M/S Askari Cement Limited (ACL) through authorized

SYED ARSHAD ALI, J.- This consolidated judgment shall decide the instant as well as the connected petitions having raised a common question of law for adjudication of this Court. Particulars of said petitions are provided in Annexure 'A' to this judgment. The writ petitioners, in these Constitutional Petitions are 11 public limited companies claiming to be registered under Companies Act, 2017 and enlisted with the Security Exchange Commission of Pakistan and twelfth is a firm registered under the Partnership Act, 1932. All the writ petitioners were assessed to levy of Urban Immovable Property Tax ("UIP Tax") on industrial building and land by the respective tehsil administration and local governments notifying it as a rating areas within the meaning of Khyber Pakhtunkhwa Urban Immovable Property Tax Act, 1958 ("KP Act of 1958") read with Khyber Pakhtunkhwa Local Government Act, 2013 ("Act of 2013"). Feeling aggrieved with the said assessment, these writ petitions were brought challenging the very notification of rated areas and notices as well as issuance of challans calling upon the petitioners to pay the UIP Tax. The brief facts of each writ petition, necessarily for present adjudication are recounted herein below: W.P No.371-P/2021 "M/ S Askari Cement Ltd. Vs. Govt. of KP"

2. The petitioner as alleged in the petition is engaged in the business of manufacturing and export of cement with the setup/plant located in village Kahi Nizampur, a rural Union Council. The income from its business is utilized for the welfare and rehabilitation of soldiers, families, dependents of martyrs and retired officers/staff of Pakistan Army. The company has installations worth billions of rupees and bring millions of foreign exchange added to national exchequer. The cement industry established by the company is amongst power intensive and highly tax sector, paying eleven (11) different types of taxes to the Federal and Provincial Governments on its products. Despite the fact that the installation / plant of the company is located in village Kahi Nizampur, the respondent No.5 vide Gazette Notification TMA No.435- 45 dated 18.03.2020 in excessive exercise of powers purportedly under section 44 of the Act of 2013 declared the factory area as rating area for the purposes of imposing of UIP Tax under the KP Act of 1958. That pursuant to the impugned Gazette Notification, the respondent No.6 issued a schedule for the survey regarding assessment of UIP Tax in the factory plant vide Notice No. E&T/NSR/9690 dated 21.11.2020 in utter disregard to the sections 2(iv) and 3 of the KP Act of 1958 and that too without any notification from the provincial government as required under section 44 of the Act of 2013 which contemplates the declaration of rating area by respective tehsil council and not by the executive authority of the government.

Hence, the notification dated 18.03.2020 was impugned.

3. Comments submitted by Respondents: The respondents No.3 to 5 submitted their parawise comments wherein it is stated that the petitioner does not fall under the definition of aggrieved person. it is further submitted that under section 44 of the Act of 2013, every Tehsil shall be a rating area for the purposes of the KP Act of 1958 and there is no bifurcation of any urban or rural area for levy and collection of UIP Tax under the Act ibid. Moreover, the notified areas as rating area were declared after observance of all codal formalities by the TMA. As far as the mandate of Tehsil Council to levy UIP Tax is concerned, it is submitted that at the relevant time there was no elected Tehsil Council in existence and the Local Government Department possessed powers and authority of Tehsil Council was thus competent to have issued the notification in terms of the Act of 2013. In addition, the Secretary Finance Government of Khyber Pakhtunkhwa in compliance with order dated 18.04.2024, submitted a written statement explaining the question as to whether the UIP Tax which is being collected under the Act of 2013 becomes part and parcel of the Provincial revenue that is to say it is credited to the Provincial Consolidated Fund or it become part of the revenue of the Local Fund and Public Accounts in terms of section 30 of the Act, 2013. The Secretary Finance in the written statement submitted that the UIP Tax is a property tax of Local Government which is collected by Excise, Taxation & Narcotics Control Department, Khyber Pakhtunkhwa on behalf of Local Government Department under object head B01301 as tax receipt. It is further explained that the provincial government retains 15% share in it as collection charges and remaining 85 % share is released to Administrative Department for onward distribution among the Tehsil Municipal Administration in accordance with section 3-A of the KP Act of 1958. That after release of 85% share of UIP Tax to the Local Government, this amount becomes part of the public accounts of TMA's in accordance with section 30 of the Act of 2013.

WP No.4218-P/2013 "M/s Premier Sugar Mills & Distillery Company Ltd. vs. Government of Khyber Pakhtunkhwa through its Chief Secretary"

4. The company claims to be one of the largest sugar mill of the country since its establishment in the year 1940. It is averred in the petition that the petitioner company was illegally subjected to UIP Tax under the KP Act of 1958 without first declaring the area as rating area through requisite approval from tehsil council and was issued challan No.MR5119 dated 28.08.2023 requiring the petitioner company to deposit Rs. 23888168/- assessed against it as UIP Tax. It was also stated in the petition that the area where the factory is located is rural one and as such, the notification by the respondents as rated area is void and illegal.

5. Comments submitted by Respondents: The respondents have filed their para-wise comments, out of whom, respondent No.1 raised objection to the maintainability of this petition in view of factual controversy involved in adjudication of the matter and non-availing of alternate remedy besides raising the question to jurisdiction of the court. The respondents No.3 and 4 also submitted that the area, where the Sugar Mill is situated, has been competently and duly notified as rating area by exercising the powers conferred under section 44 of the Act of 2013. It is further submitted that the petitioner is precluded from seeking extraordinary relief due to existence of a forum available under the Act of 2013. The Excise Department too also raised the objection of ouster of jurisdiction.

W.P No.530-P/2023 "Lucky Cement Limited vs. District Excise, Taxation & Narcotics Control etc."

6. The petitioner company as alleged in the petition is engaged in the manufacture of cement having its plant situated in Darra Pezu Tehsil and District Lakki Marwat, a rural area. The respondents No.1; vide his letter dated 02.02.2023; pursuant to letter dated 23.01.2023 of respondent No.2 on the strength of letter dated 15.02.2022 issued by respondent No.3 and the Recommendations issued by the Office of the Director, Excise, Taxation & Narcotics Control, D.I Khan Region, required the petitioner company to pay UIP Tax. It was further stated that on the basis of Notification dated 01.07.2011, the cement factory of petitioner company was placed in Category B of UIP Tax rating area discriminately as no other factory throughout the province was subjected to UIP Tax at par with the petitioner company. That prior to filing of instant writ petition, the petitioner had challenged the discriminatory action of the respondents by placing the petitioner company/factory in Category B through Writ Petition No. 359-P of 2016 before this Court and the matter went up to the Supreme Court of Pakistan in Civil Appeal No.2092/019, wherein the Supreme Court of Pakistan held the notification as discriminatory vide its judgment dated 24.09.2022 and directed to treat the petitioner company / be placed at par with other cement factory in the province. That in the light of the judgment of Supreme Court of Pakistan in favour of the petitioner, the amount of UIP Tax recovered from the petitioner for the period from 2011-12 to 2022.23 is violative of Article 25 of the Constitution and the respondents are bound to comply with the directions of Supreme Court of Pakistan to remove the discrimination and to adjust all UIP Tax recovered from the petitioner company in excess of UIP Tax imposed on other cement manufacturers which was liable to be refunded to the petitioner. That the petitioner company was also liable to be placed at Category D at par with other cement companies during the said period.

That impugned demand letter purporting to levy the UIP Tax on the petitioner company for the year 2020-21 by placing it at Category C and recovery of an amount of Rs.16,331,938/- calculated by the respondents is without any lawful authority. That the KP Act of 1958 as regards to tehsils does not apply by its own force, rather for the application of the said law the declaration by the Tehsil Council under sections 42 and 44 of the Act of 2013 is a sine qua non. It was further averred in the petition that apart from the discrimination pointed out above, the factory is located in a rural area and not duly determined as urban/rated area and as such the demand letter 02.02.2023 is also liable to be withdrawn. Moreover, the assessment of levy of UIP Tax at the rate of Rs.2.5 per sq.ft. for the whole plot area under no canon of law can be adopted for non-urban areas in which large tracts of land or often under cultivation; thus the assessment suffers from unreasonableness. That clause 7 of Schedule II of the KP Act of 1958 is not applicable to the built up premises, quarries and open land in the said area, therefore, the impugned demand letter based on letter 23.01.2023 and 15.02.2022 may be declared to be of no lawful authority.

7. Comments submitted by Respondents: The respondents have filed their respective para-wise comments. The respondents No.1 and 3 raised the objection qua maintainability of this writ petition for non-availing of alternate remedy available to the petitioner and further submitted that the impugned notification was competently issued after the observance of codal formalities. The respondents No.9 and 10 also raised the similar legal and factual objections. Hence prayed that writ petition is without any force and shall be dismissed.

