' SHAFIUR REHMAN, J.---All these appeals raise a common question of law namely, "whether the Zila Council, Sheikhupura, was competent to levy export tax on item wise basis or that its competence in this regard was confined to charging tax on the basis of gross weight".
2. The respondent No,1 in CA.797/92 to 799/92 and respondents Nos.1 and 2 in CA.800/92 (writ petitioners) are the manufacturers of tyres and tubes of various types and their factories happen to be located within the territorial limits of Zila Council, Sheikhupura. The products manufactured by them particularly the tyres and tubes are liable to export tax. The taxing powers of the Government and the Zila Council are contained in sections 137, 138 and 144 read with item No,7 of Part II of the Second Schedule of the Punjab Local Government Ordinance, 1979 (Punjab Ordinance No,VI of 1979). These are reproduced hereunder:--- "137. Tax to be levied.---A Local Council subject to the provisions of any other law may, and if directed by Government, shall levy all or any of the taxes enumerated in the second schedule.
138. Notification and enforcement of taxes.---(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.
144. Taxation Rules.---(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 taxpayer and the duties and powers of the officials and other agencies responsible for the assessm ent and collection of taxes.
"THE SECOND SCHEDULE TAX TO BE LEVIED BY LOCAL COUNCILS (See Section 137)
' PART II ' TAXES OF ZILA COUNCILS
1. Xxxxxxxx
2. Xxxxxxxx
3. Xxxxxxxx
4. Xxxxxxxx
5. Xxxxxxxx
6. Xxxxxxxx
7. Tax for the export of goods and animals from the Zila."
3. On 24-4-1990 the Government of the Punjab notified the Punjab Zila Councils (Export Tax) Rules, 1990 in exercise of the powers possessed by it under sections 144, 167 and Section 137 read with item No,7 of Part-II of the Second Schedule of the Punjab Local Government Ordinance, 1979. It came into force on 1-7-1990 and had no limiting date. The definition clause (Rule 2) contained in clause (e) the definition of "Export Tax Schedule" as meaning the Export Tax Schedule notified by the Government for a Zila Council". The charging, assessing and the calculating provisions (Rules 5, 6 and 7) were as hereunder:--- "5. Presentation of goods at Tax posts.---(1) The Zila Council shall levy and collect export tax on export of goods produced within its limits or which during their transit through the limits of Zila Council beyond the time allowed for the purpose under these rules.
(2) Every person exporting goods liable to export tax shall present such goods at the tax post through which they are to be exported.
(3) In case the goods are in transit from other Zila Council, the person exporting the goods shall ask the Tax Clerk for a transit pass at the time of arrival at the tax post of the Zila Council.
(4) On the presentation of the goods to the tax post for a transit pass under sub-rule (3), the Tax Clerk shall promptly issue such transit pass in Form I.
(5) The goods in transit shall be exported from the limits of a Zila Council within 24 hours from their entry into such limits, but the time limit may be extended by the Taxation Officer for such reasonable period as he may deem fit on an application for this purpose being made by the person exporting the goods not later than two hours of the expiry of the time limit for retaining them within the limits of the Zila Council.
(6) The driver of every vehicle carrying goods liable to tax shall stop the vehicle at the tax post and the driver of every vehicle, whether or not carrying goods liable for tax shall stop when signaled to do so by any official on duty.
(7) The Export Tax Officer on duty at the export tax post may inspect and weigh the goods presented or ought to be presented at the posts in such manner as may be necessary for the assessm ent of export tax thereon.
(8) A complaint book in Form 2 shall be maintained at every tax post in which any person may record his complaint and every complaint shall be investigated by the Taxation Officer or an Inspector and the action taken shall be recorded in the complaint book and conveyed to the complainant.
6. Assessm ent and collection of the tax.---(1) The tax shall be assessed in accordance with the rates specified in the Export Tax Schedule.
(2) Where a consignment consists of two or more classes of goods chargeable at different rates, each portion of the consignment shall be treated as a separate consignment.
(3) The Clerk shall assess the tax payable on goods presented at the Tax Post and on receiving the amount issue a receipt in respect thereof in Form 3.
(4) The receipt shall be prepared by the carbon process in duplicate and the original copy thereof shall be handed over to the exporter.
(5) The total amount brought forward and the progressive total carried forward shall be shown on the duplicate copy of the receipt.
(6) Export tax shall be calculated on the gross weight of the consignment including packing and other containers.
(7) If there is any dispute about the assessment or the liability of any goods to export tax, it shall be paid according to the demand of the Clerk, but the aggrieved person may appeal to the Taxation Officer within a period of 10 days from the date on which the disputed tax is paid.
7. Assessm ent of export tax on rail borne goods.---(1) Every exporter shall immediately after getting a consignment from within Zila Council limits booked with the Railway, pay the tax at the nearest Tax Post and shall file a declaration giving details of the dates or the date of booking, the weight of the consignment, the railway receipt number and such other information as the Zila Council may determine.
(2) The Clerk shall assess and recover the tax according to the declaration filed under sub-rule (1) and issue a receipt in respect thereof.
