MUHAMMAD NAWAZ ABBASI, J.- Brooke Bond Pakistan Limited Khanewal through its Factory Manager has filed this constitutional petition seeking declaration that the Notification dated 6.6.1991 issued by Commissioner Multan Division for the extention of Municipal Limits of Municipal Committee, Khanewal and in consequence thereof the recovery of Octroi by respondent No. 3 from the petitioner was illegal and without lawful authority.
2. The facts of the case are that the petitioner company installed a Factory at Khanewal for the purpose of blending the raw tea into packets for public consumption out of the limits of Municipal Committee Khanewal. The location of the Factory in question was in Chak No. 88-A 10-R outside the Municipal Limits of the Municipal Committee. An extention of the boundaries of Municipal Committee was made through a Notification dated 6.6.1991 issued by the Commissioner Multan and as a result thereof the area where the Factory in question is situated fell within the limits of Municipal Committee, Khanewal.
3. The respondent No. 3 after extention of the limits of Municipal Committee imposed octroi fee on raw tea and packing material of the petitioner's company brought to the factory from outside the octroi limits of Khanewal Municipality.
4. The demand and the recovery of octroi by respondent No. 3 from the petitioner on raw tea and packing material has been questioned on the ground that the products of the petitioner are not consumed within the local limits of respondent No. 3 and said respondent has no authority to recover the octroi from the petitioner. The liability of the petitioner, if any, is to pay transit fee under West Pakistan Town Committee (Octroi rules) 1964. The demand and payment of the octroi fee by the respondent No. 3 shall be double taxation i.e. Payment of octroi fee to respondent No. 3 and also to the urban Local Council of the city where the product is consumed.
5. The Notification for the extention of the Local Limits was further attacked on the ground that the extention was made without notice to the public as required* under Punjab Local Government Ordinance 1979 and that the extention of limits ipso facto did not vest power to respondent No. 3 to impose Municipal Taxes on the resident of the area and thus the impugned Notification was issued in violation of Section 5 and 7 of Punjab Local Government Ordinance 1979.
6. Respondent No 3 in its comments to the writ petition stated that the population of Municipality abnormally increased and it spread over a large area outside the Municipal limits enjoying all benefits of the Municipal area without payment of local taxes. The income of the Municipal Committee badly suffered and for the purpose of providing better amenities/facilities to the residents of the area suggestion was made for the extention of the Municipal limits in 1981 for the first time and thereafter in 1988. After completing the formalities, a public notice was published in the "Daily Nawa-i-Waqt on 24.5.1988 calling the objection of proposed boundaries of urban limits.
Some part of Zila Council Khanewal was also proposed to be made part of the Municipal limits of Municipal Committee, Khanewal with no objection certificate of Zila Council. The proposal was finally placed before respondent No. 1 who after considering all aspects of the matter vide Notification dated 6.6.1991 approved the extention of limits of Municipal Committee, Khanewal. The Notification in question was published in the Punjab Gazette on 29.6.1991 to be enforced with effect from 1.7.1991.
6. It has been pleaded on behalf of the Municipal Committee/respondent No. 3 that the extention of limits with the aim of raising funds was with the liability to provide the civic emenities to the residents of the extended area which being in the welfare of the people was in accordance with public policy and moto of respondent No. 3. The, extention of the limits in fact has caused financial loss to the respondent No. 3 as the octroi which was being charged from the residents of the area in question after the extention of limits could not be charged.
7. The Commissioner respondent No. 1, in his comments submits that petitioner's Factory after going through machinical process by blending various kinds of tea and filling it in packets produce the same in salable commodity which falls within the definition of "goods" for the purpose of octroi leviable under the rules. The Taxes imposed by the Federal Government, Provincial Government and the Local Councils in their Tax area are other than the octroi tax to be levied by urban Local Council and in present case by the respondent No. 3 on the goods to be consumed, used or sold in the octroi unit of Municipal Committee Khanewal and it was not same tax levied by the different Governments or Local Councils. The respondent No. 2 also justified the extention of limits of Municipal Committee, Khanewal and imposition of octroi fee on the goods of petitioners on similar grounds.