W.P No.4204-P/2021 "M/s Chashma Sugar Mills Limited Vs. Government of KP through Chief Secretary"

8. In this writ petition, the petitioner company is claiming to be one of the largest Sugar Mills in the country having two units known as Chashma-I & Chashma-II alongwith Chashma Ethanol Fuel Plant. That the company is bringing huge foreign exchange to the country. That the company has also launched Assistance Technical Support to local farmers in developing of land measuring 75,000 acres by bringing the same under cultivation. That 2,500 permanent and seasonal employees are working in the company and more than 10,000 families are dependent on the employment offered by it. That the industrial unit in Chashma-I is located at village Council Malaria, University Road, D.I Khan and Chashma-II is situated in village Council Miran, Ramak, D.I Khan, which are rural areas but the respondents through Notification No.2947 dated 23.10.2020 have declared the same as rating area for the purpose of imposing UIP Tax. That pursuant to the said Gazette Notification, an assessment of UIP Tax Notice No.12350 dated 24.08.2021, Notice No.12351 and Notice No.12352 of even date for CEFP (Chashma Ethanol Fuel Plant) at the rate of Rs2.50 per sq.ft were issued. It was further mentioned that the total land owned by company is not used for industrial purposes and substantial area owned by the petitioner is agricultural land, but the office building, industrial building and vacant land were treated alike for the purpose of levy of UIP Tax. That the UIP Tax under the KP Act of 1958 is restricted only to urban areas as envisaged in the Preamble and section 3(1) of the KP Act of 1958. That the urban area is defined in section 2(iv) of the KP Act of 1958. That according to section 44 of the Act of 2013, approval of respective Tehsil Council is mandatory before imposition of the UIP Tax. It was hence, prayed that the impugned notification and notices of levy of UIP Tax be declared as illegal.

9. Comments submitted by Respondents: The respondents filed their para-wise comments wherein, besides raising the objection qua maintainability of writ petition under section 111 of the Act of 2013, it is submitted that they were justified in the extension of rating area for imposition of UIP Tax due to the municipal services provided by the TMAs in the area and the impugned notification has been issued by observing all the codal formalities. Hence prayed that writ petition is without any force and shall be dismissed.

W.P No.2016-P/2022 "MS Khyber Foods and others Vs. Government of Khyber Pakhtunkhwa"

10. It is alleged that the petitioners firm is associated with manufacturing units of small scale food products i.e. Cakes, Snacks Poops and nimko etc. The petitioners are aggrieved from Gazette Notification TMA No.435-45 dated 18.03.2020 declaring the Petitioner's Ceramic factory located in UC, Shaidu, District Nowshera as urban area for imposing of UIP Tax under the KP Act of 1958. (It appears that the mentioning of ceramics factory in the petition is due to clerical mistake, which is infact a food factory). That pursuant to Gazette Notification, schedule for survey regarding assessm ent of UIP Tax in the factory plant of petitioners, was issued by respondent No.6 on 26.11.2020 followed by demand Notice (PT10 Challan) dated 21.05.2022. That legally the UIP Tax under section 44 of Act of 2013 is restricted only to the urban areas. That as per list of Village/ Neighborhood Councils issued by the Khyber Pakhtunkhwa Local Government, Election and Rural Development Department, the Village Council Shaidu, where the factory of the petitioners is located, is divided in three Neighborhood Councils namely Shaidu-1, Shaidu-2 and Shaidu-3, therefore, without complying with requirements of section 44 of the Act of 2013, the very notification declaring the area as rating area is unlawful and void-ab-initio; hence prayed that writ petition shall be allowed and impugned notification shall be held as cancelled.

11. Comments Submitted by Respondents: In the para-wise comments filed by the respondents, it was submitted that the impugned notification was validly issued by invoking provision of section 44 of the Act of 2013, where under every Tehsil Council is a rating area for the purposes of collection of UIP Tax recoverable irrespective of the location of the factory being a rural area. The locus standi of the petitioner, being not an aggrieved person, has also been questioned. Hence prayed that writ petition being without any force shall be dismissed.

W.P No.204-D/2023 "M/S Almoiz Industries vs. Government of Khyber Pakhtunkhwa and others"

W.P No.577-D/2021 "M/S Almoiz Industries vs. Government of Khyber Pakhtunkhwa and others"

12. Both these petitions were originally instituted before the D.I Khan Bench of this Court but in view of pendency of the other identical petitions, these petitions were directed to be clubbed with the other petitions pending at the Principal Seat. Both the petitions are emanating from the initial Notification dated 03.08.2018 and have a chequered history. In the earlier round of litigation, the notification was challenged in the writ petition No.521-D of 2019, which was disposed of on 17.11.2020 in the terms to file the objections in the hierarchy of concerned department. That consequently, the petitioners filed objections before respondent No.6, which were rejected vide order dated 19.01.2021.

Against which order, appeal was preferred under section 111 of the Act of 2013 before respondent No.4, but the same also met the same fate vide decision of respondent No.4 dated 16.09.2021. That during the pendency of said appeal before respondent No.4, the respondent No.3 demanded the petitioner company to pay an amount of Rs.45,196,814/- vide letter dated 30.08.2021 as UIP Tax despite the fact that the petitioners have already paid millions of rupees as UIP Tax in the light of impugned notification dated 03.08.2018.

In this writ petition, the petitioners have challenged the Notification No.1037-TMA, dated 03.08.2018 and subsequent Letter No.72/TMA dated 19.01.2021 & Letter No.12579-81/ET&NC dated 30.08.2021 of respondents No.3 & 6 and impugned order dated 16.09.2021 of respondent No.6. It is asserted that UIP Tax is governed by section 42 of the Act of 2013 read with the relevant provisions of the KP Act of 1958. It is further averred that Item No.5 of Part III of Third Schedule and section 2(h) of the KP Act of 1958 defines `tax' as the tax leviable under the provision of section 3 of the KP Act of 1958. The charging provision i.e. section 3, levies tax only on residential and commercial properties to the exclusion of industrial properties. Besides, it has no retrospective effect in imposition of the UIP Tax without specification of date for enforcement under section 42(4) of the Act of 2013. Legally a taxing provision requires to be mentioned in unambiguous manner and purpose of law shall be taken into consideration while interpreting the statute. That the orders of the respondents are lacking reasonability, fairness and justification as required by Article 24A of the General Clauses Act, 1897. Hence, the present petition and lastly prayed that impugned notification shall be cancelled being unlawful and void in nature.

13. Another pending writ petition No.577-D, the third Writ Petition No.204-D was filed challenging the vires of amendment in the schedule under the KP Act of 1958, through the Khyber Pakhtunkhwa Amendment of Certain Fiscal Laws Act, 2021 ("Act of 2021"). It is claimed that the petitioner is aggrieved of insertion of section 2(4) of the Act of 2021, whereunder Item No.7 of Schedule-II of the KP Act of 1958 was modified and under section 2(4) of the Act of 2021, industrial lands and buildings were also included as Item No.7 subject to the imposition of UIP Tax upon industrial land and building at flat rate of Rs.2.50 per sq.ft of the whole plot area, which is ultra vires to law. It is averred in the petition that the charging provision of the KP Act of 1958 levies UIP Tax on residential and commercial properties only and the same cannot be extended to industrial properties. It is further added that the petitioner's industry pays a significant amount of Rs.36 million annually on account of UIP Tax, which is discriminatory as compared to the other provinces. Therefore, prayed that the amendment in the schedule under the KP Act of 1958 through the Khyber Pakhtunkhwa Amendment of Certain Fiscal Laws Act, 2021 ("Act of 2021") shall be held as Ultra Vires to Law.

14. Comments submitted by Respondents in Writ Petition No.577-D/2021.

In response to writ petition No.577-D/2021, the respondents have submitted their parawise comments where in Paras No.4 and 5 of the grounds it is pointed out that the UIP Tax is leviable by virtue of amendment in section 3 of the Act of 2013. It is further submitted that according to the schedule of Finance Act, 1997 read with sections 4(2) and 3(2) of the KP Act of 1958, the categories of building are to be reckoned from the list provided in the schedule and further under section 44 of the Act of 2013 read with amendment in the Finance Act 1997, the petitioner company is liable to levy of UIP Tax. While in the subsequent writ petition, the parawise comments were returned with the office objection but the same were still not resubmitted.

W.P No.2289-P/2021.

