' FAKHRUDDIN H. SHAIKH, J.-The petitioner has filed this petition challenging the right of respondents No, 1 and 2 to levy octroi duty on empty L. P. G. Cylinders which are returned by the consumers to the petitioner for re-filling and re-supplying to the consumers through the distributors.
2. The petitioner is private limited company which was established in October, 1966 with following objects :-
(a) To manufacture, buy, sell, distribute, dispose of and otherwise deal in liquified petroleum gas and other petroleum products.
(0 To manufacture, buy, sell, import, export, let on hire and otherwise deal in tanks, cyliders, valves, regulators, testing equipment, cookers, stoves, heaters, engines and other domestic and industrial appliances, equipment, apparatus and machines.
(c) To supply liquified petroleum gas, and other petroleum products for lighting, litating, motive power or any other purpose whatsoever.
3. The office of the petitioner for the purpose of carrying this business is situated within the limits of Cantonment Board (hereinafter referred to as the Board) of Korangi Creek, Karachi. The plant for filling and re-filling of L.P.G. In the cylinders is also situated within the same area. In March, 1981 the petitioner imported 10,041 empty cylinders for use at the petitioner's plant in Korangi. When the cylinders were taken to the plant, the octroi contractor of respondent No, 2 (who was Messrs Abdullah Company at that time, and presently Messrs Indus Enterprises-respondent No, 3) demanded octroi duty on the import of the said cylinders within the limits of Cantonment Board Korangi Creek. The petitioners paid Rs, 27,295 as octrol duty for importing the said cylinders within the limit of the said Board.
4. The manner of use of the said cylinders by the petitioner is, that the petitioner fills L. P. G. Into these returnable cylinders and sells the L. P. G. filled in these cylinders to its various customers in the southern and northern areas. When the L. P.
G. Contained in the cylinders is consumed by the customer, they return the cylinders to the petitioner which are brought by the petitioner to its said plant at Korangi and L. P. G. Is again filled in the cylinders and supplied to the petitioner's customers, but these cylinders remain the property of the petitioner. When the petitioner sells to its customers is only the L. P. G. Contained in the cylinders. From its distributors the petitioner collects its empty cylinders and takes them to its said plant at Korangi for re-filling with L. P. G. And re-supplying them to its distributors.
5. In May, 1981 when empty cylinders were collected by the petitioner from its distributors and carried to its plant at Korangi, the contractor demanded octroi duty on these cylinders also.
Petitioner denied its liability for the same on the plea that the cylinders were collected from the consumers by the petitioner only for the purpose of re-filling and re-supplying to consumers through the distributors. According to the petitioner octroi duty was payable only once when the cylinders were imported within the limits of the Board for the first-time, as stated in para. Three.
6. In July, 1982 respondent No, 3 became the octroi contractor of the said Board who also demanded octroi on the returnable empty cylinders which were collected by the petitioners for re- filling with L. P. G. And for re supplying the same to the distributors outside the limits of the Board.
The petitioner refused to pay petrol on the plea that the duty has already teen paid when these cylinders were, for the first time, imported in March, .1981. According to the petitioners the empty cylinders which were returned by the consumers for re-filling at the petitioners plant within the limits of the Board, could not be subjected to levy of octroi for the second time or thereafter for any number of times.
7. It may be stated that octroi duty was demanded by the contractor of the Board on the basis of notification of the Ministry of Defence dated 31-5-1979 which is to the following effect :- MINISTRY OF DEFENCE Notifications Rawalpindi, the 31st May, 1979 S. R.
0. 472 (1)179>.-In exercise of the powers conferred by section 60 of the Cantonments Act, 1924 (II of 1924), the Cantonment Board, Korangi Creek, with the previous sanction of the. Federal Government, is pleased to direct the following further amendment shall be made' in its Notification No, 4/71 the 1st July, 1971, namely :- In the aforesaid Notification, for Schedule "B" the following shall be ubstituted, namely :- Section VIII i. Iron.
(h) Utensils made of iron (empty gas cylinders and other empty iron containers) 0.20 per kilo, According to the petitioner the item (h) in the aforesaid notification does not apply to "returnable empty L. P. G. Cylinders" collected by the Petitioners from its distributors and brought by it to its said plant at Korangi to refill L, P. G. And re-supply them to its distributors, because these cylinders are brought at the said plant only for the temporary retention for re-filling with L. P. G. And the cylinders so brought at the plant remain on the plant for few days only whereafter the same are re-supplied to the consumers.