8. A local council is constituted under Punjab Local Govt. Ordinance, 1979. Section 6 (e) of the Ordinance provides of constitution of a Municipal Committee for each Municipality, and under Section 6 (2) (e), a Municipal Committee should be comprising an urban area having a population exceeding thirty thousands. By virtue of Section 6(5) Government may at any time by Notification extend, curtail or otherwise alter the limits of a Local Council or declare that any Local Council shall seize to be Local Council. The Government has unfettered powers of extention of the Local limits of Local Council to be exercised in suitable cases for the purpose of welfare of the people of the area .And to provide them better amenities of life not otherwise available to them. A duty is placed on the shoulder of the Local Government to provide all amenities of life to the residents of area as is provided under the relevant rules. However, in an area which is declared urban area and made part of an urban Local Council, the residents shall also be liable to pay local taxes. Section 137 of the Punjab Local Government Ordinance provides as under:- "A local council subject to the provisions of any other may, and if directed by Government, shall levy all or any of the taxes enumerated in the second schedule." Section 138 provides as under:
1. All taxes levied by a Local Council shall be notified and shall, unless otherwise directed by Government, be subject to previous publication.
2. Where a tax is levied or modified the local council shall specify the date for the enforcement thereof and such tax or the modification shall come into force on such date.
Section 139 deal with the increase or decrease of taxes as under: -
(1) . Government may direct a local council.-
(a) to levy any tax;
(b) to increase or reduce any such tax or the assessment thereof to such extent as may be specified; or (c) to suspend or abolish the levy of any such tax.
(2) If a direction issued under sub-section (1) is not complied with within the specified time if any, Government may make an other giving effect to the direction.
Section 144 provides as under:-
(1) All taxes and other charges levied by a local council shall be imposed, assessed, leased compounded Administered and Regulated in such manner as may be provided by rules.
(2) Rules framed under this Section may among other matters provide for the obligation of the tax- payer and the duties and powers of the officials and other Agencies Responsible for the Assessm ent and Collection of taxes.
The West Pakistan Municipal Committee (Octroi Rules 1964)'and West Pakistan Town Committees (Rules 1964) providing schedule of octroi fee have been made applicable to all Municipal Corporations and Municipal Committee in the Punjab. Punjab Local Council (Taxation) Rules 1980 provide complete procedure for the purpose of imposition of Local Government Taxes.
9. Whenever a new Local Tax is required to be imposed in an area, the procedure provided under the rules is to be followed and in case of departure, the tax if imposed shell be without any legal sanction. The octroi duty to be levied and collected by the Local Councils is distinguishable to that of the taxes which are imposed and charged for by the Federal Government, Provincial Government or the Local Government on trade and business on income. The octroi duty is charged irrespective of the nature of the business and the limit of income. It is a tax on the goods mentioned in the schedule which are imported within the octroi limits of an urban Local Council either to be consumed or used or sold as the case may be. The raw tea is blended and. Is made in salable commodity. The goods brought to the factory are converted in packets for the purpose of mar-wing through a process for their used and further are sold to their agents at different places.
The raw tea and packing material are goods for the purpose of West Pakistan Municipal Committees (octroi rules, 1964) and when the same are brought within the octroi limits of Khanewal Municipality for use or sale, even if not for consumption in the local area, shall be liable to octroi duty. The consumption alone is not the criteria for non-application of the octroi rules to the goods of the petitioner.
Under Rule 2 (M) of the ibid octroi rules; Octroi means a Tax on the import of goods for the consumption, use or sale in the octroi limits.
Admittedly, the goods liable to octroi duty are brought within the octroi limits by the petitioner for use and sale, hence the same are not immuned from octroi duty.
10. The Tax or Taxes proposal requires publication of preliminary hearing of objections and suggestions to the proposal, conveying of the meeting of the local council on the subject, finalization of the taxation proposal of the taxes and post-sanction publication for the purpose of local taxes as provided under Punjab Local Council (Taxation Rules) 1980. West Pakistan Municipal Committee (octroi rules) 1964 published under Municipal Administration Ordinance, 1960 adopted for the purpose of octroi duty to be levied by urban local council in Punjab need not to be processed.
11. The question as to whether with the extention of Municipal limits, respondent No. 3 was bound to give a proposal for the imposition of octroi and approved the same as provided under the rules or the inclusion of the area in Municipality ipso-facto created liability on the resident of the area to pay the local taxes already imposed by the Municipal Committee. The extention of the limits on one hand provides a number of facilities to the people for which there was no need of formal notification except the notification of extention of limit itself. As soon as an area is made? Part of the Municipal Committee, the residents of the said area are entitled to all facilities provided under the rules to the people residing within the Municipal limits. Similarly, the taxes which are already in field and were imposed after due publication and sanction are not needed to be reproposed or published for the purpose of extended areas .Rather by operation of law, it become a liability of the residents of the extended area to pay all tax already imposed in the area. The proposal; the previous publication and the sanction of imposition of taxes is required in a case where a new tax is to be imposed and not the taxes already part of the schedule, for the reason of extention of an area of Municipal Committee. The extention of limits
12. For the foregoing reasons, I see no force in this petition which is dismissed with no order as to costs. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.