Raja Muhammad Ramzan and 47 others, who are engaged in the business of carriage of sand and concrete from the areas forming part of district Attock, have filed this petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 against Zila Council Attock and its contractor praying that the imposition of export tax at the rate of Re.1 per quintal on sand and concrete be declared to be illegal and unlawful.
2. The ground on which this petition is based is that while levying the tax, the procedure prescribed by the Local Councils (Taxation) Rules, 1980 has not been adhered to inasmuch as, although in the taxation proposal, the levy of tax at the rate of 0/50 paisa per quintal was suggested, the tax has been imposed at the rate of Re.1 per quintal.
3. These petitions have been resisted by both the respondents on the plea that the tax has been imposed strictly in accordance with the law and after observing requisite formalities.
4. From the respective contentions of the parties as also the record produced by them, there appears to be no factual dispute. It is common ground between them that in the taxation proposals announced by the Zila Council, the rate at which the tax on export of sand and concrete.
Was sought to be levied was mentioned as 0150 paisa per quintal. No objections against this levy were submitted but it appears that imposition of tax on certain other items was objected to by some persons. These objections were considered by a sub--committee set up under the rules which recommended reduction in the rate or taxation on items like eggs, poultry, fodder. In order to make up for the shortfall in the revenue, the committee also recommended that the proposed rate of tax on sand, concrete etc. Covered by Item No.35 of the Schedule, be increased from 0/50 paisa to Re.1 per quintal. This proposal of the sub--committee was approved by the Zila Council in its meeting held on 8th June, 1991.
5. In this factual background the contentions of the counsel for the parties may now be examined.
The learned counsel for the petitioners has contended that as in the taxation proposal and the public notice inviting objections, the rate of tax on export of sand and concrete was proposed at 0150 paisa per quintal, it was not competent for the Zila Council to levy the tax at the rate of Re.1 per quintal without issuing fresh notice and giving an opportunity to the public to object to the levy of that rate.
6. The respondents' learned counsel, on the other hand, has argued that as all the formalities like issuance of public notice and consideration of objections by the sub-committee and Zila Council have been fully met in the present case the impugned levy was unexceptionable. According to the learned counsel, while considering the obejections, it was open to the sub-committee as also to the Zila Council to modify the rate of taxation and no fresh notice needed be issued.
7. Section 137 of the Punjab Council Government Ordinance, 1979 authorise local councils to levy taxes enumerated in the Second Schedule. There is no dispute that export tax on sand and concrete is covered by Item 37 of the Second Schedule. Section 144 of the Ordinance provides that all taxes are to be levied by the local council in such manner as may be prescribed by the rules. In exercise of its rule making powers, the Government of Punjab has framed the Punjab Local Council (Taxation) Rules, 1980. According to the rule 3, the chairman of the local council, while framing annual or revised budget, has to draw a taxation proposal separately for each tax in the form of draft and notification indicating the class of persons or category of property proposed to be taxed and the rate at which the tax is to be levied. Rule 4 postulates that immediately after the sanctioning of the budget, the chairman shall issue a public notice in respect of each taxation proposal inter alia specifying the main features of taxation proposal, classes of persons or properties to be affected thereby and the amount of rate proposed to be increased, reduced or modified. The chairman is also required to publish a taxation programme specifying a date which shall not be less than 30 days from the publication of preliminary taxation proposal by which objections/suggestions to the preliminary taxation proposal may be made by the inhabitants. All objections and suggestions received from the inhabitants have to be entered in a register maintained for that purpose as required by rule 5 which also ordains that the local council shall appoint a sub-committee consisting of the chairman and such other persons as may be specified to examine the suggestions. The sub-committee is obliged by sub-rule (3) of the rule 5 to hear the objections in public whereafter it has to submit report which is to be considered by the local council in a special meeting under rule 7. If the taxation proposal is approved by the majority of the members, the same stands sanctioned by the local council whereafter the tax is deemed to have been sanctioned and notification has to be published in the official Gazette levying the tax.
8. It is not the case of the petitioners that various steps mentioned in the rules were not followed but the real dispute which emerges is that if the rate of the proposed tax as mentioned in the public notice, is enhanced either by the sub-committee or by the local council, is it necessary to issue a fresh notice under rule 4 of the Punjab Local Council Taxation Rules, 1990 or whether the local council can modify and enhance the rate of tax without proceeding anew in the matters.
