CHIEF SECRETARY, GOVERNMENT OF THE PUNJAB, LAHORE vs COMMISSIONER

MUHAMMAD AKRAM, J.-This will dispose of the above seventeen apple--cations made by the Chief Secretary, Government of the Punjab, Lahore directly to the High Court under section 66(1) of the Income-tax Act, 1922 referring the following common questions of law said to arise out of a consolidated order dated 18th of April 1973 passed by the Income-tax ,Appellate Tribunal (Pakistan)

Lahore in the connected appeals (I. T. A. Nos. 804 to 820 of 1972-73) relating to the assessment years 1954-55 to 1970-71 respectively:- "(1) Whether the notice under section 34 was validly issued and served so as to vest requisite jurisdiction in the Income-tax Officer?

(2) Whether the Tribunal was justified in holding that assessment proceedings were initiated and completed during the statutory period of limitation?

(3) Whether the Tribunal was justified in holding that Thal Development Authority was not a "local authority" within the meaning of section 4(3)(iii) of Income-tax Act, 1922?

(4) Whether any valid assessm ent to Income-tax could be made on Thal Development Authority after it had admittedly been dissolved and had ceased to exist?

(5) Whether the Tribunal was justified in holding that assessment made under section 23(4) was valid and legal?

(6) Whether in the facts and circumstances of the case Income-tax can legally be charged in respect of receipts of That Development Authority?

(7) Whether the assessm ent to Income-tax is not violative of Article 167 of the Interim Constitution which is reiterated in Article 165 of the permanent Constitution?

The last question reproduced above was not pressed by the learned counsel for the petitioner and was dropped at the hearing before us.

2. Briefly the facts necessary for the disposal of the above references are these On the 29th of July 1949 the Thal Development Authority (hereinafter filled the Authority) was constituted under the That Development Act XV of 1949 with a view to provide for speedy development of the area brought under irrigation by the execution of the Thal Project, and for the resettlement thereon of refugees and others and for the levy of Development Fee. In the year 1959, in the execution of its development schemes, the Authority decided -to establish a Sugar Mill within its own jurisdictional area. Accordingly a Public Company was incorporated under the name and style of the Thal Industrial Corporation Ltd. To run a Sugar Mill commonly known as the Leiah Sugar Mill at Leiah within the jurisdictional area of the Authority. The company itself was subjected to income tax on the business done by it and there is no dispute about it before us.

3. On the 28th of December 1953 the Company appointed the Thal Development Authority as its Managing Agents on commission at the rate of 7J% of its profits in addition to Rs. 3,520 per month as the office allowance and it continued to act for the company as such. But eventually by virtue of Notification No. SIII-2-68/67(1247) dated 31st of May 1969 the then Government of West Pakistan decided to dissolve the Authority in accordance --with section 81(1) of the Thal Development Act with effect from Ist of June 1969 and the petitioner, the Chief Secretary, Government of Punjab, Lahore was appointed as its Administrator.

4. On the 30th of June 1971, the Income-tax Officer, Companies Circle 11, Lahore issued separate notices under section 34 of the Income-tax Act, 1922 addressed to the Administrator. Thal Development Authority, Lahore to the effect that he had reasons to believe that the taxable income in the hands of the Authority for the seventeen assessment )ears from 1954-55 to. 1970-71 in question bad escaped assessm ent by concealment of income. He, therefore, called upon the petitioner to file the returns for each of the respective assessment years in question. But the assessee all along failed to file any return. Notices under section 22(4) were also issued from time to time requiring the Authority to produce its books. In these circumstances on the 28th of June 1972 the Income-tax Officer, Companies Circle II, Lahore separately completed the assessments for each of seventeen assess--ment 3 ears 1954-55 to 1970-71 in question against the Authority under section 23(4) of the Income-tax Act for its failure to file the returns. He observed that the Thal Development Authority was a body corporate having a perpetual succession and a common seal.

