1. ' MUHAMMAD HALEEM , C .J.--Leave was granted to resolve the controversy arising from the conflicting judgments in Masood Hussain v. Muhammad Saeed Khan (PLD 1965 Lah .11) as followed in this judgment and in Abdur Rashid 'v. Abdul Qadeer Shah (PLD 1966 Pesh. 89) and Nur Khan v.
2. Abdullah (PLD 1976 Kar. 862) as to whether tax levied by the Excise and Taxation Department could be regarded as tax having been levied by the Municipality in terms of proviso (a) to section 30(1) of the Displaced Persons (Compensation and Rehabilitation) Act, 1958.
3. ' The appellant herein is a transferee of bungalow No, 64-B , Model Town, Lahore. This building was transferred to him in 1965 and thereafter he served a notice on the respondent under section 30 of the Displaced Persons (Compensation and Rehabilitation) Act, 1958, asking him to pay rent to him in future on the basis of the latest assessment by the Municipality. It seems that there was a dispute as to the quantum of rent and the responded--tendered it at the rate of Rs,60 per month but as it was not accepted by the appellant, he deposited it in the Office of the Rent Controller. The respondent's defence was that he continued to be the tenant on the same terms and conditions as to the payment of the rent and that the increase of rent on the basis of the assessment by the Excise and Taxation Department could not be termed as an assessment by the local authority of 'the area where the property is located. The appellant on the other hand contended that the notification relied on in the above-stated case only created an exemption from the payment of tax but did not debar the Lahore Municipal Corporation from assessing the property.
4. ' The trial Court framed an issue as to what was the correct rate of rent to be charged and ultimately relied while deciding it on paragraph 15 of the judgment in Masood Hussain v.
5. Muhammad Saeed Khan (PLD 1965 Lah.11), as under: "It was decided at the conference that the management of the Model Town Society was to exclusively remain with the Society; it was to remain in control of all building operations within its area and was to be exempted from the operations of the relevant provisions of the Municipal Act, and except for octroi duty, the Society was to be exempted from all municipal taxes."
6. ' This arrangement was given effect to in the notification issued under subsection (1) of section 132 of the City of Lahore Corporation Act, 1941, dated 9th September, 1943. Accordingly, the trial Court held that the area administered by the "Model Town Society" was not only exempt from taxation but also from assessm ent and thus the correct rate chargeable was Rs,60 per month and as it was tendered no default was committed in its payment. The application for ejectment was ?Ejected on 4th of November, 1966.
7. On appeal to the District Judge, an Additional District Judge,Lahore , while dismissing it on 5th of December, 1968, held: "The learned counsel for the appellant has argued that the Municipal Corporation has to follow the assessm ent made by the Excise and Taxation Department. Therefore, the assessment made by the Excise and Taxation Department should be taken to be the assessment made by the Corporation. I have already stated above that the area in Model Town is exempt from taxation by the Municipal Corporation and as such there is no institute to be termed as local body which may carry out assessm ent for the properties in Model Town, Lahore. Unless the assessment is either made by itself of by adopting the assessm ent of the Excise and Taxation Department, it cannot be said that there exists a local body which has assessed the rental to more than Rs,60."
8. ' The second appeal also failed as the High Court upheld the conclusion of the appellate Court that "by virtue of an arrangement operative since 1940, the Lahore Municipal Corporation could not assess and recover any tax qua the property in Model Town. This position was affirmed in an earlier case decided by this Court and reported as Syed Masood Hussain and others v. Muhammad Saeed Khan and others (PLD 1965 Lah.11)".
9. ' The appellant, however, raised another submission that though the assessment by Excise and Taxation Department as distinguished from that by a Municipality or local authority 'cannot be made the basis of increase in rent under proviso (a) to subsection (1) of section 30 of the Displaced Persons (Compensation and Rehabilitation) Act, the same can be relied upon as "assessment of the Municipality" and therefore the demand for the increase of rent on the basis of the latest assessm ent was not illegal. In support of this ground he relied on Abdur Rashid v. Abdul Qadeer Shah(PLD 1966 Pesh. 89). The High Court distinguished this ruling on the short ground that the amended proviso (a) to subsection 30(1) of the Displaced Persons (Compensation and Rehabilitation) Act was not considered in it and as the amended proviso stood the expression "of the Municipality" was substituted by, "by the Municipality" which made the real difference. The reasoning, therefore, in that judgment turned on the language of the proviso as before its amendment. The conclusion thus drawn was that now the position after the amendment was entirely changed and the assessm ent by the Excise and Taxation Department of any locality could not be treated as assessm ent by a Municipality or a local authority and under the law the appellant could not charge the rent at the enhanced rate of assessment by Excise and Taxation Department. The High Court further held that as the Bungalow was situate in the locality known as Model Town which was exempt from the relevant provisions of the Municipal Act, the assessment could not also be made of such a property.
10. ' The learned counsel for the appellant cited Nur Khan v. Abdullah (PLD 1976 Kar. 862) to contend that by virtue of rule 2(a) of the West Pakistan. Municipal Committees (Buildings and Lands Tax)
11. Rules, 1962 read with section 30 of the Displaced Persons (Compensation and Rehabilitation) Act, the assessm ent made by Excise and Taxation Department shall be deemed to be the assessment of the Municipal Corporation for purpose% of section 30 of the Displaced Persons (Compensation and Rehabilitation) Act. In this case, the case of Abdur Rashid v. Abdul Qadeer Shah (PLD 1966 Pesh.
