' MUHAMMAD BASHIR KHAN JEHANGIRI, J.---Leave to appeal has been sought from the order dated 22-3-1995 of the Peshawar High Court, whereby the Constitutional Petition to challenge the revision of octroi tax on grains by the Government of N.-W.F.P., was dismissed.
2. In exercise of powers conferred under section 135 of the N.-W.F.P. Local Government Ordinance (IV of 1979) (hereinafter called as the Ordinance), the Provincial Government authorised the Municipal Corporation, Peshawar and all the Municipal Committees in the Province to collect with effect from 1-7-1992 octroi tax, inter alia, on 'grains' of all kinds including `bajra' and gram black at Re.0.50 per quintal as per Schedule which was to remain enforced for a period of three years. On 30-7-1992, however, the Provincial Government in partial modification of the aforesaid notification enhanced with immediate effect the rate of octroi tax on 'grains' etc. From Re.0.50 per quintal to Rs,2 per quintal. Feeling aggrieved, the petitioners in a joint petition under Article 199 of the Constitution challenged the notification enhancing the octroi tax on 'grains' as per the modified Schedule.
3. The power of levying new taxes or to revise taxes is contained in section 135 of the Ordinance which reads as under:-- "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."
' Again exercising powers conferred under sections 134 and 172 of the Ordinance, the Government of N.-W.F.P. Had framed the N.-W.F.P. Local Councils (Imposition of Taxes) Rules, 1980 (hereinafter referred to as the Rules). Under rule 3 of the Rules, if in its opinion the financial position calls for any change in the tax structure, the Local Council shall formulate taxation proposals and incorporate them in an appendix with the budget. In pursuance of rule 4 of the Rules the Local Council shall issue a public notice in respect of each taxation proposal and shall specify in such notice the prescribed details. After hearing objections under rule 5 of the Rules, the Local Council after considering the report of the sub-Committee shall approve it with or without modification. Then the proposal so sanctioned under the above Rules, shall be notified. Under Rule 8, the Rules shall be, mutatis mutandis, applicable for increasing or reducing the rate of any existing tax."
4. It was contended before the High Court and reiterated before us that the enhancement of the octroi tax on grains was ultra vires section 135 read with the Rules. The learned Division Bench of the High Court, however, repelled the contention holding that as "there was no new taxation proposal, therefore, the process as laid down in section 135 of the Ordinance and rules 3, 4 and 5 of the Rules, was not to be undertaken".
5. Leave to appeal is, therefore, granted to examine the following question of law of public importance:-- "Whether the respondents were legally competent to revise through the impugned notification the Octroi Schedule without complying with the provisions of section 135 of the Ordinance and Rules 3, 4 ad 5 of the Rules"?