As such it was liable to tax on the income received by it as commission and office allowance as the managing agents for the company during this period, which was brought to tax for each of the respective assessm ent years in question. Dissatisfied, the assessee filed separate appeals (I. T. A.

Nos. 804 to 820 of 1972-73) for each of the respective assessment years in question. As already stated above all the seventeen appeals were disposed of by the Appellate Tribunal (Pakistan)

Lahore by a consolidated order passed on the 18th of April 1973. It was of the opinion that the Thal Development Authority was not a "local authority" exempt from the payment of the tax within the preview of section 4(3)(iii) of the Act. There was no defect in the issuance or service of notices under section 34 of the Act. In any case the defects, if any, in the notices did not vitiate the assessm ent in view of the provisions contained in section 66-B of the Act. The Tribunal held that these assessm ents were made within the period of limitation and that the Income-tax Officer was justified in framing the ex parte assessments under section 23(4) of the Act because of the defaults committed by the Authority in its failure to file the required returns in compliance with the notices under section 34 of the Act. The Tribunal, however, accepted the appeals before it on the sole ground that the Income-tax Officer was nom justified in bringing to charge the gross receipts of the Managing Agency Commission and Office Allowance in the hands of the Authority without allowing any deductions for the expenses incurred by it in that connection.. It, therefore, directed the Income-tax Officer to frame the assessments afresh after taking into account a fair estimate of the expenses incurred by the assessee in connection with the business of the Managing Agency,

5. In these circumstances the petitioner has made these connected applications referring the above questions of law before us for opinion. By far the most important question going to the root of the assessm ents made in all these cases is question No. 3 as to whether the Tribunal was justified in holding that the Thal Development Authority was not a "local authority" within the meanings of section 4(3)(iii) of the Income-tax Act, 1922. We, therefore, propose to deal with this question first.

6. According to section 4(3)(iii) of the Income-tax Act income of the "local authority" except income from a trade or business carried on by the authority so far as that income is not income arising from the supply of commodity of service within its jurisdiction shall not be included in the total income of the assessee for the purposes of computation of the tax. The term "local authority" has nowhere been defined in the Income-tax Act. But in this connection the Income-tax Officer was of the opinion that the assessee (Thal Development Authority) was a body corporate having a perpetual succession and a common seal, established under the Thal Development Act, 1949. It could sue and be sued and had received the managing agents commission and allowances charged to tax. On appeal the Tribunal repelled the contention advanced on behalf of the assessee to the effect that the That Development Authority was a "local authority" and the income in its hands was not .Chargeable to tax in accordance with section 4(3)(iii) of the Income-tax Act.

In that connection reliance was placed on behalf of the petitioner before the Tribunal on the reported case of Dy. Managing Director, National Bank of Pakistan v. Ataul Haq (1). In that case the Supreme Court in the context of the provisions contained in Article 98 of the late Constitution of the Islamic Republic of Pakistan 1962 defined the terms local authority as generally understood in this sub-continent to mean an authority which is entrusted with the administration of local fund and charged with the functions of the type of local self Government within its territorial jurisdiction.