9. Tax is compulsory exaction oF money and it is long established law that while considering statutes authorising the levy of taxes, the Courts have always insisted upon strict compliance with the procedure prescribed for imposing the tax. The object in providing an elaborate procedure like the one prescribed by Punjab Local Council (Taxation) Rules, 1990 is to ensure that the levy is made in fair, just and equitable manner. It is with this object in view that issuance of public notice and giving of an opportunity of not less than 30 days to the residents to object to the taxation, have been insisted upon by the rules.
10. In the public notice dated 3rd May, 1991 the proposed rate of levy was 0150 paisas per quintal, but the sub-committee, while considering objections to other items, recommended the increase in the tax to Re.1 per quintal which was accepted by the local council. However, unfortunately, while doing so, neither any fresh notices or taxation proposals were published nor any opportunity was provided to the affected persons to object to it. Thus a manifest violation of rules 4 and 6 of the Punjab Local Council Rules, 1980 was committed.
11. The argument of the learned counsel for the respondents that as, while considering taxation proposal under rule 7, it is open to the local council to modify the taxation proposal, if it could enhance the tax, is not well-founded. Whatever may be the effect ' of modification, one thing is certain that if under the garb of modification, the object is to enhance the rate of tax, the procedure prescribed has to be followed anew. To hold otherwise would defeat the very purpose of the rules inasmuch as a person may not object to the payment of tax at a particular rate but he can certainly raise objection if the levy is to be made at an enhanced rate. It is the case of the petitioners that had any public notice been given and, objections invited to the imposition of tax at the rate of Re.1 per quintal, they would have definitely represented against that. The view is supported by the judgment of this Court in Trading Company v. Faisalabad Municipal Corporation 1990 CLC 1732.
1.2. In Sukkur Municipal Committee v. Muzaffarud Din and others PLD 1967 Supreme Court 299, it was observed at page 304 that:-- "The main object of this section appears to be that the rate-payers must be given. Adequate notice with sufficient detail in order to enable them to object to the proposed tax or duty. This cannot, it is true, be effectively done unless the classes of persons or properties proposed to be taxed and the rates at which the tax is proposed to be levied are also known. But it does not require simultaneous publication of both the rules as well as the schedule, provided both are published and the rate- payers are given sufficient opportunity of objecting to them. To make the tax effective, however, both must be published and until both are published the tax cannot be enforced. Indeed, the tax can come into force only from the date specified under section 77 after both the rules and the schedule have been approved by the Provincial Government under section 76."
The dispute before the Court was as to whether the rate of taxes can be modified without issuing public notice under section 61 of Cantonments Act, 1924 and rule 255 of the West Pakistan Municipal Committee Taxation Rules, 1964. It was held that even where the existing tax is sought to be revised to the disadvantage of the residents, the procedure prescribed has to be followed by the Cantonment Board. (Also see Burshane (Pak) v. Cantt. Executive Officer PLD 1983 Kar. 517)
13. Reliance of the learned counsel for the respondents on the judgment of the Indian Supreme Court in Western Indian Theatres Ltd. v. Municipal Corporation of City of Poona AIR 1959 SC 586, is misplaced, for that case is clearly distinguishable as the dispute in that case was whether, while modifying the tax, the Government has power to enhance it, but the question is as to whether, while making the enhancement, the procedure prescribed has to be followed, was not in issue. The same holds true of the other judgment relied upon by the learned counsel namely Cantonment Board, Poona v. Western India Theatres Ltd. AIR 1954 Bombay,. 261 which was in fact the case from which the appeal was taken to the Supreme Court in the case noted above. There may not be any cavil that word modification may include alterations and enhancement but it must be interpreted in the context in which it has been used and not in abstract. In the present case, if the interpretation placed by the learned counsel for the respondents is accepted, it would negate the effect of other rules on the subject.
From what has been stated above, it is thus evident that the impugned levy cannot be upheld.
14. The learned counsel for the respondents has objected that as the petitioners have not availed of the alternative remedy of the filing of appeal/revision under rules 14 and 15 of the Punjab Local Council (Taxation) Rules, 1990, this petition is not maintainable. The objection is misconceived as the dispute whether the tax has been imposed in accordance with law, cannot be raised in appeal/revision provided for by rules 14 and 15. Under Section 166 of the Local Councils Ordinance, 1977 appeal can only be filed against an order passed by local council and the remedy is not available where there is a challenge to the imposition of the tax by the local council itself.
Consequently, objection of the learned counsel is not well-founded.
As a result of what has been stated above, the petition is allowed and the notification imposing export tax on sand and concrete at the rate of Re.1 per quintal is declared to be without lawful authority and of no legal effect. There shall be no order as to costs.
AA./M-353/L