"Al/S Cherat Cement Co. Ltd. vs. Govt of KP"

15. The petitioner in this writ petition statedly invested billions of rupees by installation of cement manufacturing units / production lines in Khyber Pakhtunkhwa since 1984, contributing to national exchequer by paying taxes in billions of rupees, which included 11 types of taxes paid to the Federal and Provincial Governments. That the factory is located at Lakarai, a Rural Union Council Shekhai (Pahari Kati Khel), but the respondents through the impugned Notification TMA No .3064- 71/UIP.Tax/TMANSR dated 20.04.2020 with reference to section 44 of the Act of 2013 declared the factory area as rural area without seeking approval from Tehsil Council. It was also averred in the petition that the factory area which forms part of Village Council Shekhai, Pahari Kati Khel is included in the list of Village/Neighborhood Council issued by Khyber Pakhtunkhwa Local Government, Election and Rural Development Department. Hence, the present petition.

16. Comments submitted by Respondents: Parawise comments have been submitted by the respondents, wherein it is stated that there is no bifurcation of Urban and Rural areas in respect of levy and collection of taxes and under section 44 of the Act of 2013, all the Tehsil Councils shall be a rating area within the meaning of the KP Act of 1958.

W.P No.1092-P/2021 "M/S Swat Ceramics Ltd. Vs. Government of Khyber Pakhtunkhwa and others"

17. The petitioner is a registered company under the Companies Laws of Pakistan and is a manufacturer of ceramic tiles having its manufacturing unit at Shaidu, Nowshera. That the premises, where the factory is situated, falls within the territory of Village Council Shaidu, which has been divided in three Neighborhood Councils i.e. Shaidu-I, Shaidu-2 & Shaidu-3, therefore, prayed that the impugned Notification is illegal. Hence, the present petition.

18. Comments submitted by Respondents: The respondents duly submitted their parawise comments wherein it is stated that as per section 44 of Act of 2013 every Tehsil Council for the purposes of the KP Act of 1958 shall be considered as a rating area and the notification in question was competently issued. It is also submitted that the petitioner does not come within the definition of aggrieved person.

W.P No.4205-P/2021 "Ms Tandianwala Sugar Mills Ltd vs. Government of Khyber Pakhtunkhwa through its Chief Secretary and others"

19. The petitioner M/s Tandianwala Sugar Mills is also one of the largest Sugar Mills of the country, which is located in Tehsil Paroa, D.I Khan, which besides, producing the sugar products, is also providing assistance/technical support to the local growers by bringing 75,000 acres of land under cultivation and also employed 1,500 permanent and seasonal employees on whom almost 10,000 families depend. That it was in the year 2020, when the respondents issued Notification TMA No.2947 dated 23.10.2020 under section 44 of Act of 2013, whereby the petitioner's Sugar Mills located at Meran Tehsil Paroa, D.I Khan, in Village Council Meran, was declared as a rating area under the KP Act of 1958. That pursuant to said Gazette Notification, the respondent No.6 issued assessm ent Notice No.12353 dated 24.08.2021 to the petitioner at the rate of Rs.2.50 per sq.ft as per revenue record. It is alleged in the petition that the entire land owned by the petitioner company is not underutilization for industrial purposes and substantial area is still agricultural in nature. That the taxes meant for the urban areas, are hardly applicable to the declared rural areas unless the prerequisite of section 44 of Act of 2013 is meted out. That the notification dated 23.10.2020 and subsequent notices do not fulfill the requirement of section 44 of the Act of 2013 for issuance by the competent authority; hence, prayed that the same are liable to be withdrawn.

20. Comments submitted by Respondents: The respondents contested the writ petition by filing their para-wise comments, wherein question of availability of alternate remedy has been raised and it is insisted that the factory area is urban in nature which is duly notified as rated area where the TMA is providing municipal services.

W.P No.831-P/2022 "MS Khazana Sugar Mills Ltd vs. Govt of KP and others"

21. The manufacturing unit of petitioner namely M/s Khazana Sugar Mills (Pvt) Limited is located at Charsadda Road, Peshawar within the precincts of Village Khazana Payan, a declared Village/Neighborhood Council by the Khyber Pakhtunkhwa Local Government, Election and Rural Development Department. It is averred in the petitioner that the power to declare any area as rural area rests with Chief Secretary of the Province and not with respondent No.5 but the respondents issued a controversial Notification bearing No.2032 dated 28.07.2011 purportedly in exercise of powers under section 117 of the Khyber Pakhtunkhwa Local Government Ordinance, 2001 ("Ordinance of 2001") declaring the area as rating area for UIP Tax under the KP Act of 1958. That pursuant to the said Notification, the petitioner was issued Notice No.281 dated 17.06.2019 by ETO-VI Peshawar for submission of site map. That the petitioner responded to the said Notice by asserting the status of area is rural and has taken exception to levy of UIP Tax to the industrial units. That the respondents while turning deaf ears to the assertion of the petitioner have passed an assessment order on 21.06.2019 and PT10 Challan was issued requiring the petitioner to make payment of Rs.975,356/- as UIP Tax for the period 2018-19 alongwith arrears of Rs.6,369,248/- total Rs.7,344,604/-. That the petitioner filed detailed objections vide letter dated 24.06.2019 indicating departure of respondents from mandatory procedure. That without considering the petitioner's objections, another PT10 Challan for payment of Rs.1,603,346/- for the period of 2019-20 alongwith arrears of Rs.7,344,604/- total Rs.8,947,950/- was issued on 19.11.2019 and consistently threatened the petitioner by frequent notices and in a span of eight days on 27.11.2019, a show cause notice followed by notice dated 11.12.2019 as final notice were issued entailing warrant of arrest in case of default till 18.12.2019. The petitioner asked the respondents to withdraw the PT-10 notices but they are adamant to recover the UIP Tax from the petitioner. That the petitioner before filing of writ petition, instituted a civil suit challenging the notices but the same was dismissed for lack of jurisdiction. The petitioner also made recourse to departmental remedy which was also not entertained. That recently another Notice 25.01.2022 and final Notice 28.02.2022 have also been issued to the petitioner calling upon it to pay the UIP Tax. That the entire area under the control of petitioner is not for industrial use rather substantial area still remains agricultural. That the levy of the impugned UIP Tax is in contravention of section 44 of the Act of 2013. It is further averred in the petition that Industrial land is also not amenable to charging section 3 of the KP Act of 1958 and only residential and commercial properties are subject to UIP Tax. Further averred that since the Village Council Khazana Payan is a declared rural area by the Khyber Pakhtunkhwa Local Government, Election and Rural Development Department and prerequisite of section 44 of the Act of 2013 is also not fulfilled, therefore, prayed that the impugned Notification and superstructure built thereon being void ab initio would fall on ground.

22. Comments submitted by respondents: The respondent No.5 filed para-wise comments, wherein the competency of writ petition has been challenged and it is submitted that the impugned Notification was competently issued in pursuance of section 117 of the Ordinance of 2001 and no exemption to industrial unit is provided. It was emphasized that the petitioner has been depositing the UIP Tax till 30.06.2020 without any protest and objection and as such he is barred from challenging the same at belated stage.

W.P No.4693-P/2023 "M/S Frontier Sugar Mills and Distillery Company vs. Govt of KP and others"

23. In this writ petition, the petitioner company is claiming to be one of the largest Sugar Mills of the country established in the year 1938 and has challenged the Challan No. MR 5119 dated 04.10.2023 requiring the company to pay the UIP Tax assessed against it by declaring the factory area as rated area for the purposes of the KP Act of 1958. It is averred in the petition that the impugned assessm ent has been made without adhering to mandatory provision of section 44 of the Act of 2013 which contemplates approval of Tehsil Council concerned as prerequisite for declaring an area as rated area. That the impugned Challan was issued without reasonable cause and justification, therefore, prayed that the charge and demand of UIP Tax is illegal.

24. Comments submitted by respondents: The respondents filed their parawise comments wherein it is mainly submitted that the impugned notification was validly issued by exercising of powers conferred under section 44 of the Act of 2013 and the entire area of Tehsil Council shall be deemed as rating area for the purposes of levy of UIP Tax. Apart from this, the maintainability of the writ petition has also been objected to.

25. Arguments of Mr. Saquib Iftehkhar, Advocate: Mr. Saquib Iftikhar, the learned counsel representing the petitioner has argued that the subject tax is on immovable property, which is governed under the KP Act of 1958 and under the said Act, the urban property can be subject to the impost of UIP Tax. The said UIP Tax should have either residential or commercial character, whereas the impugned levy through the notification in question is on industrial plot and building which is beyond the mandate of the KP Act of 1958. The learned counsel has next contended that the imposition of the UIP Tax through amendment in Schedule-II to the KP Act of 1958 is obviously ultra vires as it is in conflict with the main statute.

