' This judgment shall dispose of W.Ps. Nos.9909 of 1992 and 11620 of 1992.
' Messrs Hussain Sugar Mills Ltd., petitioner herein, is running a sugar mill within the Municipal limits of Jaranwala Municipal Committee.
2. By Notification bearing No,5489/1-17, dated 28-6-1992, Zila Council, Faisalabad (respondent No,2) in the exercise of powers vested in it by section 137 of the Punjab Local Government Ordinance, 1979, imposed export/exit tax on goods leaving its limits including sugar which has been subjected to tax at the rate of Rs.4.80 per quintal. On the strength of this notification, respondents are demanding export tax from the petitioner on the sugar produced by it which passes through the limits of Zila Council, Faisalabad while being exported to other parts of the country.
3. In support of this petition, first contention raised by the learned counsel for the petitioner is that as the mill of the petitioner is located within the urban area of Jaranwala which does not form part of Zila Faisalabad, respondent No,1 cannot impose any tax on the sugar being produced by the petitioner.
4. However, this argument of the learned counsel for the petitioner that no tax can be levied on the goods which are not manufactured in the Zila ignores the true nature of tax in question. The goods exit tax is not a tax on the manufacture of goods but on their export/exit from the limits of Zila.
Consequently, place of manufacture of the goods is of not much consequence. This aspect of the case need not be dilated upon any further in view of the authoritative pronouncement of Supreme Court of Pakistan in Zila Council, Jhelum v. I.C.I. Pakistan Ltd. (Formerly I.C.I. Pakistan Manufacturers Limited), Khewra, District Jhelum 1993 SCMR 454 _ wherein it has been ruled that even in respect of those goods which are not manufactured in the Zila, Zila Council has the jurisdiction to charge export tax provided the goods are exported out of the area falling within its jurisdiction.
5. The next contention of the learned counsel for the petitioner is however well-merited. It was stated that sugar manufactured by the petitioner while passing through Zila Faisalabad remains in transit and is taken out of the Zila within 24 hours of its entry into the Zila. According to Rule 5 of the Punjab Zila Council (Goods Exit) Rules, 1990 the goods which remain in transit within the limits of Zila Council during the time allowed for the purpose of removal of these goods from the Zila cannot be subjected to payment of export tax. Sub-rule (5) of Rule 5 fixes that period as 24 hours. However, Taxation Officer has power to extend this time on an application being made in this behalf.
6. It follows from the above that the goods, which remain in transit and are exported out of the limits of Zila Council within 24 hours of the entry of the goods into Zila, are not liable to payment of export tax. This view funds full support from the case of Zila Council, Jhelum (supra).
7. Learned counsel for the respondents was not in a position to rebut this contention of the learned counsel for the petitioner in view of the aforesaid pronouncement of Supreme Court of Pakistan. He, however, submitted that in the Supreme Court's judgment, there is no reference to the time limit beyond which goods cannot remain in transit and as such respondents are not entitled to avail of time limit of 24 hours.
8. This argument of the learned counsel on the face of it cannot be accepted. As Rule 5(5) specifically fixed the period of transit as 24 hours, there is clearly no justification for respondent No,2 to charge 'the export tax which are taken out of the Zila Council within these 24 hours.
' In view of what has been stated above, this petition is allowed to the extent that it is declared that the respondent No,2 has no right to charge export tax on the goods which remain in transit in the limits of Zila Council, Faisalabad for a period of 24 hours or less.
' There shall be no order as to costs.