This judgment shall dispose of Writ Petitions Nos. 171/88, 308/88, 387/88, 484/88, 1060/88, 6111/92, 7050/92 and 10061/92 arising under the same circumstances and involving similar controversy.
2. The petitioners in all these petitions are running various factories on the G.T. Road, Lahore which earlier fell within the local limits of a Rural Local Council. On 10-2-1980, Town Committee, Muridke, the predecessor of respondent No. 2 passed a resolution proposing that the limits of Town Committee be extended till Nallah Dek on the North, Sau Moria Bridge on the South and Bismal Factory on the West for the purpose of Octroi.
3. On 31-1-1982, a public notice issued by the Town Committee appeared in the Press expressing the intention of Town Committee to extend its limits and inviting objections. After about 5 years on 25-1-1987, a notification was issued by the Provincial Government under section 6 of the Punjab Local Government Ordinance, 1979, altering limits of Municipal Committee, Muridke by inclusion of certain areas therein which were previously fell within the jurisdiction and territorial limits of the rural Local Councils. This was followed by notice dated 4-1-1988 from respondent No., l to the petitioners calling upon them to pay Octroi on the goods imported by them into Municipal limits.
4. The petitioners feeling aggrieved by the notification of the Provincial Government and the notice issued by the Municipal Committee have filed these petitions under Article 199 of the Constitution. of Islamic Republic of Pakistan, 1973.
5. The main contention raised by the learned counsel for the petitioners in support of these petitions was that after the inclusion of the areas in which the factories of the petitioners were located within the Municipal limits, the procedure prescribed by the Punjab Local Councils (Taxation) Rules, 1980 for imposing taxes was not followed nor any notification imposing the octroi issued by respondent No. 1 which has, consequently, no lawful authority to demand payment of octroi duty. According to the learned counsel for the petitioners, the extension of Municipal limits does not ipso facto make the levy of taxes already in force applicable to the extended areas.
6. Some of the learned counsel have also argued that the notification dated 22-1-1987 had the effect of extending the limits of Municipal Committee only for the limited purposes of elections to the Local Councils and not for other purpose; while Mr. Muhammad Aslam Butt, Advocate, maintained that action of the respondents is mala as the sole objective was to recover octroi duty.
He has relied upon Sindh Fine Textile Mills Ltd., Karachi v. People's Municipality, Shikarpur and 2 others (PLD 1978 Karachi 449).
7. The learned counsel for the respondents; on the other hand, has contended that the area in question was validly included within the limits of Municipal Committee by the Government in the exercise of its powers under section 6 of the Punjab Local ;Government Ordinance, 1979 and no valid objection can be taken thereto. .
According to Mr. Ali Sibtain Fazli, Advocate appearing for the respondents, the natural consequence of inclusion of the area within the Municipal limits was that of tax which already stood imposed within the Municipal limits became applicable to the newly-added areas also.
8. Before dealing with the main contention of the learned counsel for the petitioners, it appears convenient to take up the remaining two arguments raised by them. So far as the inclusion of the area within the Municipal limits is concerned, the notification issued in this behalf on 25-1-1987 is not open to any valid exception. Section 6 of the Punjab Local Government Ordinance, 1979 unmistakably vests power in the Government to alter the limits of Local Councils. The decision is purely administrative in nature and rests with the Government alone. This Court cannot in its Constitutional jurisdiction undertake an exercise to find out as to whether or not such a decision was justified on facts. Similarly, on its proper construction, notification dated 25-1-1987 shows that though it was issued keeping in view the elections being held to the Local Councils yet the alteration of limits was not only for that limited purpose nor was it transitional or temporary in nature. The use of word "thereafter" in the notification is clearly indicative of the intention that even after the elections, the altered limits would remain in force.