26. Arguments of M/S Isaac Ali Oazi, Advocate and Barrister Ibrahim Khan Afridi.

The learned counsels representing the petitioners have argued that the introduction of Item No.13 of the Schedule-II to the KP Act of 1958 is beyond the scope of charging section, hence, the industry cannot be subject to the impost of UIP Tax. The learned counsels, while referring to section 3(1) of the KP Act of 1958, have argued that in order to invoke the charging section, the property must be within the urban area as defined under section 2 sub section 2 of the KP Act of 1958, which in addition to above should also be located within rating area in terms of section 2(g) of the KP Act of 1958. The learned counsels have also maintained that the KP Act of 1958 only encompasses residential as well as commercial buildings, therefore, the imposition of UIP Tax on industry is beyond the scope of the charging section. They next contended that the insertion of the KP Act of 1958 in section 44(1) of the Act of 2013 is not a mere legislation by reference rather it is a legislation by incorporation and have stated that when the existing Act or certain of its provisions are incorporated by reference into a latter Act, the provisions so incorporated become part and parcel of the latter Act as they had been borderly transported to it but the same should be distinguished from referential legislation which merely contains reference or citation of the provisions of an earlier Statute. Therefore, the Act of 2013 would not enlarge the scope of the KP Act of 1958. The learned counsels have also contended that the notification was issued by the Executive Officers, who were purportedly acting in terms of section 120A of the Act of 2013 and at the relevant time the respective tehsil council was not in place, therefore, the said notification by the executive authority without the approval of the tehsil council is thus illegal and without lawful authority.

27. Arguments of Mr. Salman Akram Raja, Advocate Mr. Salman Akram Raja, the learned senior Advocate Supreme Court, while advocating on behalf of Lucky Cement, has argued that the matter of imposition of UIP Tax has been finally settled by the Apex Court in the case of M/s Lucky Cement Ltd^[1], wherein it was observed that the present petitioner was discriminated as no other industry dealing in the manufacturing of cement has been made subject to the said impost. Therefore, directions were issued to the respondents to treat the petitioner company with a uniformed criteria as applicable to other cement industries and if the petitioner has paid UIP Tax during the period when it was not supposed to pay the said UIP Tax, the same should be either reimbursed or readjusted in its future liability.

28. Arguments of Mr. Sabah-ud-Din Khattak, Advocate (representing Local Council Board and TMA Mr. Sabah-ud-Din Khattak, Advocate, the learned counsel representing the Local Council Board and TMA's has addressed the lead arguments. However, in order to address this issue, he has argued that the Local Government Ordinance, 2001 was repealed by the Local Government Act, 2012, wherein the local government system created under the previous regime was devolved and the Local Councils were again named as a Municipal Corporations, Municipal Committees in the urban areas and the District Councils in the rural areas were restored. The said distinction was done away through section 44 of the Act of 2013, whereby all the Tehsil Councils are now rating area for the purpose of imposition of the UIP Tax under the Act of 2013. He has also placed on file certain notifications, whereby the areas in question were declared as notified area. The learned counsel representing the Tehsil Administration had adopted the said arguments.

29. Arguments heard and record of the case was perused with the able assistance of the learned counsel representing the parties.

30. It is settled that in any taxing statutes there are three stages; firstly, the imposition or creation of the very tax or the levy known as the charge. The charging section, in the ordinary parlance, connotes the subject of tax. Next is the quantification of the tax levy, which is called assessment, in other words, the measure of tax, and thirdly, the recovery of the tax levy which is normally called collection. The former is the charging section which connotes the subject of the taxing statute while the latter two are the machinery provisions contained in the machinery section of the statute^[2].

31. Taxing immovable property is provincial subject and the West Pakistan Urban Immovable Property Tax Act, 1958 ("Act of 1958") provides a complete mechanism for levy, assessment and collection of a tax payable on immovable property situated in urban area. Since the promulgation of Khyber Pakhtunkhwa Local Government Ordinance, 2001, the collection of tax on immovable property has devolved to the local governments. The scheme of the Act of 1958 provides for the levy, collection and assessm ent of tax on immovable property. The relevant provisions of the Act of 1958 germane to the present controversy are as follows: Section 2 of the Act of 1958 Definitions

2. In this Act unless the context otherwise requires, the following expressions shall have the meanings hereby respectively assigned to them, that is to say--

(g) "rating area" means urban area where tax is levied under the provisions of this Act.

(h) "tax" means the tax leviable, under the provisions of section 3; and

(i) "urban area" means an area within the boundaries of a Municipal Corporation, Municipal Committee, Cantonment Board, Small Town Committee, or other authority (not being a District Board) legally entitled to, or entrusted by Government with the control or management of a municipal or a local fund.

Section 3 of the Act of 1958 Levy of Tax

3. (1) Government may by notification specify urban areas where tax shall be levied under this Act: Provided that one urban area may be divided into two or more rating areas or several urban areas may be grouped as one rating area.

(2) Subject to the provisions of section 4, there shall be levied, charged and paid a tax, on the basis of annual rental value of buildings and lands in the rating areas (here to force notified or as may hereafter be notified under this Act.-

(a) at the rate specified in Schedule I in respect of residential buildings; and

(b) at the rate specified in Schedule II in respect of commercial buildings: Explanation-I.- Residential buildings are the buildings which are used for the purpose of dwelling whereas commercial buildings are the buildings alongwith any appurtenances and installations that may be attached therewith, which are used as office establishment or for carrying on any commerce or trade.

Explanation-II.- In case when compartmentalization and partition is carried out in the buildings in such a way to collectively use the building for residential as well as commercial purposes or to house more than one dwellings, the tax in respect of such compartments and partitions shall be levied in a manner as if they are separate buildings.

(2a) A rebate at the rate of 4 ^[20]% of the tax assessed under subsection (2) shall be admissible to those assesses who pay the tax in advance for the whole year by the 5 [30th day of September] of the year to which it relates: Provided that there shall be thirty-five percent (35%) rebate for all those taxpayers, who have timely, paid their tax in the preceding five years; and

(3) The tax shall be due from the owner of buildings and lands.

Section 5 of the Act of 1958 Ascertainment of Annual Value

5. The annual value of any land or building shall be ascertained by estimating the gross annual rent at which such land or building together with its appurtenances and any furniture that may be let for use or enjoyment with such building might reasonably be expected to be let from year to year, less

(a) any allowance not exceeding twenty per centum of the gross annual rent as the assessing authority in each particular case may consider reasonable rent for the furniture let with any such building;

(b) an allowance of ten per centum for the cost of repairs and for all other expenses necessary to maintain such building in a state to command such gross annual rent. Such deduction shall be calculated on the balance of the gross annual rent after the deduction, if any, under clause (a); and

(c) any land revenue actually paid in respect of such building or land: Provided that in calculating the annual value of any building or land under this section the value of any machinery in such building or on such land shall be excluded.

Provided that in calculating the annual value of any building or land under this section the value of any machinery in such building or on such land shall be excluded.

SCHEDULE-II

9. The tax shall be calculated as under: a. area in square yards; b. covered area in square feet; provided that open sheds in the commercial units shall be counted as one half of its total measurements, while calculating the covered area; and c. (a) (b) multiplied by the locality factor.

13. Industrial buildings within the limits of rating areas shall be assessed for the purpose of this tax at a flat rate of Rs.2.50 per square foot of the building only. The provision of 10(b) shall also apply.

The Khyber Pakhtunkhwa Amendment of Certain Fiscal Laws Act 2021.

Clause 7 of the 2nd Schedule "7. Industrial lands and buildings, within the limits of rating areas, shall be assessed and taxed at a flat rate of rupees 2.50 per square foot of the whole plot area.

Explanation: For this clause, the industrial building or land shall include a building, group of buildings or a plot, wherein finished, semi-finished or raw goods are manufactured, processed or stockpiled and shall also include all the residential buildings, colonies, hostels, mess, school etc; within the premises of the industrial compound. Similarly, all commercial land or buildings other than factory area i.e. workshop, shops, godowns, banks, petrol pumps, factory offices, mobile towers etc; situated within the industrial compound, shall be considered as part of industrial building or land. However, if these land or buildings are used for any other commercial purpose, which has no relevance with the industry or commercial activity, open to public, or any space rented out, the same shall be assessed and taxed as per clauses 1 to 6 of Schedule-II, in case of commercial land or buildings, and in accordance with rates given in Schedule-1 of this Act for all residential buildings.".