8. The vires of the Notification dated 31-5-1979, quoted hereinabove, has also been challenged for the reason that original Notification dated 1-7-1947, referred to therein had not been published in the Gazette and further: that the original Notification of 1971, if at all published, was null and void for non-compliance of sections 61 and 62 of the Cantonment Act, 1924 (hereinafter referred to as the Act), the compliance of which was mandatory.
9. The petitioner has, therefore, sought, inter alia, following reliefs in this petition :-
(a) That section 60 of the Cantonment Act, 1924 permits the imposition by the respondent No, 2 in its cantonment of only such taxes as can be imposed in any municipality by a Province and, therefore, the powers of the respondent No, 2 in the matter of imposition of taxes in its cantonment are identical to those of a Province. Levy of octroi on L P. G. Being admittedly beyond the competence of the Province, levy of octroi on the containers of L. P. G. Is also without the authority of law and of no legal effect.
(b) Assuming that octroi was leviable on the import of empty cylinders by the petitioner within the limits of the respondent No, 2, the liability of the petitioner to pay octroi stood fully and finally discharged when the petitioner paid -octroi in March and April, 1981, when the petitioner paid about Rs, 27,295 as octroi on the importation from abroad of about 10,041 empty cylinders into the limits of the respondent No, 2 for the use of the petitioner. The use of the said cylinders by the petitioner is that the petitioner fills the cylinders with its L. P. G. And supplies the L. P. G. In these cylinders to its customers and when the L. P. G. Is consumed by the customers the petitioner collects the returnable cylinder and brings it to its said plant at Korangi to re-fill the cylinder with L. P. G. And to re-supply the cylinder to its customer. The said payment of octroi by the petitioner was for this use of the cylinder by the petitioner and there is no authority in law for the respondents to levy octroi on the same returnable cylinder, every time the petitioner collects it and brings it to its said plant at Korangi to re-fill it with L. P. G. And to re-supply it to its customer situated outside the limits of the respondent No, 2.
' The plea of the respondents is that the octroi duty was imposed under section 60 of the said Act.
Hence compliance of sections 61 and 62 was not necessary. It is further alleged that in the impugned notifications of 31-5-1979, which was published in the Gazette of Pakistan Extraordinary dated 6-6-1979 (relevant extract from which has already been reproduced in para. 4 above) the reference to the notification of July, 1961 has been made by mistake. In fact the original notification was dated 1-1-1971 and not dated 1-7-1971. It appears that the month of "July" has been wrongly printed for the word "January" in the impugned notification. It is further alleged that in fact the impugned notification was in continuation of notification dated 10-9-1976 which has been published in the Gazette of Pakistan Extraordinary of 1976 at page 1853. It is, therefore, pleaded that in the impugned notification dated `1-7-1971" should be substituted by the dated "10-9-1976". This notification contains Schedule "B" in which the relevant item, which is (h), in section VIII, corresponds to item (h) under section VIII of the impugned notification.
10. It is further claimed on behalf of the respondents that as soon as an empty gas cylinder is filled with gas at the plant of the petitioner and supplied to the distributors outside the limits of the Board, the purpose for which it was imported within the limit of the Board, is exhausted. Hence when the same empty cylinder is emptied by the consumer and is returned to the petitioner's plant for further use by re-filling with gas, the cylinder shall be liable to octroi duty, before it is brought within the limits of the Board for use for the second time. According to them duty shall be paid on such returnable cylinder every time it is brought within the limits of the Board after being used by the consumers.
11. In order to appreciate the legal pleas raised in this case, it will be proper to re-produce the relevant provisions of the Act, that is, sections 60, 61 and 62 which are as under :- "60.-(1) The Board may, with the previous sanction of the Government impose in any cantonment any tax which, under any enactment for the time being in force, may be imposed in any municipality in the Province wherein such cantonment is situated.
(2) Any tax imposed under this section shall take effect from the date of its notification in the (official Gazette).
