QAZI MUHAMMAD JAMIL, J.--The petitioners who are running Timber Sale Depots and Saw-mills in the District of Swat, have challenged the Notification of Government of N.-W.F.P. Dated 6th of August, 1984, whereby rule 9 of the N.-W.F.P. Establishment of Sale Depots and Sawing Units Rules, 1978, was amended and fee for registration and for annual renewal of the same for such depots and mills was enhanced from Rs.100 to Rs.1,000.
2. Mr. Nasir-ul-Mulk Bar-at-Law, learned counsel for the petitioners while explaining the background of the aforesaid impost of Rs.100 stated that the said amount was charged by the former ruler of Swat before the merger of Swat State under `Riwaj'. In return the then ruler provided the owners of Sale Depots facilities like allocation of Timber quota from the State Forests. He states that after the merger of State in 1969, the `Riwaj' fee of Rs.100 continued to be levied but the facilities provided earlier were totally withdrawn. In 1978, the Government of N.-W.F.P. Made rules in exercise of powers laid down in section 3 of the Punjab Forests (Sale of Timber) Act, 1913. This is how the provisions of rule 9 of the said Rules levied Rs.100 as registration and annual renewal fee on the depots. According to him, impost of Rs.100 could still justifiably be called as fee for defraying the expenditure of registering the depots but its enhancement to RS.l00 has no co-relation with the benefit or services, if any, rendered to the depots-holders. The learned counsel argues that the levy of Rs.1,000 for registration and renewal of the depots is not fee but amounts to taxation which is not within the competence of respondent No.1. In this respect, he has defined the terms `taxation' and `fee' and made a distinction between the two. He has pointed out the contents of memorandum from respondent No.2 who informed the petitioners that their representation against the aforesaid impost of Rs.1,000 was rejected. The said memorandum, which is placed as Annexure "A" with the petition, clearly states that the registration fee has been enhanced from 88.100 to Rs.1,000 through a notification by the Finance Department "with the objective of mobilization the resources to generate provincial revenue and with the indirect benefit to discourage the trend of frequent installation of Saw-mills which is detrimental to the interest of forests conservancy". The distinction between `taxation' and `fee' shall be presently dealt with and the purpose of imposing Rs.1,000 on the depots-holders and Saw-mills owners as given in the aforesaid memorandum, according to the learned counsel for the petitioners, must be kept in view in order to determine the nature of the said impost.
3. One of the respondents in the written statement filed by him admist the factual position as explained by the learned counsel for the petitioners. However, to the assertion of the petitioners that the increase of the aforesaid fee from Rs.100 to Rs.1,000 for the purpose of generating Provincial revenue and not for any services rendered amounts to imposition of tax, the reply of the said respondent is simply as follows," the enhancement of fee is quite justified as explained in para.6 above" and para.6 referred to merely states that "the Government of N.-W.F.P. Published the amendment in the Ordinary Gazette of 11th July, 1984 and subsequently the amendment in Rule 9 made vide Government of N.-W.F.P. No. Soft. 1(FAD)V-168/71/23724_34 dated 6-8-1984---.. ". As such the respondents have tacitly admitted that the levy of Rs.1,000 is not for any services rendered or other benefits granted to the petitioners but is for generating provincial revenue and discouraging the multiplicity of Saw-mills.
4. Mr. J.D. Akberji, the learned Advocate-General appearing on behalf of the respondents also did not dispute the factual position as put forward by the petitioners but stated at the Bar that respondent No.3 though an important functionary of the Provincial Government was no body to give reasons for the impugned levy of Rs.1,000 and that the Government of N.-W.F.P. Was well within its rights to enhance the aforesaid fee for registration and renewal of the depots. He has, however, not been able to give his own reasons for enhancing the said fee from Rs.100 to Rs.1,000. He has alto not filed any document which should render assistance to this Court for finding out as to what services are being rendered to the petitioners and the nature of benefits derived by them in order to justify the aforesaid enhancement by exacting Rs.1,000 as registration or renewal fee from the petitioners.
5.`Tax' is defined on the basis of judicial precedents as "a pecuniary contribution made by the persons liable for the support of Government" in Black's Law Dictionary,' Fifth Edition', which further goes on to explain the tax as "a pecuniary burden laid upon individuals or property to support the Government, and is a payment exacted by legislative authority." On the other hand, the term A `fee' has been defined in the same Dictionary as "a charge fixed by law for services of public officers or for use of privilege under contrl of Government a recompense for an official or professional service or a charge or emolument or compensation for a particular act or service." The question of difference between `tax' and `fee' came up for consideration before Dacca High Court in Abdul Majid and another v. Province of East Pakistan and others PLD 1960 Dacca 502 and the learned Judges explained the distiction between the two as follows:- "The distinction between a tax and fee lies primarily in the fact that a tax is levied as a part of a common burden, while a fee is payment for special B benefit or privilege".
"The preamble of the East Pakistan Finance Act, 1957 clearly mentions that the purpose of the Act is to raise funds for augmentation of the revenue of the province...... The: fact that no part of this fees is earmarked or specified for rendering service to the payee negatives the theory of fee."