32. It is stipulated in section 3(1) of the Act of 1958 that as a first step, the Government^[3] may, through notification, specify the urban areas where UIP Tax shall be levied under this Act. However, sub section 2 of section 3 of the Act of 1958 in clear words envisages that there shall be levied, charged and paid UIP Tax, on the basis of annual rental value of buildings and lands in the rating area, which should be notified under the Act of 1958 and the rating area has been defined under section 2(g) to mean urban area where UIP Tax is levied under the provisions of this Act, whereas the urban area is defined under section 2, sub clause (i) to mean an area falling within the boundaries of a Municipal Corporation, Municipal Committee, Cantonment Board, Small Town Committee, or other authority. The rate of UIP Tax for residential and commercial buildings is provided under Schedule-I as well as Schedule-II to the Act of 1958. The Schedule-II further elaborates the measure of UIP Tax upon the buildings and lands and also envisages for categorization of the land as Al, A, B, C and D. The formula for calculation of UIP Tax is provided through Entry No.9 of the said Schedule, whereas Entry No.13 of Schedule-II stipulates that industrial building within the limits of rating area shall be assessed for the purpose of UIP Tax at the rate of Rs.

2.50 per sq.ft. of the building only. Through Finance Act, 2021, the said Schedule for industrial area has been amended which envisages that industrial lands and buildings within the limits of rating area shall be assessed and taxed at a flat rate of Rs.2.50 per sq.ft. of the whole plot area. Through the latter amendment of 2021, the scope of levy has been extended from the building to the whole plot with a uniformed flat rate of Rs.2.50 per sq.ft.

33. The jurisdiction of the Government to declare any area as an urban area beyond the boundaries of Municipal Corporation, Municipal Committee, Cantonment Board and Town Committee has been held by the Apex Court in the case of "Province of Punjab through Secretary, Government of the Punjab Excise and Taxation Department and others vs. Muhammad Aslam and others" (2004 SCMR 1649) to be without lawful authority and it was held that only immovable property situated within the urban area as defined under the Act of 1958 would be subject to the impost of the charging section.

34. Since the promulgation of Khyber Pakhtunkhwa Local Government Ordinance, 2001, the collection of tax on immovable property under the Act of 1958 becomes part of the Local Fund and Public Accounts established presently under section 30(1) of the Act of 2013^[4]. In order to ascertain this factual position when the case was heard by this Court on 18.04.2024, directions were issued to the Secretary Finance Department Khyber Pakhtunkhwa to provide a written statement to this Court explaining the aforesaid position. The said directions were repeated by this Court through order dated 18.07.2024 and that is how the said written statement was filed before this Court and placed before us in Chamber on 22.07.2024. The said written statement reads as under: "In compliance of the Hon'ble Court order dated 18/04/2024 wherein it has been directed that the worthy Secretary Finance shall submit written statement/report explaining the following: "Whether the property tax which is being collected under the Act, 2013 becomes part and parcel of the Provincial revenue that is to say it is credited to the Provincial Consolidated Fund or it become part of the revenue of the Local Funds and Public Accounts in terms of section 30 of Act, 2013?"

Furthermore, it is stated that Urban Immovable Property tax is a property tax of Local Government, which is collected by Excise, Taxation & Narcotics Control Department, Khyber Pakhtunkhwa on behalf of Local Government Department, Khyber Pakhtunkhwa under object head B-01301 as tax receipt. The provincial government retains 15% share in it as collection charges and remaining 85% share is released to Administrative Department for onward distribution among the Tehsil Municipal Administration (TMAs) in accordance with section 3-A of UIP Tax Act 1958 (Annex-I). After release of 85% share of UIP Tax to the Local Government, this amount becomes part of the public accounts of TMA's in accordance with section 30 of the Khyber Pakhtunkhwa Local Government Act, 2013 (Annex-II).

35. The scheme of the composition of the tehsil council and declaration of rating area for the purpose of property tax as provided under the various laws relating to the establishment of the local governments are reproduced as under: Ordinance, 2001 Local Act of 2012 Act of 2013 Section 117 Section 176 Section 44

117. Rating Areas and Property Tax. (I) on commencement of this Ordinance, every Tehsil and Town shall be rating areas within the meaning of the North- West Frontier Province Urban Immovable Property Tax Act 1958 (W.P. Act V of 1958) 1958.

(2) The Tehsil Council or Town Council, as the case may be, shall subject to the- provisions of section 116, determine the rate of property tax in an areas within the Tehsil or Town: Provided that in the areas within a Tehsil or Town where rate has not been determined, the areas shall be"

176. Roting Areas and Property Tox.--

(I) On commencement of this Act, every City shall be rating area within the meaning of the Khyber Pakhtunkhwa Urban Immovable Property Tax Act, 1958 (W.P. Act V of 1958).

(2) The Municipal Corporation and Municipal Committee, as the case may be, shall determine the rate of property tax in its area: Provided that in the areas within a City where rate has not been determined, the areas shall be deemed to be"

44. Rating Areas and Property Tax.-- -

(I) On commencement of this Act, every tehsil shall be rating area within the meaning of the Khyber Pakhtunkhwa (Urban Immovable Property Tax Act, 1958 (W.P. Act V of 1958).

(2) The rate of Property tax in an area within a tehsil shall be subject to approval of respective tehsil council: Provided that in the areas within a tehsil where rate has not been determined, the areas shall be deemed to be exempted "from property tax till determination of the rate. deemed to be exempted from property tax till determination of the rate.

(3) (Unless varied under subsection (2) above, the existing rates in the areas within a Tehsil and Town shall remain in force. Explanation: For the purpose of that section the "rate" shall mean the tax leviable under the North-West Frontier Province Urban Immovable Property Tax Act, 1958 (71/.P. Act V of ,958)"exempted from property tax till determination of the rate.

(3) Unless varied under subsection (2) above, the existing rates in the areas within o City shall remain in force.

Explanation: For the purpose of this section the "rate" shall mean the tax leviable under the Khyber Pakhtunkhwa Urban Immovable Property Tax Act, I958 (W.P. Act V of 1958)"(3) Unless varied under subsection (2) above, the existing rates in the areas within o tehsil shall remain in force.

Explanation: For the purpose of this section the "rate " shall mean the tax leviable under the Khyber Pakhtunkhwa Urban Immovable Property Tax Act, 1958 (W.P. Act V of 1958)"

36. The Act of 2013 was finally amended through the Act No. XXV of 2019 and the concept of Municipal Administration, City District Government and District Government was completely done away. However, for the purpose of rating area and UIP Tax, every tehsil was declared as rating area within the meaning of the Act of 1958. Thus, the legal position which now emerges is that the tax on immovable property is charged under the Act of 1958; however, the same is subject to the approval of the Tehsil Council of a particular Local Government. The legal proposition which we are confronted to address is that the nature and character of the levy/tax under section 3(2) of the Act of 1958 is on the urban immovable property and the urban immovable property as defined under section 2(i) of the Act of 1958 relating to its location in Municipal Corporation etc, is no more available. Therefore, the following questions have cropped for adjudication of this Court: i. Whether in terms of section 44 of the Act of 2013, the entire tehsil has become a rating area and whether the local council of a tehsil can impose and collect the UIP Tax on any property in any part of the tehsil, despite the same has no urban character.

Whether the notification issued by the Administrative Officers of the local government when the elected government was not in place whereby certain areas in the tehsil have been declared as a rating area was within the authority of the Administrative Officers of the local government in terms of section 120A of the Act of 2013? iii. Whether an industrial building/plot falls within the purview of commercial building as explained in the charging section 3 of the Act of 1958?

Opinion of the Court.

Whether in terms of section 44 of the Act of 2013, the entire tehsil has become a rating area and whether the local council of a tehsil can impose and collect the UIP Tax on any property in any part of the tehsil, despite the same has no urban character.

37. In order to appreciate the above question, we would like to refer certain provisions of the Act of 2013, germane to the present controversy.

Section 2 of the Act of 2013

2. Definitions.---In this Act, unless the context otherwise requires,- (a)

(b)

(c-i) "City Local Government" means the City Local Government as provided in sub-section (5) of section 21 of this Act;

(ff) "tax" includes any cess, fee, rate, toll or other charge leviable under this Act;

(gg) "tehsil" means a tehsil notified under the West Pakistan Land Revenue Act, 1967 (W.P. Act No.XVII of 1967) and includes any other area as declared by the Government to be a tehsil for the purposes of this Act; Section 5 of the Act of 2013

5. Constitution of local governments.---(1) Subject to other provisions of this Act, local governments constituted under this Act shall be:

(a) a City Local Government;

(b) Deleted

(c) a Tehsil Local Government for a tehsil;

(d) Deleted

(e) a Village Council for a village in the rural areas; and

(f) a Neighbourhood Council for a Neighbourhood in areas with urban characteristics.