61. When a resolution has been passed by the Board proposing to impose a tax under section 60, the Board shall in the manner prescribed in section 255 publish a notice specifying (a) the tax which it is proposed to impose (b) the persons or classes of persons to be made liable and the description of the property or other taxable thing or circumstance in respect of which they are to be made liable ; and (c] the rate at which the tax is to be levied.
62.-7-(1) Any inhabitant of the cantonment may, within thirty days from the publication of the notice under section 61, submit to the Board an objection in writing to all or any of the proposals contained therein and the Board shall take any objection into consideration and pass orders thereon by special resolution.
(2) If the Board decides to modify its proposal or any of them, it shall be re-publish the modified proposals in the manner provided by section 61 indicating that the proposals are in modification of the proposals previously published ; and the provisions of subsection (1) of this section shall apply to such modified proposals.
(3) When the Board has finally settled the proposals, it shall submit them alongwith the objection, if any, made in connection therewith to the (Federal Government) through the competent authority."
' The original notification whereby octroi duty was imposed upon, inter alia, gas cylinders, was dated 1-1-1971 and not 1-7-1971 as wrongly printed in the impugned notification dated 31st May, 1979.
The notifications dated 1-1-1971 appears at page 1 of the Gazette of Pakistan, Part III of 1971 and bears No, 4/71. The opening para. Of this notification is relevant which is re-produced hereunder :- "In exercise of the powers conferred by subsection (I) of section 60 of the Cantonments Act, 1924 (Act of 1924), the Cantonment Board Korangi Creek, with the previous sanction of the Central Government, hereby impose an octroi duty on all goods and animals brought within the Jimits of Korangi Creek Cantonment for consumption, use or sale therein as per Schedule given below :- ' Under this notification a Schedule has been prescribed which contains certain items of goods on which octroi duty has been levied. This Schedule does not contain gas cylinders.
12. The above notification dated 1-1-1971 was amended by another notification dated 10th September, 1976, which is printed on page 1838 Gazette of Pakistan, Extroardinary of the same date.
By this notification the Schedule under the first Notification of 1971 was substituted by two Schedules namely Schedule "A" and Schedule "B". Under Schedule "B" of this notification, is section VIII, heading "Iron" was added which, inter alia, contained item (h) pertaining to utensils made of iron empty gas cylinders and other empty iron gas containers). It would appear from this Notification that for the first time in 1976 octroi duty of Rs, 0.69 per maund was levied on gas cylinders. The notification of 1976 was issued under section 60 of the Act which gave power to the Federal Government to authorise any Board to impose any tax which a municipality in the province is empowered to impose.
13. In the impugned notification dated 31-5-1979 wrong reference has been made to an earlier Notification No, 4/71, dated 1-7-1971. There was no notification of the Federal Government dated 1-7- 1971. In fact it was notification dated 1-1-1971. But the notification of 1971 does not contain any Schedule "B" which is purported to have been amended by the impugned notification. In fact the impugned notification purports to amend the notification on 10th September, 1976, referred to above, which consists of Schedules "A" and "B". It might be advantageous to reproduce the opening para. Of this notification which runs as under :- "S. R.
0. 900 (1) 76.-In exercise of the powers conferred by section 60 of the Cantonments Act, 1924 (II of 1924), the Cantonment Board Korangi Creek, with the previous sanction of the Federal Government, is pleased,to direct that the following amendment shall be made in its Notification No, 4/71, dated the 1st January, 1971 namely :- ' In the aforesaid notification, for the Schedule the following shall be substituted, namely".
' Under the above para.-Schedules "A" and "B" have been added as already stated above, and in section VIII of Schedule "B" under the heading "Iron", item (h) has been inserted which is the same as item (h) under section VIII of Schedule "B" of the impugned notification with the difference that the octroi duty has been changed from Re.
0.68 per maund to Re.
0.02 per kilo. The purpose of mentioning in detail the various notifications was to point out the mistake which was apparent on the face of the impugned notification in respect of the earlier notification referred to therein. The impugned notification of 31-5-1976 should, therefore, be presumed to amend the notification of 1976, referred to above and not the notification of 1971, wrongly referred to therein.