Before the Tribunal the petitioner also relied on some of the relevant provisions of the Thal Development Act, 1949 to contend that the Thal Development Authority was entrusted with the administration of a local fund and was also charged with some of the functions of local self Government usually discharged by a "local authority" as commonly understood. It was, therefore, argued before the Tribunal that Income-tax Officer was little justified in bringing to charge the income in the hands of the Authority in the status of a "Company" as a body corporate having a perpetual succession and a common seal. But the Tribunal repelled all these contentions advanced before it for the assessee. In the opinion of the Tribunal it shall serve no useful purpose to try and ascertain the meanings of the term "local authority" and observed that the Thal Development Authority was a body corporate under the Thal Development Act 1949 and its status could best be decided by reference to the Statute creating it. Section 3 of that Act itself clearly lays down that the Thal Development Authority shall be a body corporate and this in itself was sufficient to determine the true status of the accessee as a "Company". In the opinion of the Tribunal this should end the controversy and after that there was no room left to snake any further probe or guess about it. The Tribunal was further fortified in forming this opinion on reference to section 45 of the Thal Development Act. By the fiction of law under this section the Thal Development Authority was deemed to be a "local authority" for the purposes of the Local Authorities Loans Act 1914. This was a proof positive (1) PLD 1965SC201 to show that but for the limited purposes of this section the Thal Development Authority could not be regarded as a Local Authority. Even otherwise on reference of the definition of the term "Local Authority" contained in the reported case of the Deputy Managing Director, National Bank of Pakistan and others v. Ataul Haq the Tribunal held that the Thal Development Authority has no resemblance with and was not a local authority. In the end the Tribunal also rejected the further contention advanced on behalf of the petitioner to the effect that in any case the Thal Development Authority was holding a dual character both as a corporate body as well as a local authority. In conclusion the Tribunal agreed with the Income-tax Officer in assessing the income in question in the hands of the Thal Development Authority in the status of a "Company" within the meanings of section 2(5-A) of the Income-tax Act, 1922 for all the years in question.

7. As already mentioned above the term "local authority" is nowhere defined in the Income-tax Act.

1922. But section 2(9) of the Act defines a "person" to include an individual, a Hindu undivided family, a firm, an association of persons or a body of individuals, whether incorporated or not, a company, Government of a Province, a local authority and every other artificial juridical person.

This definition in itself implies that for the purposes of Income-tax Act a local authority is an artificial juridical person distinct from a company and an association of persons whether incorporated or not. This definition read with section 3 (before and after its amendment by the Finance Act 1965) leaves no room for doubt in our mind that the "local authority" itself is a unit of assessm ent quite distinct and separate from a company, firm or other association of persons. In fact the local authority occupies a unique position under :.The Income-tax Act and is taxable only in respect of that part of its income which arises from any business carried on by it so far as that income does not arise from the supply of a commodity or service within its own jurisdictional area under section 4(3)(ilf) of the Act. These are some of the specific provisions applicable to a local authority to distinguish it from a company defined in section 2(5-A) of the Act.

8. The term "local authority" is of course defined in section 3(26) of the General Clauses Act 1897 reproduced below:- "Local authority" shall mean a municipal committee, district board, body of port commissioners or other authority legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund." As such this definition shall hold good in interpreting the term used in the Income-tax Act. But the Tribunal has altogether failed to advert to it.

Local authority is invested with the control or management of a municipal or local fund. A Municipal Committee, district board and a body of port Commissioners are illustrations of the local authorities specifically included within the definition. A common feature in all these is that they exercise powers of local self Government invested in them over a local areas within their limits. It exercises some of the powers and functions of local Govern--ment and is entrusted with the development and municipal administration of a local area within its jurisdiction. The Supreme Court of Pakistan in the reported case of The Deputy Managing Director, National Bank of Pakistan Dacca and others v. Ataul Haq has held that the National Bank of Pakistan is not a "local authority" within the contemplation of Article 98(2) of the Constitution of Pakistan, 1962. In that context the Court observed that:- "The expression "local authority" has been used in statutory phraseology in the Indian Sub- continent for a great many years, and is always understood to mean an authority which is entrusted with the adminis--tration of a local fund. Local authorities are bodies exercising within limited territories included in a Province, powers which belong to the Province, but which by statute are delegated to the local authority. A local authority is ordinarily charged with functions of Self- Govern--ment, and has power of making be-laws, of imposing taxation, and maintaining and administering a local fund."

If we may say so with respect, this explanation of the term is also in con--sonance with the definition of the term Local Authority contained in section 3(28) of the General Clauses Act, 1897.

8-A. The term "local fund" is defined in the Compilation of the Treasury Rules (Volume I) as under:- "(i) revenue administered by bodies which by law or rule having the force of law comes under the control of the Government, whether in regard to the proceedings generally, or to specific matters such as the sanctioning of their budgets, sanction to the creation of filling up of particular appointments, the encashment of leave, pension or similar rules;

(ii) the revenues of any body which may be specially notified by the Government as such."