(2) Government may, by notification in official Gazette, specify the name by which a local government shall be known and unless so specified, it shall be known as the local government of the place where its office is situated.

(3) Save as otherwise provided in this Act, every local government shall be competent to acquire, hold or transfer any property, movable and immovable, to enter into contract and to sue or be sued in its name, through officer designated in this regard.

(4) Government shall prescribe rules of business for local governments notifying structure and working of local government administration, groups of offices, allocation of business, appointment, posting, promotion and transfer of officers and officials, performance evaluation, channels of communication, coordination of local council business, consultation between offices and incidental matters for smooth and efficient disposal of official business.

Section 8 of the Act of 2013

8. Provisions of Tehsil Local Government shall apply to City Local Government.---Save as otherwise provided in this Act, the provisions relating to Tehsil Local Government shall mutatis mutandis apply to the City Local Government and any reference in these provisions to

(i) Chairman, Tehsil Local Government and Tehsil Council shall be read as Mayor, City Local Government and City Local Council;

(ii) Chairmen, Tehsil Local Government and Tehsil Council shall be read as Mayors, City Local Government and City Local Council; and

(iii) Tehsil Local Administration shall be read as City Local Administration.

Section 25 of the Act of 2013

25. Functions and powers of tehsil council.-- The functions and powers of tehsil council shall be to

(a) approve taxes, fines and penalties proposed by Chairman, Tehsil Local Government; Section 25A of the Act of 2013 25A. Functions of Mayor, City Local Government and City Local Council.---(1) In addition to the functions specified in 1 [sections 23A and 25A], the Mayor, City Local Government shall perform the following functions, namely: (a)

(b)

(2) In addition to section specified in section 25, the City Local Council shall perform the following additional functions, namely: Section 42 of the Act of 2013

42. Imposition, notification and enforcement of Taxes.---(1) A local government subject to the provisions of any other law may, and if directed by Government shall, levy all or any of the taxes and levies specified in the Third Schedule.

(2) No tax shall be levied without previous publication of the tax proposal inviting and hearing public objections and approval of the respective local council.

(3) A local government may reduce, suspend or abolish a tax.

(4) Where a tax is levied or modified, the local government shall specify the date for the enforcement thereof, and such tax or the modification shall come into force on such date.

(5) Government shall have power to direct a local government to levy any tax, increase or reduce any such tax or the assessm ent thereof and suspend or abolish the levy of any tax.

Section 44 of the Act of 2013

44. Rating Areas and Property Tax.---(1) On commencement of this Act, every tehsil shall be rating area within the meaning of the Khyber Pakhtunkhwa Urban Immovable Property Tax Act, 1958 (W.P. Act V of 1958).

(2) The rate of property tax in an area within a tehsil shall be subject to approval of respective tehsil council: Provided that in the areas within a tehsil where rate has not been determined, the areas shall be deemed to be exempted from property tax till determination of the rate.

(3) Unless varied under sub-section (2) above, the existing rates in the areas within a tehsil shall remain in force.

Explanation.---For the purpose of this section the "rate" shall mean the tax leviable under the Khyber Pakhtunkhwa Urban Immovable Properly Tax Act, 1958 (W.P. Act V of 1958).

THIRD SCHEDULE [See section 42] Part - I TEHSIL LOCAL GOVERNMENT 1...............

2...............

3...............

5. Urban Immovable Property Tax.

38. It is evident from the above that the Act of 1958 imposes tax on immovable property which is situated in urban area as defined under section 2(i), to be a rating area as defined under section 2(g) of the Act. However, the language of section 3(2) of 1958, which is a charging section, stipulates that the imposition of UIP Tax is on a building and land situated in a rating area. No doubt, under the Act of 1958, the rating area presupposes an urban area; however, the collection of the UIP Tax has devolved to tehsil government, a local government under the Act of 2013 and through section 44 of the Act of 2013, by a deeming clause, the rating area has been extended to the territorial limits of entire tehsil, notwithstanding the fact that the urban area, as defined under section 2(i) of the Act of 1958, can be identified in the Act of 2013 being a City Council, Tehsil Headquarter or Neighbourhood Council.

39. The close perusal of section 3(2) of the Act of 1958 envisages that the UIP Tax shall be charged and paid on the basis of annual rental value of a building and land in the rating area. The definition of rating area as provided under the Act of 1958 (restricted to urban area only) apparently is in conflict with the section 44 of the Act of 2013 (which is the entire territorial limit of the tehsil). One of the rules used in reading an Act of Parliament is that a word or expression defined in the Act must be given the same meaning throughout the Acts.^[5] The rule, however, has less force when the word occurs in different sections of the Act. A definition of a term in a statute is merely declaratory in nature and should not be unnecessarily inflicted where it does not fit in with the subject or context^[6]. The effect of section 44 of the Act of 2013 on the charging section 3(2) of the Act of 1958 is that through a deeming clause, the entire tehsil is now a rating area, therefore, the rating area as occurred in section 3(2) should be read as the entire tehsil. Indeed, it is settled law that the effect of a deeming provision in a taxing statute is that it brings within the tax net an amount which ordinarily would not have been treated as an income. In other words, it brings within the net of chargeability income not actually accrued but which supposedly to have accrued notionally.^[7] However, in terms of section 44(2) of the Act of 2013, the rate of UIP Tax in an area within a tehsil shall be subject to the approval of the respective tehsil council and in case no rate has been determined for any area in tehsil, the area shall be deemed to be exempt from the UIP Tax till determination of that area. Hence, the rating area is akin to the subject of UIP Tax, whereas the rate of property under section 44(2) is akin to the measure of UIP Tax. The measure of UIP Tax has thoroughly been provided under the Act of 1958 and the only jurisdiction with tehsil council is to approve the UIP Tax for a particular area.

40. The outcome of the aforesaid discussion is that both Act of 1958 and Act of 2013 are provincial statute and deals, inter alia, with the imposition of UIP Tax on property being a provincial subject.

Therefore, the aforesaid statutes are intra vires to the Constitution and it is settled law that the law should be saved rather than be destroyed and the court must lean and favour of upholding the constitutionality of a legislation keeping in view that the rule of Constitutional interpretation is that there is a presumption in favour of constitutionality of legislative enactments unless ex facie it is violative of constitutional provision.^[8] Whether the notification issued by the Administrative Officers of the local government when the elected government was not in place whereby certain areas in the tehsil have been declared as a rating area was within the authority of the Administrative Officers of the local government in terms of section 120A of the Act of 2013?

41. The composition of the tehsil council is provided under section 24 consisting of members as provided in Part-I of Eleventh Schedule to the Act of 2013 comprised of all Chairmen of Village and Neighbourhood Councils in the Tehsil, beside the elected members against the reserved seats for women, youth, peasant/workers and minorities; the number whereof is determined by the Government. One of the functions of the tehsil council is provided under section 25 of the Act of 2013, which stipulates to approve the taxes, fines and penalties proposed by the Chairman, Tehsil Local Government. The functions and powers of Chairman of Tehsil Local Government as well as that of Mayor, the City Local Government and City Local Council is provided under sections 23A and 25A of the Act of 2013. Therefore, it is evident from the bare reading of sections 23A, 25, 25A and 44(2) of the Act of 2013 that the rate of the UIP Tax in an area within rating area shall be subject to the approval of the respective tehsil council. Whereas it is provided under section 42(2) of the Act of 2013 that no UIP Tax shall be levied without previous publication of the tax proposal inviting and hearing public objections and approval of the respective local council. Section 120A of the Act of 2013 stipulates that soon after the completion of the tenure of all the district councils, tehsil councils, town councils, village councils and neighbourhood councils in the province shall stand dissolved and as a consequence thereof, all District Nazimeen, Tehsil Nazimeen, Town Nazimeen, Village Councils Nazimeen and Neighbourhood Councils Nazimeen shall cease to hold their respective offices. Sub section 2 of section 120A envisages that the department shall authorize the administrative officers of the respective councils to perform administrative functions of respective Nazimeen till the installation of local governments under this Act. Thus, it is evident that the Administrative Officers of the local government were clothed with the powers and functions of Chairman and Mayors of a Local Government and the powers and functions of the Local Council were never delegated to the Administrative Officers of the Department.