14. The plea of Mr. Noor Muhammad, learned counsel for the petitioner is that octroi duty can be imposed only when the gas cylinders are brought within the limits of the Board for the first time, but not when the empty cylinders are returned by the consumers to the petitioner's plant for re-filling with L. P. G. His argument is that return of the cylinders to the plant for re-filling does not amount to "importing the cylinders for use within the area of the Board", because the same cylinder is re- supplied to the consumers outside the limit of the Board. According to him temporary retention of the' empty cylinder for the purpose of re-filling and re-supplying, does not amount to "using" the cylinderfor any purpose.
15. We are not inclined to agree with the view convassed by the learned counsel. According to the impugned notification dated 31-5-1979, the duty has been imposed under section 60 of the Act on certain goods (including empty gas cylinders) which are brought within the limits of the Cantonment for consumption, use or sale therein (underlining* is ours). The under-lined portion appears in the opening para. Of the first notification i,e, of 1971. The underlined* words shall also be read with the subsequent notifications, that is, of 1976 and 1979, which only purport to amend and further amend respectively, the original Schedule of the 1971 notification. B Even otherwise the term 'octroi' as defined by the West Pakistan Municipal Committee (Octroi) Rules, 1964, means a tax on the import of goods for consumption, use or sale within the octroi limits.
16. It is, therefore, to be seen whether an empty cylinder which is returned by the consumer after using the L. P. G. To the petitioner's plant for re-filling, should be deemed to have been brought within the limits of the cantonment for "consumption use or sale". Since the terms 'consumption', 'use' or 'sale' are to be read disjunctively, hence if the empty cylinder is brought within the area of the cantonment for any of the three purposes, that is, consumption, use, sale, it shall fall within the mischief of the impugned notification dated 31- 5-1979. The terms 'consumption' and 'sale' will not apply to the empty cylinders, because they are brought to the plant for re-filling. The question, therefore, arises whether "re-filling" the cylinder with L. P. G. Would amount to "using" the cylinder within the limits of the cantonment. Since the word 'use' has not been defined by the Act or the rules (which have not been framed so far under the Act), it should be understood in its ordinary dictionary meaning. According to Concise Oxford D Dictionary the word 'use' means "employment, application to a purpose, treat in a specified manner". Thus if an empty cylinder is imported for the purpose of re-filling, it is being employed or applied to specific purpose or is being treated in a specific manner. Hence there can be no manner. Of doubt that if an empty cylinder is brought within the limits of Cantonment for the purpose of re-filling with L. P. G. At the plant of the petitioner, it shall fall within the mischief of the impugned notification, because it has been brought within the cantonment area for use therein. It is immaterial whether a cylinder is brought for the first time or repeatedly within the Cantonment area. If the same cylinder is brought repeatedly for use within the octroi limits of the Cantonment, it shall be liable to levy of octroi duty each time because it is being brought for 'use' within the said limits.
17. Mr. Noor Muhammad has referred to the case of Murree Beverage v. Municipal Corporation, Lahore (1) at page 59. It is only headnote of the case which says:- "West Pakistan Municipal Committees Octroi Rules, 1964, rules 35 and 83 Octroi duty-Fruit Juices capable of consumption without dilution-Use of bottles/containers containing such justices- Temporary retention within meaning of Rule 83(e)-Exemption provisions relating to octroi passes, hence, attracted."
' From the above note it would appear that empty container, of fruit juices brought within the octroi limits for temporary retention were exempted from octroi duty under Rule 83(e) of the West Pakistan Municipal Committees Octroi Rules, 1964. The ratio of this case is not applicable to empty cylinder; brought within the limit of cantonment areas because no exemption has been granted to them as in the case of the empty bottles under rule 83(e) of the Octroi Rules of 1964. For Cantonment area no rule corresponding to rule 83(e) exists. In fact no rules whatsoever have been framed under the Act. Moreover the empty cylinders are not brought to the plant simply for temporary retention. They are brought for re-filling, that is, for 'use' within the octroi limits of the cantonment. Hence the question of exemption in this case does not arise.