According to the law Lexicon by Aiyer the term "local fund" means any fund under the control or management of a local authority. We shall presently show from a discussion of the different provisions of the Thal Development Act, 1949 that the "Authority Fund" constituted under section 42 of that Act meets with all these requirements and is nothing but a local fund vested in the Thal Development Authority.

9. Let us now examine the status of the Thal Development Authority. It was constituted under the Thal Development Act XV of 1949 by virtue of a notification issued on 29-7-1949. This Act according to its preamble was enacted to provide for the speedy development of the area brought under irrigation by the execution of the Thal Project, and for the re-settlement there--on of refugees and others and for the levy of development fee. Under section 1(2) the Act was extended to the Districts of Mianwali, Muzaffargarh, Khushab Sub-Division in Sargodha District and the Provincial Government was empowered by notification to extend all or any of the provisions of the Act to other parts of the Punjab. Section 3 of the Act lays down that the duty of carrying out the provisions of the Act in the local area to which the Act is extended, shall be vested in a Board called the Thal Development Authority. The Board shall be a body corporate, and shall have perpetual succession and a common seal and shall by that name sue and be sued. Section 4 lays down that the Authority shall consist of not more than seven members appointed by the Provincial Government by notification. Under subsection (1) of section 21 the Authority may frame a scheme for the development of any local area or part thereof providing for all or any of the matters enumerated therein. Inter alia it may provide for the acquisition of any land or interest in land necessary for, or affected by the execution of the scheme, the relaying of any land comprised in the scheme, the lay out and construction of towns, mandis, market places, villages and settlements, and the provisions of facilities for communication including the lay-out and alteration ,of roads, streets, foot-paths, bridle-paths aerodromes and waterways. The scheme may also provide for the provision of open spaces, playing fields, national parks, nature reserves, forests and forest parks, the breaking up, cultivation, a forestation or plantation of lands. The draining, water supply and Lighting of streets and sanitation of villages and settlements, towns, mantissa and market places, the installation, management, maintenance and encouragement of public utility undertakings, rural trades and crafts, industries and works. These are some of the matters provided in the scheme. The scheme may authorise the doing of all acts intended to promote the health, well being and prosperity of the residents of local area, including the conser--vation and preservation from injury o; pollution of rivers and other sources and means of water-supply, and establishment of educational institutions, dispensaries and nursing homes. Under section 30(1) of the Act the Authori--to may undertake any work and incur any expenditure for the improvement and development of a local area. Section 40 lays down that when by the execution of any scheme under this Act, any land in the area comprised therein which is not required for the execution thereof, will in the opinion of the Authority, be increased in value or will obtain benefit from the execution of the scheme the Authority may, while framing the scheme provide, that in lieu of acquisition of such land a development fee shall be paid by the owner or any person having interest therein. Chapter V1I of the Act contains the financial provisions applicable to the Authority. Section 42 of the Act lays down that there shall be a fund to be known as `Authority Fund' vested in the Authority which shall be utilised by the Authority to meet charges in connection with its functions under the Act including the salaries and other remunerations of the members of the Authority and the Tribunal and any officers and servants duly appointed under the Act. Section 42-A of the Act lays down that the Authority shall prepare its annual budget estimates and submit the same to the Provincial Government. Under section 43 the Authority is authorised to levy taxes within its local area 'with the previous sanction of the Provincial Government. Section 45 of the Act defines the powers of the Authority to borrow money. It lays down that the Authority shall be deemed to be a local authority under the Local Authorities Loans Act, 1914 for the purpose of borrowing money under that Act, and the making and execution of any scheme under this Act shall be deemed to be a work which such authority is legally authorised to carry out. Under section 50(l) the Provincial Government may by notification in the official gazette make rules consistent with the Act. The Authority may from time to time with the previous sanction of the Provincial Government, make be-laws under section 51 of the Act. Section 81 of the Act provides for ultimate dissolu--tion of the Authority and transfer of its assets and liabilities to an Administrator. In this connection subsection (1) lays down that when all schemes sanctioned under this Act have been executed or have been so far executed as to render the continued existence of the Authority in the opinion of the Provincial Government, unnecessary, or when in the opinion of the Provincial Government it is expedient that the Authority shall cease to exist, the Provincial Government may by notification declare that the Authority shall be dissolved from such date as may be specified in this behalf in such notifica--tion; and the Authority shall be deemed to be dissolved accordingly. Under subsection (2) of this section from that date all the properties, liabilities shall vest in the Administrator. In this case the Thal Development Authority was actually dissolved with effect from 1-6-1969 by virtue of Government of West Pakistan, Services and General Administration Department Notifica--tion No. S-111-2-68/67(1247) dated 31-5-1969 issued under section 811) of the Act.