42. The Government of Khyber Pakhtunkhwa Local Government Peshawar through Notification No.SOG/LG/7-12/LG/19 dated 04.09.2019 has authorized officer/administrator/tehsil municipal officer, tehsil municipal administrator to perform the functions of Chairman and Mayor of the tehsil councils. However, no power of the local council, more particularly, relating to the imposition of taxes were neither given to them nor it could be delegated under section 120A of the Act of 2013. In W.P No.2016-P/2022, titled "MS Khyber Foods and others vs. Govt of Khyber Pakhtunkhwa", W.P No.4218-P/2023, titled "M/s Premier Sugar Mills & Distillery Company Ltd. vs. Government of Khyber Pakhtunkhwa through its Chief Secretary", W.P No.4205-P/2021, titled "Ms Tandianwala Sugar Mills Ltd. vs. Govt of KP through Chief Secretary", W.P No.4204-P/2021, titled "M/s Chashma Sugar Mills Ltd vs. Govt of KP though Chief Secretary", W.P No.2289- P/2021, titled "M/S Cherat Cement Co. Ltd. vs. Govt of KP", W.P No.1092-P/2021, titled "M/S Swat Ceramics Ltd. Vs. Govt of KP", the impugned notifications, whereby the rating areas have been notified, were issued by the Administrative Officers of the Tehsil Municipal Administration while at the relevant the local council was not in place, therefore, all such Notifications have been issued without lawful authority because it is established principle of law that where the law requires something to be done in a particular manner, it must be done in that manner. Another important canon of law is that what cannot be done directly cannot be done indirectly^[9].

Similarly, the Apex Court in the case of "Muhammad Akram vs. Mst. Zainab Bibi" (2007 SCMR 1086) has very elaborately held that when law requires a thing to be done in a particular manner then it would be a nullity in the eyes of law, if not performed in that very prescribed manner. The Apex Court in the case of "Director. Directorate-General of Intellizence and Investigation and others vs. Messrs Al-Fait Industries (Pvt.) Limited and others" (2006 SCMR 129) had further expounded the proposition by holding that it is well-settled and established principle of law that when the Legislature requires the doing of a thing in a particular manner then it is to be done in that manner and all other manners or modes of doing or performing that thing are barred.

Whether an industrial building/plot falls within the purview of commercial building as explained in the charging section 3 of the Act of 1958?

43. The learned counsel for the petitioners, while referring to the Explanations to section 3(2) of the Act of 1958 have argued that only residential and commercial buildings alongwith appurtenances and installations that may be attached thereto which are used as office establishment or for carrying on any commerce or trade can be subject to the impost of UIP Tax, whereas the industries do not fall within the meaning of commerce or trade. They have next contended that the industries for the subject of impost of 'UIP Tax has been inserted through Entry No.13 in Schedule-II to the Act of 1958 and it is established law that in case of conflict between the enabling provisions of the Act and Schedule, it is the enabling provisions of the Act which would be applicable and the Schedule has to yield before it. The learned counsel for the petitioners have referred to various dictionaries defining the meaning of trade and commerce in support of their arguments. In order to appreciate the respective arguments of the parties, let us reproduce the relevant charging provision of the Act of 1958.

Section 3 of the Act of 1958 Levy of Tax

3. (1) Government may by notification specify urban areas where tax shall be levied under this Act: Provided that one urban area may be divided into two or more rating areas or several urban areas may be grouped as one rating area.

(2) Subject to the provisions of section 4, there shall be levied, charged and paid a tax, on the basis of annual rental value of buildings and lands in the rating areas (heretoforce notified or as may hereafter be notified under this Act.-

(a) at the rate specified in Schedule I in respect of residential buildings; and

(b) at the rate specified in Schedule II in respect of commercial buildings: Explanation-I.- Residential buildings are the w buildings which are used for the purpose of dwelling whereas commercial buildings are the buildings alongwith any appurtenances and installations that may be attached therewith, which are used as office establishment or for carrying on any commerce or trade.

Explanation-II.- In case when compartmentalization and partition is carried out in the buildings in such a way to collectively use the building for residential as well as commercial purposes or to house more than one dwellings, the tax in respect of such compartments and partitions shall be levied in a manner as if they are separate buildings.

(2a) A rebate at the rate of 4 ^[20]% of the tax assessed under subsection (2) shall be admissible to those assesses who pay the tax in advance for the whole year by the 5 [30th day of September] of the year to which it relates: Provided that there shall be thirty-five percent (35%) rebate for all those taxpayers, who have timely, paid their tax in the preceding five years; and

(3) The tax shall be due from the owner of buildings and lands.

44. It was the contention of the learned counsels for some of the petitioners that two types of property are subject to the imposition of UIP Tax, the residential as well as the commercial, as explained in Explanation No.1 to section 3(2) of the Act of 1958. The main emphasis of the learned counsel for the petitioner was that only the property, which is commercial in nature can be subjected to the impost of UIP Tax and any immovable property building which has an industrial character do not fall within the purview of commercial building. However, this matter has been finally settled by this Court in the case of "Messrs Sarhad Food Processors through Managing Partner vs. Excise and Taxation Officer-II, Peshawar and 3 others" (PLD 2004 Peshawar 285). The relevant para of the judgment reads as under:

10. The last limb of the argument of the learned counsel for the petitioners is also vacuous both factually and legally when the Industrial Estate falls within the boundaries of the urban area, vide Notification No. S .O. (LG-OLG-12(33)176(1), dated July, 1978 and that when it has been held by the Hon'ble Supreme Court in a Judgment rendered in the case of Government of N.-W.F.P. and others v. Haji Muhammad Afzal Zia in Civil Appeal No.437 of 1999, decided on 20-1-2004 that the Small Industrial Estate falls within the urban area.

45. Therefore, we are not inclined to hold a different view other than the one held by this Court in the case of Sarhad Food supra; hence, this objection of the petitioners is also overruled.

46. Moving on further to the case of Lucky Cement Limited ("Company"). Precise grievances of the Company are that it has installed a manufacturing unit at rural area of Pezu, which was purportedly subject to the impost of UIP Tax in terms of the then NWFP Local Government Ordinance, 2001 through a notification dated 01.07.2011. The Company was subjected to the impost of UIP Tax discriminatorily as other similarly placed cement manufacturing units located in the province of Khyber Pakhtunkhwa were never subjected to the impost of the said tax. A huge amount was compulsorily extracted from the petitioner between the period 2011 to 2020. Further, for the period 2020-21 to 2020-23 the other cement plants in the province of Khyber Pakhtunkhwa were placed in category C or D for I the purpose of levy of UIP Tax, whereas the petitioner's Company was placed in category B. Though later the Company was placed in category C, however, the amount assessed against the present petitioner was exuberant.

47. The petitioner had challenged the discriminatory treatment before this Court as well as the Apex Court. The Apex Court through judgment dated 14.09.2022 had allowed the petitioner Company and directed the respondents that the petitioner be treated at par with other cement manufacturing companies as far as the levy and imposition of UIP Tax tax is concerned. The petitioner Company in particular has challenged various letters/orders, whereby the UIP Tax was assessed in contravention to the judgment of the Apex Court.

48. The perusal of the record would show that through notification dated 02.07.2011 issued under sub section (1) of section 117 of the erstwhile Local Government Ordinance, 2001 read with the Khyber Pakhtunkhwa Urban Immovable Property Tax Act, 1958, the Company at Dara Pezo was declared as a rating area within the category B of the Act of 1958. On the basis of the said notification, the Company was taxed. The imposition of the said tax on various grounds was challenged before this Court through Constitutional Petition bearing No.359-P/2016, however, the matter was ultimately decided by the Apex Court while hearing Civil Appeal ccNo.2092 of 2019 on 14.09.2022. The relevant paras of the judgment are reproduced as under: Para 8-9-10.

8. When the Government was aware of, or had been informed, that discrimination was taking place and an unfair/unreasonable benefit/advantage was given to the appellant's competitors for no discernible reason it was incumbent upon the Government to exercise its powers under section 42(5) of the Act and rationalize matters, and its failure to do so would mean that it was acting in an arbitrary and capricious manner, which was not permissible. The United Kingdom's House of Lords had 142 years ago in the case of Frederic Guilder Julius v The Lord Bishop of Oxford, held that that, 'giving a power is prima facie merely enabling the donee to act, and so may not inaccurately be said to be equivalent to saying he may act, yet if the object of giving the power is to enable the donee to effectuate a right, then it is the duty of the donee of the powers to exercise the power when those who have the right call upon him to do so. This principle of interpretation of statutes was approved and reiterated by the House of Lords in the 2012 in the case of M. v Scottish Ministers.