18. The main contention of Mr. Noor Muhammad, learned counsel for the petitioner is that the impugned notification dated 31-5-1979 was issued without complying with the mandatory requirements of sections 61 and 62 of the Act. This specific plea has been mentioned by the petitioner in para. 13(e) of the petition which runs as under:- "That sections 61 and 62 of the Cantonment Act, 1924, lay down a pre-emptory procedure to be followed by the respondent No, 2 before any tax can be imposed by its validly. This procedure has not been followed at all or has been followed in a manner so as to defeat the purposes of the said sections 61 and 62 inasmuch as the taxed {{FOOT NOTE}}
(1) PLD 1973 Note 44 {{FOOT NOTE}} proposed by the respondent No, 2 were not adequately publicised so as to enable the inhabitants in the Korangi Cantonment to make their objections to the proposals. The imposition of the taxed by the said notification dated 31-5-1979, published in the Gazette of Pakistan, Extraordinary, dated June 6, 1979 is, therefore, without due compliance of law and is without lawful authority and of no legal effect."
' It may be stated that this plea has been supported by the petitioner by an affidavit filed alongwith the petition."
19. No counter-affidavit to the main petition has been filed by any respondents. Only respondent No, 3 has filed a counter-affidavit but it is not in respect of the main petition. It is in respect of injunction application only in which respondent No, 3 states as under in respect of the affidavit relating to the main petition:- "The detailed affidavit relating to the merit and claim in the petition will be filed in due course before the petition becomes ripe for final hearing."
20. In spite of the above commitment made by respondent No, 3 in his above counter-affidavit, no such counter-affidavit relating to the main petition was filed. It would, therefore, appear that the contention of the petitioner regarding non-compliance of the provisions of sections 61 and 62 of the Act which have been reproduced in para. 11 above, stands unrebutted.
21. According to section 61 of the Act whenever a tax is proposed to be imposed under section 60 by the Board, a resolution is to be passed and thereafter notice, is to be published, as prescribed in section 255 of the Act. In this notice three things are to be specified namely :
(a) the tax which is proposed to be imposed;
(b) the persons or classes of persons to be made liable to tax; and
(c) the rate at which the tax is to be levied.
The purpose of the notice is to invite objection from the public. It may be stated that such notice is necessary not only when a tax is imposed for the first time, but it would be necessary even when an existing tax is varied or modified by the Board. This requirement is prescribed by subsection (2) of section 62 of the Act. Now it is not disputed that by the impugned notification, tax or octroi duty on gas cylinders imposed by the notification of 1976 was varied i. e. Enhanced from Re.
0.68 per mound to Re.
0.4 per kilo. It was, therefore, necessary for the Board to have issued a public notice as prescribed by section 255 of the Act in terms of section 61 specifying the three things mentioned therein for inviting objections of the public.
22. So far as the effect of non-compliance of such requirements in fiscal matter is concerned, several cases have been cited by Mr. Noor Muhammad, learned counsel for the petitioner.
Reference has been made to the case of Kotri Association of Trade and Industry v. Government of Sind and another (1). This was a case relating to imposition of tax under section 60 of Sind Councils (Imposition of Taxes) Rules, 1979. The rule provided certain requirements to be fulfilled before imposing the tax. It was held by a Division Bench of this Court in the above case as to non- compliance of legal formalities in fiscal matters as under:- "Now section 60(1) provides for levy of the taxes in the prescribed manner. "Prescribed" is defined in section 3(49) to mean prescribed {{FOOT NOTE}}
(1) 1982 CLC 1252 {{FOOT NOTE}} by rules and rules means rules made under the 1979 Ordinance (section 3(59)). Rule making power is vested in the Government and not to the councils by section 103. Councils can only make bye- laws under section 104. For carrying out the purposes of the 1979, Ordinance. Specifically under section 60 thereof, the Government made the aforesaid Sind Councils (Imposition of Taxes) Rules, 1979. In the process of levying the taxes, therefore, the councils are, by law, required to take the steps and comply with the procedure and requirement of the rules made in this behalf. No argument was raised that the aforesaid Rules of 1979 are ultra vires of the 1979 Ordinance. It can be taken as an admitted position that these 1979 rules have been made to carry out the purposes of the 1979 Ordinance as regards the levy of taxes by the councils and we are also of this view. Section 60 of the 1979 Ordinance and the 1979 Rules are fiscal provisions and it is a settled principle of law that fiscal provisions are to be strictly construed. If citizens are to be subjected to a tax, then the general principle of law is that all the prescribed formalities required to be fulfilled must be fulfilled and in case there is a default or failure in comply with the legal formalities, the benefit must got to the citizens."
