' MAMOON KAZI, J.--The petitioners are aggrieved because they have received a demand from respondent No,1 for payment of property tax under the Urban Immovable Property Tax Act, 1958 for the years 1990-91 and 1991-92 respectively. The petitioners are a pharmaceutical company and are tenants of respondent No,2 in respect of Plot No,12 admeasuring 16,090 square metres situated in the Industrial Area, West Wharf, Karachi.
2. As per the provisions of the said Act, the structures raised by the petitioners on the said plot were assessed at the annual rent of Rs,1,71,810 and property tax was levied from year to year on the said structures on such annual rental value. However, on 19-5-1991, the petitioners received from respondent No,1 a notice purporting to have been issued under Rule 9 of the Sindh Urban Immovable Property Tax Rules, 1958 which proposed to amend the valuation list under sections 9 and 9 (2) of the said Act in view of the revised/enhanced rent being paid by the petitioners to respondent No,2. The same was done with retrospective effect from 1-1-1982. Enhancement on account of additions and alterations made to the premises was also made with effect from the said date. Although the petitioners objected to the respondent in respect of the tax levied on the land but the petitioners received challan forms from the said respondent on 17-6-1991 which were based on an order passed by the said respondent on 16-6-1991 indicating that arrears had been charged in respect of the said property with effect from 1982 amounting to Rs,16,09,798 on account of enhancement of rent. Property tax in respect of the site was charged at an amount of Rs,1,89,515 for each year in question.
3. The main contention of Mr. Faez Isa, learned counsel for the petitioners has been that as per subsection (5) of section 3 of the said Act, such tax "shall be due from the owner of the building and lands". The term "owner", according to section 2(e) of the said Act, "includes a mortgagee with possession, a lessee in perpetuity, a trustee having possession of a trust and a person to whom an evacuee property has been transferred provisionally or permanently under the Displaced Persons (Compensation and Rehabilitation) Act, 1958 (Act No,XXVIII of 1958) and therefore, according to Mr. Faez Isa, initial liability to pay such tax cannot rest upon a tenant of such building or land. It may be pointed out in this regard that although the learned counsel has not called into question the power of respondent No,1 to recover such tax from the petitioners in respect of the structures standing on the said land as admittedly the same were constructed by the petitioners themselves, objection has however, been raised in respect of the tax proposed to be recovered in respect of the said land in respect of which the petitioners admittedly are the tenants of respondent No,2. The main thrust of arguments of Mr. Faez Isa has, firstly, been in respect of section 14 of the Urban Immovable Property Tax Act which although enables the prescribed authority to recover tax from a tenant in occupation of such land or building but the said section further provides for service of notice in respect of the arrears due from the owner. If the person paying rent, wilfully fails to comply with such notice, the prescribed authority is then empowered to proceed against him in the manner provided in the said Act. It would be worthwhile to reproduce section 14 of the said Act, which is as follows:-- "14. Recovery of tax from tenants.--Where the tax due from any person on account of any building or land is in arrears, it shall be lawful for the prescribed authority to serve upon any person paying rent in respect of that building or land, or any part thereof, to the person from whom the arrears are due, a notice stating the amount of such arrears of tax and requiring all future payments of rent (whether the same have already accrued due or not) by the person paying the rent to be made direct to the prescribed authority until such arrears shall have been duly paid, and such notice shall operate to transfer to the 'prescribed authority the right to recover, receive and give a discharge for such rent. If the person paying rent wilfully fails or neglects to comply with the notice aforementioned, the prescribed authority may, after giving him an opportunity of being heard, proceed against him as it would have proceeded under the provisions of this Act against the owner of the building or land in respect of which the tax is in arrears."
4. A plain reading of section 14 clearly indicates that in the first instance it provides for recovery of arrears of such tax from the tenant and such notice operates to transfer to the prescribed authority the right to recover such tax. The said section further empowers the prescribed authority to give a discharge for rent payable by the tenant in respect of such land or building. It also empowers such authority to proceed against the tenant as it would have proceeded under the provisions of the said Act against the owner of the building or land in respect of which such tax is in arrears. The entire scheme of the law, therefore, clearly indicates that initial liability to pay such tax rests with the owner of the building or the land but in case of arrears the same can be recovered from a tenant and in case the tenant fails to discharge the liability of such owner, the same can be recovered in accordance with the coercive procedure provided in section 15 or 16 of the said Act.
5. Although so far as the illegal position referred to above is concerned, no controversy exists in this regard but the main contention of Mr. Abbas Ahmed, learned counsel for the respondent No,2 has been that not only there is an agreement executed by the petitioners with the said respondent, dated 4-5-1985, clause (3) whereof provides for discharge of all liabilities of respondent No,2 by the petitioners in respect of all rates, taxes, charges, assessments, duties, impositions, etc. But, according to its past practice, the petitioners have regularly been discharging such liabilities of the said respondent to respondent No,1. In fact, copies of various challans in this regard have been filed alongwith the memorandum of petition which clearly indicate that the petitioners have been discharging such liability not only in respect of the structures constructed by them but also in respect of the land in question. However, the basic question that requires to be determined is not whether such liability was being discharged by the petitioners without any protest previously but whether any coercive procedure can be adopted by respondent No,1 for recovery of such tax from the petitioners without serving upon them a notice under section 14 of the said Act. As has been pointed out earlier in this judgment, no recovery can be made from the tenant by respondent No,1 by resorting to coercive procedure as provided under section 15 or 16 of the said Act without service of notice under section 14 of the said Act upon the tenant. Compliance with the provisions of section 14 first appears to be mandatory as indicated by the section itself. However, in the present case, we find that apart from sending challans for payment of such tax for the years 1990-91 and 199192 respectively, no further action has yet been taken in this regard by respondent No,1.
Although, according to the terms of the agreement, it apparently appears that the petitioners had taken upon themselves to discharge certain liabilities of respondent No,2 but execution of any agreement between the petitioners and the said respondent is not germane to the questions raised in the present petition. As indicated by the challans (Annexures B/1 to B/10) filed by the petitioners themselves, such liability of respondent No,2 was being voluntarily discharged by the petitioners. However, the question of serving notice upon a party under section 14 of the said Act would only arise when any amount is in arrears. Such an eventuality would arise only when either the owner or the tenant fails to discharge such liability in respect of such tax. Such a contingency evidently has not yet occurred. Consequently, in our opinion, the apprehension of the petitioners on mere receipt of challans appears to be premature and hence misconceived. We would, however, like to clarify that in case, the said respondent proposes to recover any amount from the petitioners by resorting to the coercive procedure as provided in the Urban Immovable Property Tax Act, the same cannot be done without service of notice under section 14 upon the petitioners which, as has been pointed out earlier, is mandatory.
6. In view of the above observations, it is not necessary for us to go into the other grounds raised on behalf of the petitioners by Mr. Faez Isa. We would also like to clarify that in case any coercive method is adopted by respondent No,1 for recovery of the said tax from the petitioners, it would again be open for the petitioners to file a Constitutional petition in case they are aggrieved by such action and all such grounds can be raised by the petitioners at that time.
7. Subject to the above observations, these petitions are disposed of as premature with no order as to costs.