10. The brief review of some of the relevant provisions of Thal Development Act discussed above is sufficient to form a fair idea as to the constitution and features of the Thal Development Authority, its powers and duties and the functions entrusted to it under the law. It is a statutory corporation constituted under section 3 of the Thal Development Act. It is a body corporate, has perpetual succession and can sue and be sued. It has its own juristic personality distinct from its members.

Within its own local area, it exercises considerable powers of local Self-Government. It may frame schemes for the development of a local area under its control and provide of civic amenities for the inhabitants of the area. It has its own local fund to manage. It prepares its own annual budget for submission to the Provincial Government. It may levy taxes in its own local area with the sanction of Provincial Government. It may also make be-laws. We have, therefore, no hesitation in holding that the Thal Development Authority is a local Authority as defined in section 3(28) of the General Clauses Act.

11. But in the opinion of the Tribunal the Authority was created under section 3 of the Thal Development Act as a body corporate and this in itself 'was sufficient to hold that its status was that of a company as defined in section 2(5-A) of the Income-tax Act, to mean a body corporate formed by or under any law for the time being in force. In this connection as already discussed above there can be no doubt from a reading of section 2(9) with section 3 and section 4(3)(M) of the Income-tax Act that a local authority is a separate unit of assessment distinct from a company. Both a company and a local authority have corporate existence and are corporate bodies. They have this feature or characteristic common to both of them. But at the same time they do retain their individual characteristics as well. It is not that simply because the local authority has a corporate existence its entity was completely lost in the company and it ceased to exist in its own right and must be treated as company for all the purposes of the Income-tax Act.

Indeed if this process of elimination is pressed further it would lead to many anomalies in the Act.

Section 2(9) of the Act in turn defines a "person" to include an individual, a Hindu undivided family, a firm, an association of persons or body of individuals whether incorporated or not, a company, Government of a Province, a local authority and every other artificial juridical persons. If the same argument is pursued we shall soon find that in the ultimate analysis all the different entities enumerated in the definition of person shall soon lose their distinctive characteristics and cease to exist. We cannot help observing that if, as the Tribunal has held, a local authority is treated as company simply because of its corporate existence, then the exemption allowed under section 4(3)(iii) of the Act is apt to become altogether redundant meaningless and of no avail at all. It shall for all practical purposes reduce this clause to a dead letter. In our considered opinion the company and local authorities are two of the species of the corporate bodies. They do have this feature common to both but at the same time they are distinct from each other. The income of a local authority distinct from the "company", is exempt from the payment of Income-tax to the extent allowed under section a(3)(iii) of the Act.