' In view of the above observations the octroi levied by the Local Council was held to be without lawful authority. Another case cited in this connection is of Raghavendra Kripal and others v. The Municipal Board, Hapur (1). This case also related to imposition of tax by the Municipal Board under sections 131 and 135 of the U. P. Municipalities Act of 1916. The Board had to follow a particular procedure before imposing a tax. If the prescribed procedure is not followed by the Board then, according to the learned Judge who decided the case, the tax would not be deemed to have been validly levied. The actual words in which observation was made in this behalf runs as under:- "It is incontestable that no tax can be said to be validly imposed unless this procedure has been followed."
23. In the case of Messrs Jabees Ltd. Karachi v. Government of West Pakistan (2), a Division Bench of this Court held that a statute imposing tax should be interpreted literally and according to words used and clearly expressed.
24. The question of performing legal formalities before imposing a tax by a Local Council also came under consideration of the Supreme Court in the case of Sukkur Municipal Committee v.
Muzaffaruddin and another (3). This was a case of levying taxes under section 75 of the Sind Municipal Boroughs Act of 1925, section 75 gave power to a municipality to impose tax after previous publication of the taxation proposal. About the importance of complying with the prior requirements in . Case of taxation proposal the Court observed as under:- "The main object of this section appears to be that the rate-payers must be given adequate notice with sufficient detail in order to enable them to object to the proposed tax or duty. This cannot, it is true, be effectively done unless the classes of persons or properties proposed to be taxed and the rates at which the tax is proposed to be levied {{FOOT NOTE}}
(1) AIR 1950 All. 192 (2) 1979 CLC 784
(3) D 1967 SC 299 {{FOOT NOTE}} are also known. But it does not require simultaneously publication of both the rules as well as the schedule, provided both are published and the rate-payers are given sufficient opportunity of objecting to them. To make the tax effective, however, both must be published and until both are published the tax cannot be enforced. Indeed, the tax can come into force only from the date of specified under section 77 after both the rules and the schedule has been approved by the Provisional Government under section 76."
25. In view of the above legal position we are of the view that the Board before levying a tax was bound to follow the procedure prescribed under sections 61 and 62 of the Act. We are further of the view that even in the cases where the existing tax was sought to be revised by the Board F to the disadvantage of the residents of the cantonment area then in that case also the Board had to comply with the requirements of the sections 61 and 62 of the Cantonment Act. In the present case the petitioner categorically stated in his petition that the requirements of sections 61 and 62 of the Act were not followed by the Board and this averment made by the petitioner in his petition has not been denied by any of the respondents. Even at the hearing of the petition no attempt was made by the learned counsel for the respondents to place before us any material to show that the requirements of sections 61 and 62 were followed before the imposition of the tax. However, the learned counsel for the respondents jointly contended that since notification dated 10-9-1970 under which the octroi tax was levied for the first time on gas-cylinders has not been challenged in the petition, therefore, the petitioner cannot be allowed to raise the contention as to the validity of the tax which was levied as far back as 1976. This contention of the learned counsel for the respondents, however, cannot be accepted for two fold reasons. Firstly in the notification of 1979 the reference is made to the original notification dated 1-7-1971 and not to the notification dated 10-9-1976. The reference to the notification of 1-7-1971 is also not correct as there is no notification of that date. It is contended by the learned counsel for the respondents that the notification of July, 1971, referred in the notification of 1979 may be read as notification dated 1-1-1971. We have accepted this contention but we find that in the notification issued in January, 1971, no tax was levied on empty gas-cylinders. Apart from it we have also reached the conclusion that even for a modification or revision of an existing tax the Board was required to follow the procedure prescribed under sections 61 and 62 of the 'Act, therefore, even if we accept that the octroi tax on the gas-cylinders was levied for the first time by virtue of the notification dated 10-9-1976, then the subsequent amendment brought about by the notification dated 6-6-1979, was not competent as admittedly the Board attempted to revise the octroi duty on empty cylinders to the disadvantage of the petitioner and, therefore, the same could not be done without following the procedure prescribed under sections 61 and 62 of the Act. Since the requirements of the sections 61 and 62 had not been admittedly followed by the Cantonment Board in this case, therefore, the notification imposing octroi duty cannot be upheld.
26. We, therefore, allow the petition and declare that the notification of the Cantonment Board Korangi Creek dated 31st May, 1979, is without lawful authority and ineffective. There shall be, however, no order as to costs.