12. 89) was distinguished on the ground that although it was held in it that the Excise and Taxation Department was not a local authority yet the provisions of the West Pakistan Municipal Committees (Buildings and Lands Tax) Rules, 1962, were not brought to its notice in the context of subsections (24) and (26) of section 2 of the Municipal Administration Ordinance, 1960, which it considered while disposing of the case.
13. ' Rule 2(a) of the West Pakistan Municipal Committees (Buildings and Lands Tax) Rules, 1962, reads: "2. Where a tax is levied in a municipality under the West Pakistan Urban Immovable Property Tax Act, 1958, and the Municipal Committee for such municipality has already levied or levies a tax on the annual value of buildings and lands under the Municipal Administration Ordinance, 1960 (hereinafter referred to in these rules as buildings and lands tax), the tax on buildings and lands shall be assessed and recovered in the manner as provided hereafter --
(a) Unless otherwise directed by Government either generally or in any specified case, the assessm ent list prepared for the municipality under the West Pakistan Urban Immovable Property Tax Rules", 1958, shall mutatis mutandis be the assessment list for the tax on building and lands levied by the Municipal Committee."
14. ' These rules were framed in pursuance of the powers conferred by section 41 read with section 121 of the Municipal Administration Ordinance which repealed the City of Lahore Corporation Act, 1941.
15. However, by section 4 of this Ordinance, the effect of the notification issued under the repealed Act was saved and the judgment under review turns on the language of the notification. It will be of advantage to reproduce it: "The 9th September, 1943, No,3416-LG-43/57072.--- In exercise, of the powers conferred by subsection (1) of section 132 of the City of Lahore Corporation Act, 1941, the Governor of the Punjab is pleased to exempt, with effect from 1st January, 1940 all lands and buildings situated within the area administered by the Model Town Cooperative Society, the boundaries of which are given in the Schedule below, from the payment of the tax the imposition of which was notified with the Punjab Government Notification No,635-LG-BDS-39/5085, dated the 8th February, 1939."
16. ' The words "from the payment of the tax the imposition of which was notified with the Punjab Government Notification No,635-LG-BDS-39/ 5085, dated the 8th February, 1939" are the key words which only exempt the payment of tax, and as it would appear from the notification, dated 8th of February, 1939, the imposition was notified which necessarily meant that there was assessment of the property in the Model Town Society. Therefore, the key words could not be construed as otherwise than exempting the payment of tax. They do not thus bar the assessment of the property.
17. ' If this notification has to be given effect to under section. 4 of the Ordinance, then necessarily it has to be read alongwith the provisions of the Ordinance and the rules made thereunder. Section 41 of the Ordinance recites that all taxes shall be imposed and assessed in such a manner as may be provided by rules. Reading rule 2(a) of the West Pakistan Municipal Committees (Buildings and Lands Tax) Rules, it becomes clear that for the purpose of levying the tax on annual value of buildings and lands under the Ordinance, the tax on the buildings and lands shall be assessed and recovered in the manner as provided in clause (a), that is, the assessment list prepared for the municipality under the West Pakistan Urban Immovable Property Tax Rules, 1958, shall mutatis mutandis be the assessm ent list for the tax on buildings and lands levied by the Municipal Committee. In the absence of any direction either generally or in any specified case, it is the assessm ent list by the Municipal Committee for levying the tax. The assessment precedes the levy and unless it is so there cannot be any imposition of tax. Accordingly, the High Court was not correct in holding that by virtue of the notification the exemption from the payment of tax also prevented the assessm ent of the property as exemption to all intents and purposes implies, assessm ent and the exemption cannot be operative unless it is so.
18. ' It is nobody's case that the latest assessment of the Excise and Taxation Department was not in accord with the assessm ent for the other property in the locality generally which is under the law the assessm ent by the Municipal Committee on the date of demand of rent on the basis of the latest assessm ent. In that view of the matter, the following observations of this Court in Abdul Rehman v. Ghulam Rasool Tanvir (PLD 1987 SC 45) apply with full force: "By way of a proviso it has been made 'lawful for the transferee to charge the rent on the basis of the latest assessm ent carried out by the Municipality or local authority, as the case may be, for other properties in the locality generally.' This right of the landlord imposes a corresponding obligation on the tenant. Once a lawful notice is served, it supplants or substitutes the rate of rent fixed under the deeming clause and thereby increases the burden of the tenant."
19. ' Accordingly, we are of the view that the rent demanded on the basis of the latest assessment by the Director of Excise and Taxation must be regarded as one to have been made by the Municipality in terms of the amended proviso to section 30(1) of the Displaced Persons (Compensation and Rehabilitation) Act. The demand of +rent was, accordingly, lawful. But we are not inclined to order the ejectment of the respondent in view of the discretion available under section 13 of the West Pakistan Urban Rent Restriction Ordinance as the respondent was always ready and willing to tender the amount of rent which he had deposited with the Custodian and the moreso that he had deposited it on its refusal by the appellant in the office of the Rent Controller.
20. This is not all as the respondent had taken the stand in the state of law then in the field.
21. ' Accordingly, we would uphold the order of the Courts below refusing to grant ejectment, but allow the appeal on the legal point raised and direct that the respondent shall pay to the appellant within two months of the date of this order the arrears of rent at the rate of Rs,200 per month from the date of notice till the date of the decision of this appeal.
22. ' The appeal is partly allowed, but with no order as to costs.