(3) The Taxation Officer shall take all necessary measures to stop evasion of the tax on goods exported through rail."
4. On the same day i,e,, 24-4-990 the Government of the Punjab notified Schedule of Export Tax to be enforced for the Zila Councils in the Punjab. In this Schedule of Export Tax, at item No,14 Tyre Tubes of all kinds" were made chargeable to duty at the rate of 1.50 per quintal by weight. Such a levy under the Zila Council (Export Tax) Rules of 1990 read with Export Tax Schedule presented no impediment to the writ petitioners/contesting respondents and they did not feel aggrieved by such a levy.
5. On 13-8-1990 the Government of the Punjab issued the following directive to all the Chairmen of the Zila Councils in the Punjab:--- "Subject: IMPOSITION OF EXPORT TAX---MODEL SCHEDULE ' Whereas it has been brought to the notice of the Government that legality of imposition of Export Tax Schedule by the Government has been contested in the different Courts of Law, therefore, without prejudice to the position which the Government may take in defence of the cases pending in the Courts of Law, in exercise of powers conferred upon the Government under Section 139 of the Punjab Local Government Ordinance, 1979, you are hereby directed to impose/notify the Export Tax in accordance with the Model Schedule prepared by the Government under Rule 10 of the Punjab Local Councils Taxation Rules, 1980 (copy enclosed). It is further ordered that the condition of previous publication of the imposition of Export Tax as required under Sections 137 and 138 ibid read with the Punjab Local Councils Taxation Rules, 1980 is hereby dispensed with in exercise of powers under Section 138 ibid. ' This may be treated on Priority basis."
' The Model Export Tax Schedule at item No,14 contained the entry Tyre Tube of all kinds" 1.50 per quintal.
6. Notwithstanding such superior instruments being already in the field, the Zila Council, Sheikhupura/the appellant proceeded to notify in the Gazette on 20-6-1991 its own Schedule of Taxation for the year 1991-92, and at item No,9 "Tyre and Tube of all types of vehicles" were brought to charge of export tax at Rs, 3 per piece. This seriously aggrieved the respondents/writ petitioners/manufacturers as it was a manifold raise in the level of taxation of tyres and tubes.
They instituted Constitution Petitions which have been disposed of by the High Court by the impugned judgment holding that Rule 6 of the Export Tax Rules, 1990, reproduced in paragraph 3 of this judgment, permits by sub-rule (6) only levy of tax by weight and not item wise or per piece, hence the levy was ultra vires the powers of Zila Council.
7. After hearing the learned council for the parties at some length and going through the laws we find that the High Court has fallen into a grave error by taking sub-rule (6) of rule 6 to be charging provision notwithstanding the substance or the title of the rule itself which shows that it relates to assessm ent and calculation of the tax and not to the charge. Further, if we adopt or accept the conclusion of the High Court that the charging of the tax can only be by weight and not by number, then the Schedule of Export tax which stands incorporated as a part of the Rules under Rule 2(e) itself becomes ultra vires because quite a number of items therein are charged per piece. The scheme of law unmistakably indicates that rule 5 is the charging one, 6 and 7 are the machinery provisions relating to assessm ent, calculation and recovery of the tax. The charging provision contains no such inhibition as would indicate that the charge has to take place by weight alone and not by numbers/pieces. On that view the interpretation of the rules as expounded by the High Court has to be set aside as not tenable at all.
8. The pre-eminence of the Rules so far as the Zila Council is concerned is obvious from subsection
(1) of Section 144 of the Punjab Local Government Ordinance, 1979, already reproduced in paragraph 2 of this judgment. The Zila Council cannot go outside the Rules. This is one serious limitation on its power. The other serious limitation on its powers is to be found in section 137 which provides that the direction of the Government in the matter of levying the tax as enumerated in the Schedule shall be obeyed without demur. Not only the Export Rules framed by the Government incorporating the export Schedule are in the field but there is a direction of the Government contained in the circular of 13-8-1990 with which Model Export Tax Schedule was annexed/circulated (reproduced in paragraph 5 of this judgment). For emphasis it is being reproduced hereunder:--- "..You are hereby directed to impose/notify the Export Tax in accordance with the Model Schedule prepared by the Government under Rule 10 of the Punjab Local Council Taxation Rules, 1980 (copy enclosed). It is further ordered that the condition of previous publication of the imposition of Export Tax as required under Sections 137 and 138 ibid read with the Punjab Local Council Taxation Rules, 1980 is hereby dispensed with in exercise of powers under Section 138 ibid."
9. In view of the clear position of the law as above, all these appeals are allowed. The judgment of the High Court is set aside but the Writ Petitions stand allowed on the ground that the levy of the Export Tax under the Schedule notified by the Zila Council and at variance with the directive of the Government of Punjab dated 13-8-1990 is without lawful authority and of no legal effect. The liability of the respondents Writ petitioners arises and shall be recoverable under the Model Export Tax Schedule on the strength of the directive issued by the Government and protected under Section 137 of the Punjab Local Government Ordinance, 1979. No order is made as to costs.