9. The only question now remaining for consideration is how to undo the effect of the stated discrimination and unfair treatment meted out to the appellant, and whether the property tax already paid by the appellant, which was in excess of the rates imposed on identically placed buildings can be retained or it must be refunded/adjusted. In this regard the learned counsel representing the appellant referred to the decision (of a three-Member Bench of this Court) in the case of Pfizer Laboratories Ltd. v Federation of Pakistan, wherein it was held 'that the money paid by a citizen to a public authority in the form of taxes or other levies paid pursuant to an ultra vires demand by the authority is prima facie recoverable by a citizen as of right.' In that decision this Court had referred to the House of Lords decision in the case of Tower Hamlets London Borough Council v Chetnik Developments Ltd, where it was said 'that the retention of moneys known to have been paid under a mistake at law, although it is a course permitted to an ordinary litigant is not regarded by the Courts as a 'high-minded thing' to do but rather as a 'shabby thing' or a 'dirty trick'.

10. Therefore, for the aforesaid reasons, this appeal is allowed by setting aside the impugned judgment. Consequently, we direct the respondents to treat the buildings of the appellant in like manner to those of other cement manufacturers in the Province for purposes of property tax.

Needless to state that if an intelligible differentia or criterion regarding the imposition of property tax on the buildings of cement manufacturers is made in the future, and it is permissible with the applicable law And accords therewith, the taxing authority/Government may impose property tax in accordance therewith. As regards the property tax already paid by the appellant, which was at a rate higher than that which was imposed on the buildings of other cement manufacturers, the difference in such amount is to be repaid to the appellant or adjusted with regard to the appellant's future property tax liability, and this be done within two months.

49. The petitioner, alongwith the petition, has placed on record certain notifications issued by the Tehsil Municipal Administration of various tehsils in Peshawar, whereby other cement factories were subjected to imposition of UIP Tax. The record is clear that prior to 2020, no other cement manufacturing company was subjected to imposition of UIP Tax, therefore, the grievances of the petitioner's Company to the said extent are genuine as it cannot be subjected to the imposition of UIP Tax for a period prior to the year 2020 as per the judgment of the Apex Court above in the Lucky Cement case and any amount recovered from the petitioner for the said period is adjustable towards its subsequent liability. Similarly, the subsequent imposition of UIP Tax upon the petitioner at rate other than a uniformed rate as compared to other cement manufacturing companies until the introduction of clause 7 in Schedule-I through the Khyber Pakhtunkhwa Amendment of Certain Fiscal Laws Act, 2021, is equally incorrect and the petitioner is required to be assessed for the purpose of UIP Tax as per a uniformed category with other cement manufacturing companies in the province of Khyber Pakhtunkhwa.

50. Clause 7 of Schedule-II to the KP Act of 1958 was inserted through the Khyber Pakhtunkhwa Amendment of Certain Fiscal Laws Act, 2021 and thus is applicable to all industries situated in a rating area. In this regard, it is the contention of the learned counsel for the petitioner that the said rate cannot be applied to the petitioner company as it has not been approved by the respective tehsil council in terms of section 44(2) of the Act of 2013. However, this argument of the learned counsel for the petitioner could not convince us for two reasons; firstly, it is the direction of the Supreme Court of Pakistan in the Lucky Cement case that all cement manufacturing industries may be subjected to the impost of UIP Tax at a uniformed rate, provided there is a justified reason of intelligible differentia; and secondly, the area where the plant established by the Company is situated has already been declared as a rating area. However, the assessment/evaluation of the tax liability of the petitioner Company by the respondents for the disputed period is contrary to the judgment passed by the Apex Court in Lucky Cement case.

51. In view of what has been stated above, this as well as the connected petitions are disposed of in the following manner: i. We declare that through section 44 of the Act of 2013, the entire tehsil has become a rating area for the purpose of charging and collection of UIP Tax under the enabling provisions of the Act of 1958. ii. The industrial building is subject to the imposition of UIP Tax as provided in the preceding para. iii. All the notifications as mentioned in Para-42 of this petition under section 120A of the Act of 2013 declaring certain territory/area as a rating area are illegal and without lawful authority. iv. In the case of Lucky Cement, the respondents are directed to re-assess the liability of the petitioner Company strictly in accordance with the directions of the Apex Court in the case of Lucky Cement.

S.No Case Title

1. WP No.371 -P/2021 "through authorized representative/company secretary, Brig. Riaz Ahmed Gondal (Retd) vs. Government of Khyber Pakhtunkhwa through its Chief Secretary, Civil Secretariat, Peshawar and others".

2. WP No.4218-P/2023 "M/S Premier Sugar Mill & Distillery Company Limited through its authorized representative Mr. Zahoor Alam vs. Government of Khyber Pakhtunkhwa through its Chief Secretary, Civil Secretariat Peshawar".

3. WP No.530-P/2023 "Lucky Cement Limited through its authorized person Mr. Aziz-ur Rehman & another vs. District Excise, Taxation & Narcotics Control Officer/Assistant Collector Grade-I /Motor Registration Authority, Lakki Marwat and others".

4. WP No.4204-P/2021 "M/s Chashma Sugar Mills Limited through its authorized representative Mr. Zahoor Alam vs. Government of Khyber Pakhtunkhwa through its Chief Secretary, Civil Secretariat Peshawar and others".

5. WP No.2016-P/2022 "M/s Khyber Foods and others vs. Government of Khyber Pakhtunkhwa through its Chief Secretary, Civil Secretariat Peshawar and others".

6. WP No.204-D/2023 "M/s Almoiz Industries Limited through its representative vs. Province of Khyber Pakhtunkhwa through its Chief Secretary, Civil Secretariat Peshawar and others".

7. WP No.577-D/2021 "M/s Almoiz Industries Limited through its representative vs. Government of Khyber Pakhtunkhwa through its Chief Secretary, Civil Secretariat Peshawar and others"

8. WP No.2289-P/2021 "M/s Cherat Cement Co. Ltd. through its Senior Manager Accounts, Mr. Muhammad Farhan vs. Government of Khyber Pakhtunkhwa through its Chief Secretary, Civil Secretariat Peshawar and others".

9. WP No.1092-P/2021 "M/s Swat Ceramics Company (Pvt) Ltd. Through its authorized representative Mr. Malik Shah Nawaz Vs. Government of Khyber Pakhtunkhwa through its Chief Secretary, Civil Secretariat, Peshawar and others"

10. WP No.4205-P/2021 "M/s Tandianwala Sugar Mills Ltd through its authorized representative Mr. Tamiz-ul-Haq vs. Government of Khyber Pakhtunkhwa through its Chief Secretary, Civil Secretariat, Peshawar and others".

11. WP No.831-P/2022 "M/s Khazana Sugar Mills (Pvt) Ltd through its General Manager (Admin), Mr. Talimand Khan vs. Government of Khyber Pakhtunkhwa through its Chief Secretary, Civil Secretariat, Peshawar and others".

12. WP No.4693-P/2023 "M/S Frontier Sugar Mills & Distillery Company Limited through its authorized representative Mr. Zahoor Alam vs. Government of Khyber Pakhtunkhwa through its Chief Secretary, Civil Secretariat, Peshawar and others".

1. Messrs Lucky Cement Ltd. through General Manager, Peshawar vs. Khyber Pakhtunkhwa through Secretary Local Government and Rural Development, Peshawar and others, reported as 2022 SCMR 1994.

2. H,M. Extraction Ghee and Oil Industries (Pvt.) Ltd. and another vs. Federal Board of Revenue and another, reported as 2019 SCMR 1081.

3. The Government of Khyber Pakhtunkhwa as defined in section 2 sub clause (d) of the Act of 1958.

4.

30. Establishment of Local Funds and Public Accounts.----(1) There shall be established a district fund, a tehsil fund, village fund and neighbourhood fund, as the case may be, for each respective local government.

5. Principles of Interpretation of Statutes, by Sh. Shaukat Mahmood and Sh. Nadeem Shaukat, 1st Edition Page-25.

6. Principles of Interpretation of Statutes, by Sh. Shaukat Mahmood and Sh. Nadeem Shaukat, 1St Edition Page-25

7. Messrs Elahi Cotton Mills Ltd and others vs. Federation of Pakistan through Secretary M/o Finance, Islamabad and 6 others (PLD 1997 SC 582) and Lahore Development Authority through D.-G. and others vs. Ms. Imrana Tiwana and others (2015 SCMR 1739)

8. Messrs Elahi Cotton Mills Ltd and others vs. Federation of Pakistan through Secretary M/o Finance, Islamabad and 6 others (PLD 1997 SC 582) and Lahore Development Authority through D.-G. and others vs. Ms. Imrana Tiwana and others (2015 SCMR 1739)

9. Muhammad Hanif Abbasi vs. Imran Khan Niazi and others, reported as PLD 2018 SC 189.