12. In holding that the Thal Development Authority is not a local authority the Tribunal has also relied on the provisions contained in section 45 of the Thal Development Act and made capital out of it. This section merely lays down that the Authority shall be deemed to be a local authority under the Local Authorities Loans Act, 1914 for the purposes of borrowing money under that Act and the making and execution of any scheme under this Act shall be deemed to be a work which such Authority is legally authorised to carry out. From this the Tribunal concluded that the Thal Development Authority is not a local authority but was treated as a local authority merely by this fiction of this law. In arriving at this conclusion the Tribunal seems to have lost sight of the definition of "Local Authority" contained in section 2 of the Thal Development Act itself. It lays down that a Local Authority has the same meaning as in section 2 of the Local Authorities Loans Act 1914. Now according to section 2 of the Local Authorities Loans Act, 1914, local authority means any person legally entitled to the control or management of any local or municipal fund, or legally entitled to impose any cost, rate, duty or tax within any local area. As already discussed above under section 43 of the Thal Development Act the Thal Development Authority was legally entitled to impose tax within its local area. This conclusively establishes that the Thal Development Authority was a local authority for the purposes of the Thal Development Act as well as the Local Authorities Loans Act, 1914. This Act is designed merely to regulate the borrowing powers of local authorities. A combined reading of sections 2 and 45 of the Thal Develop--ment Act shows that they were designed merely to ensure that the borrowing powers of the Thal Development Authority shall be regulated by the provisions of the Local Authorities Loans Act, 1914. It appears to us that these provisions in the Thal Development Act were classificatory in nature. At any rate for the purposes of interpreting the term "local authority" contained in section 4(3)(111) of the Income-tax Act reliance can be placed on the definition contained in section 3(28) of the General Clauses Act which is readily applicable. In these circumstances the Tribunal was little justified in com--pletely ignoring section 3(18) of the General Clauses Act.

13. As a last resort even on reference to the definition of the term "Local Authority" in the reported case of Deputy Managing Director, National Bank of Pakistan and others v. Ata ul Haq the Tribunal has held that the Thal Development Authority has no resemblance to and was not a local authority, and observed that:- "The appellant obviously has no resemblance with that kind of institu--tion. It does not administer a local fund. Its creation is designed for a set purpose. In order to carry out these purposes it has been vested with certain powers. These powers are sometimes circumscribed and the very argument that the making of be-laws the exercise of certain powers to levy taxes or cesses raised the status of the appellant to that of a local authority is ill-founded as that would make an electric company also a local authority at least within its own distributing area but this is not a correct proposition."

In this connection we are constrained to observe that these remarks by the Tribunal are based on an altogether fallicious assumption contrary to express provisions contained in section 42 of the Thal Development Act, 1949. It was held without any discussion that the Thal Development Authority does not administer a local fund. The local fund administered by the Thal Development Authority under this section is known as the Authority Fund which is utilized by it to meet the charges in connection with its functions under that Act including the payment of salaries and other remunerations of the members of the Authority, and officers and servants appointed under the Act.

The Authority is invested with the powers under the Act to discharge the functions of local bodies in the local area within its jurisdiction. This distinguishes it from the electric company which the Tribunal had in mind. Therefore, we have no hesitation in finding that in the absence of any such powers as are vested in the local bodies the Tribunal was not justified in relying on the apology of an electric company exercising powers of distribu--tion of electricity within its area.

14. As a result of the above discussion we have no hesitation in finding that the Tribunal was not justified in holding that the Thal Development Authority was not a local authority within the meanings of section 4(3)(111) of the Income-tax Act. Accordingly our answer to Question No. 3 above is returned in the negative.

15. On our finding in favour of the assessee under Question No. 3 any discussion on the remaining questions reproduced above is of academic interest only. After this finding the other questions do not properly arise in this case. Notices under section 34/22(2) of the Income-tax Act forming the subject--matter of the first question were addressed to the Administrator, Thal Development Authority. Under section 81 of the Thal Development Authority its assets and liabilities had vested in the Administrator. Before us at the hearing the learned counsel did not seriously raise any objection against the service of these notices on him. The only objection raised against the notice was to the effect that it was time barred. In that connection the Tribunal was of the opinion that the notice was within time under section 34(1-A)(a) of the Act as the assessee or any other person on its behalf did not file any return. In the circumstances the Tribunal was justified in holding that the notice could be served at any ,time and was not time barred. Accordingly our answer to Question No. 2 is returned in the affirmative. Question No. 4 was not at all raised at the hearing before the Tribunal. Strictly speaking after our findings on Question No. 3, as already stated, it does not even arise out of the Tribunal's order and we are not called upon to indulge in a hypothetical discussion of this question. There could be no legal objection in resorting to the assessment made by the income-tax Officer under section 23(4) of the Act on the failure of the assessee to file the return.