The learned Judges, therefore, agreed with the counsel for the petitioner that "the fee levied under section 5 is a tax and not a fee, and consequently it was beyond the powers of the Provincial Legislature to enact that provisions". Similar distinction was drawn between `tax' and `fee' in a case reported as Mahboob Yar Khan and another v. Municipal Committee, Mian Channu and 2 others (PLD 1975 Lahore 748) following the principles laid down in the above-cited case from Dacca jurisdiction and Sheikh Mohammad Ismail and Company Ltd. Lahore v. Chief Cotton Inspector, Multan Division, Multan and others (PLD 1966 S.C. 388). In the leading Indian case on the subject of fee and tax, Indian Mica and Micanite Industry Limited v. Bihar (71) ASC. 1182, 1186, Hedge, J: summed up the distinction between the two as follows:- "It is clear that before levy can be upheld as fee, it must be shown that the levy has reasonable co- relation with the services rendered by the Government. In other words, the levy must be proved to be a `quid pro quo' for the services rendered".
1n Maharashtra v. Salvation ARMY (1975) 3-SCK, 475) the Supreme Court of India held that the accumulation of some surpluses year after year would at some point of time convert the fee into tax and similarly the Court shifted the burden to the State to justify a sudden increase in the fee.
6.Certain litmus tests for determining a particular exaction to be fee may be summed up as follows:- (i)There must be co-relation between the amount realised as fee and the services rendered or benefits granted to those who are made to pay the same; (ii)The general purpose for raising revenue alone for the Province or the Federation shall militate against `quid pro quo' which is an essential component of the levy of fee. Such a `quid pro quo' may not be determined with exactitude but there has to be significant relations between the fee charged and the services rendered; (i.e)a sudden raise in the fee itself which cannot be defended on the aforestated principle of `quid pro quo' may metamorphose the levy into tax. If not all, substantial part of the revenue so raised may be earmarked for the benefits of those who pay the fee. The burden of establishing the co- relationship between a levy and the services rendered or the benefits bestowed lies on those who impose such a levy.
7.The question whether a particular impost is `fee' or `tax' assumes importance as the power of taxation squarely lies with the Legislatures emanating from the provisions of the Constitution.
Outside the powers so defined, no person can pretend to tax the people in whatever garb it may be. When a particular levy or impost is challenged as a colourable exercise of legislative or executive powers, the Court has the jurisdiction to examine the real nature of the said impost or levy.
8. In the case in hand, the learned Advocate-General and the respondents in the written statement have not been able to suggest as to what benefits are being provided to the petitioners and as to what services are being rendered to them to justify the levy of Rs.1,000. On the other hand, the increase in the registration fee and renewal fee from Rs.100 to Rs.l,(100 is being made vide memorandum on behalf of the Government (Annexure A), for mobilising the resources "to generate provincial revenue and with the indirect benefit to discourage the trend of frequent installation of saw mills". It is, therefore, quite obvious that the disputed amount is being realised not for services rendered but for "mobilising the resources to generate the provincial revenue" which patently amounts to taxation. Similarly, instead of giving benefit to the petitioners, the benefit is to be derived by the taxing authority in discouraging the trend of installation of saw-mills. There is no evidence of the revenue raised by the authorities concerned being ear-marked for those from whom it is being raised. E The petitioner's assertion that no services other than registering their concerns are being rendered to them and no benefit bestowed on them is not denied by the respondents. It is established that element of `quid pro quo' is non-existent in this case. We, thererefore, find that the impugned Notification dated 6-4-1984 provides coiourble exercise of jurisdiction to the authorities concerned in imposing tax in the garb of fee.
9. It is an established principle of law that taxes could only be imposed by a legislature competent to do so. The Constitution of Pakistan, part from providing the respective fields of taxation for the Central legislature and Provincial legislatures, has made special provisions in Article 163 for provincial taxes in respect of professions, trades, callings or employments. The said Article reads as follows:- "A Provincial Assembly may by Act impose taxes, not exceeding such limits as may from time to time be fixed by Act of Majlis-e-Shoora (Parliament), on persons, engaged in professions, trades, callings or employments and no such Act of the Assembly shall be regarded as imposing a tax on income."
The impugned notification is also violative of the aforesaid Ai tide of the: I Constitution which restricts the imposition of taxes on persons engaged in professions, trade, callings or employments by an Act of the Provincial legislature not exceeding such optimum limits as may from tine to time be prescribed by an' G Act of Majlis-e-Shoora. The impugned tax on the trade of Timber sale depots and Saw-mills as such is not imposed by an Act of the Provincial Legislature and more important than that there is no Act of Majlis-c-Shoora putting a maximum ceiling of such an impost.
10. For the reasons stated above, this petition is accepted, the impugned amendment in rule 9 of N.-W.F.P. Establishment of Sale Depots and Sawing Units Rules, 1978 as notified by respondent No.1 Ode Notification dated 6-8-1984 is declared as without lawful authority and of no legal effect.
There shall be no order as to costs.