far as good imported by sea and air concerned, but its validity was upheld in respect of goods imported by road and rail. In Pakistan Tobacco Co. v. Karachi Municipal Corporation (PLD 1967 SC 241) it was held that taxes even though described as a terminal tax may be upheld as taxes either as an octroi of the goods brought into Municipal Limits of the Corporation or assessing of goods exported outside the limits. These authorities are inapt as the points involved in the precedent cases are dis--tinguishable. The counsel for the respondents has referred to Abdul Majid v. The State (PLD 1963 Lah. 292) wherein the West Pakistan Supplementary Paddy and Rice (Control) Ordinance, 1958 was challenged on the ground that it was ultra vires of the West Pakistan Foodstuffs (Control) Act, 1958. The aforementioned order provides that no unlicensed miller can process paddy into rice. It was held that the processing paddy into rice is such use of it as would bring it within the scope of clause (c) of section 3(2) of the West Pakistan Foodstuffs (Control) Act, 1958. This authority does not apply to the facts of the present case. On the other hand the learned counsel for the petitioner has referred to Lt. Col. Nawab Zada Muhammad Amir Khan v. The Controller of Estate Duty and others (PLD 1961 SC 119) wherein it has been observed that Taxing statute must be strictly construed so far as liability to pay tax is concerned.
10. The learned counsel for the petitioners has referred to Managing Director, Pakistan Agricultural Storage and Service Corporation Ltd., Lahore and another v. Nawab Din and others1981 CLC 284, where the term import of goods for "consumption, use or sale" has been interpreted. The relevant observation in paras. 5 and 7 are reproduced below ''5. Coming to the crux of the controversy, it would be appropriate at this stage to reproduce the definition of the octroi tax. It as follows vide sub-rule (2), clause (m) of the West Pakistan Municipal Committee Oetroi Rules, 1964; 'Octroi' means a tax on the import of goods for consumption, use, or sale within the octroi limits.
7. Keeping these principles in view, the provision of liability to octroi tax may be examined which is 'on the import of goods for consump--tion, use or sale within the municipal limits'. Words are to be under--stood in the context is trite law. Now, the word 'use' is in between 'consumption' and 'sale'.
Both of which carry the meaning that the goods will get disposed of by consumption or sale.
Therefore, the word 'use' has to be interpreted in the sense that the user will diminish, decrease or lead to extinction of the goods in due course as is natural with the 'use' of goods. The word 'use' does not mean nor carry the connotation that the goods will be kept intact or preserved. While interpreting words or law, the primary purpose has to be kept in view, that is another principle. If the primary purpose or dominant desire is not 'use' the goods but to keep those or preserve those by putting those in cold storage, then the importers would not be liable under the provision. If the intention is not to 'use' the goods, the liability is not there under the law."
The principle laid down in this authority applies to the facts of the present case. The Union Council; Hub could not impose import tax as it was not within their power and jurisdiction. The Notification dated 2-7-1962 shows that the import tax was levied, but under the B. D. O., 1959 a Union Council can only impose tax on the import of goods for consumption, use or sale, therefore, the power of the Council was limited to the extent for imposing tax on those goods which were meant for consumption, use or sale in that local area. Thus the taxes which could not be imposed by the Union Council cannot be saved by the deeming clause.
11. In conclusion the Notification dated 2-7-1962 issued under the' provisions of B. D. O. 1959 was inconsistent for the following reasons :-
(i) In the case under B. D. O. The Notification could be issued by the Commissioner ; but under the subsequent laws the sanction of the Government was necessary.
(ii) Under Ordinance I of 1972, Act XII of 1975 and Ordinance IX o1 1979, all taxes levied by a Local Council shall be notified, and shall otherwise directed by the .Government, be subject to the previous publication.
(iii) The successor Local Councils under Act XII of 1975 and Ordi--nance IX of 1979 had no authority to impose such tax. The Zilla Council the successor of the District Council under Act XII of 1975 could not impose such tax. Under Ordinance IX of 1979 Thesil Council, Town Committee, Municipal Committee and Municipal Corporation could impose such tax and therefore Hub Local Council could not impose such tax.
(iv) The Hub and Gaddani have been made Town Committees on 31-3-1980 and through separate notification no tax in accordance with law has been imposed by these Town Committees. The Notification No. DL/490/79-80-/1634-36 dated 30-6-1979 could not be issued by the Deputy Commissioner, either under Ordinance I of 1972 or Act X11 of 1975.
12. The Baluchistan Local Government Ordinance, 1980 (Ordinance 11 of 1980) came into force on 21- 2-1980. Under section 4(1) of this Ordinance, Ordinance, 1X of 1979 was repealed and under section 4(2) of this Ordinance the tax imposed under Act X11 of 1975 was saved, if it is not inconsistent with the provisions of this Ordinance, but as we have already held that the take in question has not been saved under Act XII of 1975 and Ordinance I of 1979, therefore the saving provision of Ordinance, 1.980 cannot app)? To the facts of the present case.
The petitions are accepted. The demand of import tax from the petitioners is illegal and without lawful authority and the order of respondent No. 2 dated 30-6-1977 empowering the respondent No. 4 to collect the tax is ultra vires and illegal.
There would be no order as to costs.
S. A. H.