9. The main argument raised by the learned counsel for the petitioners has, however, great force. It is not disputed by the respondents that after the inclusion of the area within the Municipal limits vide notification dated 25-1-1987, no separate notification levying Octroi duty was issued by the respondents nor the procedure prescribed by the Punjab Local Councils (Taxation) Rules, 1980 was followed. The only justification for demand for payment of Octroi duty put forward is that by virtue of extension of the limits of the Municipal Committee, all taxes already levied by the Municipal Committee became applicable to the extended area also. No rule or authority has been cited by the learned counsel for the respondents in support of this proposition.
10. It is difficult to agree with the learned counsel that the effect of the inclusion of the area is that all existing taxes ipso facto became applicable to the extended areas. No such consequence is provided either by section 6 or section 7 of the Punjab Local Government Ordinance, 1979. It is to be noticed that section 6(5) of the Punjab Local Government Ordinance, 1979 spells out in detail the consequences flowing from extension/alteration of limits of a Local Council. But there is nothing contained therein from which it could even be remotely inferred that one of the consequences was that the taxes in force in the existing areas become applicable to the extended areas without further proceedings merely on account of inclusion or extension of the local limits. So far as the newly-added areas are concerned, the taxes in question are levied for the first time and, therefore, it is necessary that the procedure prescribed by the Punjab Local Councils (Taxation) Rules, 1980 should be followed. To hold otherwise would amount to depriving the residents of the extended areas of their right to object to the levy and consideration, of their objections by the Sub- Committee and the House as contemplated by the Rules.
11. There are two decisions of the Indian Supreme Court which are directly in point. The first case is that of Atlas Cycle Industries Ltd. v. The State of Haryana and others (AIR 1972 SC 121) while the other is Visakhanatnam Municipality v. Kandrequla Nukaraju and others (AIR 1975 SC 2172). In Atlas Cycle Ltd.'s case (supra), it was opined that: "In the present appeals, the High Court came to the conclusion that by reason of the provisions contained in section 5(4) of the Act, taxes would automatically become leviable to new areas added to the Municipal limits. The High Court fell into the error of holding that taxes became automatically leviable in new areas ..............
There cannot be any taxation by implication. Secondly, in the Bangalkot City Municipality's case, 1963 Supp (1) SCR 710 (AIR 1963 SC 771) (supra) there was no provision comparable to section 5(4) of the Act and this Court did not decide that taxes would become automatically leviable. On the contrary, this Court in the Bangalkot City Municipality's case, 1962 Supp (1) SCR 710 (AIR 1963 SC 771)
(supra) in interpreting the words `Municipal District' occurring in a bye-law. did not extend the meaning of the 'Municipal District' to include areas which were subsequent to the making of the bye-law added within the limits of the Municipal District."
In Visakhapatna Munispality's case (supra), in para. 12, it was observed that:-- "It was urged on behalf of the appellant that the first proviso of section 81(2) would apply only when a tax was imposed 'for the first time' and since the appellant was levying property tax long before its imposition on the properties of respondents 1 to 36, it was unnecessary to follow the procedure prescribed by the proviso. It is not possible to accept this submission. The Municipality might have been levying property tax since long on properties situated within its limits but until April 1, 1966 the village of Ramakrishnapuram and Sriharipuram were outside those limits. Qua the areas newly- included within the Municipal limits, the tax was being imposed for the first time and therefore, it was incumbent on the Municipality to follow the procedure prescribed by the first proviso to section 81(2). Residents and tax payers of those areas, like respondents 1 to 36 never had an opportunity to object to the imposition of the tax and that valuable opportunity cannot be denied to them. It is obligatory upon the Municipality not only to invite objections to the proposed tax but also to consider the objections received by it within the specified period. Such period has to. be reasonable, not being less than one month. The policy of the law is to afford to those likely to be affected by the imposition of the tax a reasonable opportunity to object to the proposed levy."
I am not persuaded to take a different view.
In this view of the matter, I have no hesitation in repelling the contention of the learned counsel for the respondents that as a result of extension of the Municipal limits, the petitioners are liable to pay octroi duty without there being a fresh notification of imposition of the duty after following' the prescribed procedure.
As a consequence of the above, these petitions are allowed with no order as to costs.