This disposes of Question No. 5. Question No. 6 stands answered in the negative because of our above conclusions in answer to the main Question No. 3 above. The last Question No. 7 was not pressed before us at the hearing.

16. In these cases we had heard the arguments and the judgment was reserved. But on the 8th of August 1975 the learned counsel for the respondent filed an application (C. M. No. 23/Com./1975) under section 151 of the Code of Civil Procedure for further argument. According to the respondent the Thal Development Authority had already been dissolved and its assets and liabilities had vested in the Provincial Government. It was, therefore, alleged in this application that under Article 184(1) of the Constitu--tion of Islamic Republic of Pakistan, 1973 only the Supreme Court has the exclusive jurisdiction to entertain this dispute between the Central Govern--ment and the Provincial Government for and on behalf of the Thal Development Authority (under dissolution) about its liability, if any, to pay income. Tax on the income, profits and gains made on its business activities and that as such the Income-tax Appellant Tribunal was denuded of its authority to hear and dispose of the appeal before it. On this application we issued notices to the assessee and have heard the parties. This was an altogether new plea which was for the first time raised in this Court belatedly after the conclusion of the arguments. But as it was a purely legal plea going to the root of the case we allowed the permission to the respondent to raise the objection for whatever its worth, even at this late stage.

17. As already stated above by virtue of Notification No. S(III)-2-68/67 (1247) dated 31st of May 1969 the then Government of West Pakistan decided to dissolve the That Development Authority in accordance with section 81(1) of the Thal Development Act with effect from 1st of June 1969 and the Chief Secretary was appointed as its Administrator under section 81 of the Thal Development Act.

18. Subsection (1) of section 81 of the Act lays down that when all the schemes sanctioned under this Act have been executed or have been so far executed as to render the continued existence of the Authority, in the opinion of the Provincial Government, unnecessary, or when in the opinion of the Provincial Government it is expedient that the Authority shall cease to exist, the Provincial Government may by notification declare that the Authority shall be dissolved from such date as may be specified in this behalf in such notification; and the Authority shall be deemed to be dissolved accordingly. In that connection subsection (2) of this section further lays down that from such date (a) all properties, funds and dues which are vested in or realisable by the Authority and the Chairman respectively shall vest in and be realisable by an Administrator appointed by the Provincial Govern--ment in this behalf; (b) all liabilities which are enforceable against the Authority shall be enforceable only against the Administrator; (c) for the purpose of completing the execution of any scheme, sanctioned under this Act which has not been fully executed by the Authority, and of realising pro--parties, funds and dues referred to in clause (a) the functions of the Authority and the Chairman under this Act shall be discharged by the Administrator; and (d) the Administrator shall keep separate accounts of all moneys respectively received and expended by him under this Act, until all loans raised hereunder have been repaid, and until all other liabilities referred to in clause (b) have been duly met.

19. In this manner the Administrator became responsible for all the liabilities enforceable against the Authority. But in our opinion the Adminis--trator is a distinct entity separate from the Provincial Government under the law. It cannot be said that the liability of the Authority, if any, under the Income-tax Act had thereby devolved on the Provincial Government. As such strict senso this dispute between the Commissioner of Income-tax and the Administrator of Thal Development Authority (under dissolution) cannot be held to a dispute between the Central Government and the Provincial Government for the purposes of Article 184(1) of the Constitution. Therefore this objection raised by the respondent has no force and his application belatedly made before us is dismissed.

20. This reference is returned as above. The respondent shall bear the costs of these petitions before us.