1. ' On 30th June, 1971, the petitioner, who is Managing Director of Park Luxury Hotel, Lahore, sent an application to the Assessing Authority, Lahore Rating Area-H, Lahore, intimating that as demolition of the building known as Park Luxury Hotel, Lahore, has started from the last week of June, 1971, therefore, necessary amendment in the property tax record in that respect be made. The actual application which is contained on page 143 of the departmental file, reads as follows:- "To ' The Assessing Authority, Lahore Rating Area-II, Lahore. 30th June, 1971 ' Subject.-Part demolition of the building known as Park Luxury Hotel, Lahore.
2. ' Sir, ' In connection with our proposed venture of raising Lahore Hilton Hotel at the site of Park Luxury Hotel, the demolition of the latter Hotel has been taken in hand from the last week of June, 1971. Only a set of 22 rooms will be allowed to remain intact till we intimate to you about the demolition of these rooms.
3. ' As required by sub-rule (1) of Rule 12 (Clause 'C') of the West Pakistan Urban Immovable Property Tax Rules, 1958 this intimation is being given to you for effecting necessary amendment in the property tax record. Under the said Rule the intimation of demolition of the property or any portion thereof is required to be given within a period of one month from the date of occurrence of the demolition etc. Petitioner (Sd.) Byram D. Avari Managing Director, Park Luxury Hotel, Lahore.
4. Petitioner (Sd.) Byram D. Avari Managing Director, Park Luxury Hotel, Lahore"
5. ' A copy is forwarded to the Excise and Taxation Officer (Circle-0, Lahore with the request that in the hotel tax assessm ent record necessary amendment may also be effected accordingly.
6. ' This application was attended to in the office of the Assessing Authority (Excise and Taxation Officer, Circle II, Lahore) and first of all a Sub-Inspector visited the spot on 23-8-1971, which was followed by a visit of an Inspector on 25-8-1971 and ultimately by a visit of the Assessing Authority himself on 1-10-1971. However, the matter did not find favour with the Assessing Authority who dismissed the petitioner's application, above mentioned, vide order dated 22-10-1971. It is necessary to reproduce that order. It reads as follows:- "ORDER ' This is an order under section 9 of the West Pakistan Urban Immovable Property Tax Act, 1958 to dispose of an application tiled by Managing Director, Park Luxury Hotel regarding demolition of the building No, SE-19R-87 known as Park Luxury Hotel, Lahore, dated 30-6-1971. In the said application the management of the hotel has stated that part demolition of the hotel has been taken in hand from the last week of June 1971. In fact they wanted that a part of the building should be deleted from the valuation list with effect from 1st July, 1971.
7. ' On the receipt of this application Taxation Sub-Inspector incharge of the circle visited the property on 23-8-1971 and reported that "at present doors of about 20 rooms have been removed and the structure of the building is intact" and further that "local enquiries made also reveal that in July, 1971 demolition bad not been started". The Taxation Inspector incharge of this circle also visited the spot on 25.84971 and reported that few doors have been removed and electric wiring was being dislocated. At that time structure of the building was still intact and most of the building was not yet under demolition.
8. ' The Assistant Manager of the hotel Mr. Abbas appeared before me on 27-9-1971 and insisted that demolition work was taken in hand during June 1971 and the undersigned should personally visit the spot and verify his contentions. I visited the spot on 1-10-1971 along with the Taxation Inspector and Taxation Sub-Inspector. Manager and Assistaut Manager of the hotel were also present during my visit. On that day one wing of the hotel comprising 4 single and 26 double rooms was still intact and was being used for all the purposes. The rest of the building was under demolition and work was in progress in good weed, but rooms and walls of most of the rooms were still intact. On 27-9- 1971 when the Assistant Manager appeared before me I had asked him to produce a copy of the demolition contract to verify that when this contract was signed and became operative and he promised to show us the contract after a few days but on 1-10-1971 he stated that no written contract was signed for demolition and it was only an oral agreement between the management and the firm, carrying out the demolition work. This alternate statement also gives rise to doubts regarding the actual date of demolition.
9. ' After visiting the spot, going through the reports of the Taxation Inspector and Taxation Sub- Inspector and hearing the views of the management I am of the opinion that the demolition work has certainly been started after the commencement of the financial year in August 1971 as reported by the T. I./T. S. I.
10. ' The property tax is charged or remitted on half-yearly basis, therefore, I proceed to order that full property tax is to be charged for the current half year. Case may be taken up in December 1971 for consideration of amendment under section 9 for the purposes of second half-yearly demand with effect from Ist January 1972.
(Sd) Excise and Taxation Officer, Circle-II, Lahore."
11. ' Dated 22-10-1971
2. Just to complete the narration of facts, it may be stated that on 19-10-1971 the petitioner filed another application bearing No, PLH/ 2348/71 which is contained on page 157 of the departmental file and is stamped to be received on 28-10.1971. This application reads as follow- "No, PLH/2348/71 Dated 19-10-71.
12. Park Luxury Hotel, The Mall, Lahore.
13. ' To ' The Excise & Taxation Officer, Lahore (Circle-H).
14. ' Subject.-Demolition of Park Luxury Hotel. Sir, ' Reference our application made under rule 12 of the West Pakistan Urban Immovable Property Tax Act, 1958, in the month of June, 1971 and your visit to the Hotel this month (October, 1971), pertaining thereto.
(2) It has aleady been explained in our above referred application that the demolition of the hotel is as a preliminary phase of our Lahore Hilton Project. The demolition was started on 1-6-1971, and according to the programme the entire demolition process will be completed in 14 months. Sixty persons (Labour) are engaged in the work of demolition and upto this time more than 2/3rd of the hotel premises has come under the process of demolition. The removal of debris by the Contractors will, however, be in phases and according to their convenience but of course according to the schedule set out for the purpose.
(3) In order to give you an idea of the accommodation that was available before starting the demolition and the extent to which the demolition has taken place, the following details may perhaps be helpful:- {{TABLE}} ' Accommodation available Present stage of domolition. Before demolition
(i) 86 rooms for lodgers Only 22 rooms remain-wing adjacent to the West Gate of the Hotel to house the Project Offices, Project Contractor, Staff Offices and the two Directors. fii) 3 Main rooms for offices Demolished-Debris being removed.
15. (Reception Office, Accounts Office and Managerial Office)
(iii) 1-Room (Reception Lounge) Demolished.
16. 1-Room (Card Room for do.
17. Ladies)
18. 2-Rooms (Restaurant-cum- do. Dining Room)
19. 1-Hall (Upstairs for amateur concerts and dances. 1-Room (used as a Bar)
20. 2-Kitchens (One Eurpean One Pakistani)
21. 1-Cold Storage Room (3 Freezers and 1 defreezer were installed).
22. 2-Big Apartments (used as Bakery)
23. 1-Big Room (for opetating two Tandoor's for baking Nans and Tanduri Rooti).
24. 1-Very big Room (used as Pantry).
25. 1-Service Room (used for service of food and drinks with counter).
26. 1-big room (staff dining room).
27. 40-Servant Quarters 18-Motor Garrages 4-Outhouses.
28. Demolished. do. Do. Do. do. Do. Do. Do. Do.
29. 30-Demolished 10-demolition under way. Only 6 Garrages are scheduled to be left after first phase is over. 1- Occupied by Assistant Manager. Demolished.
30. 2-vacated, demolition is under way.
31. 1-will be demolished after phase 1. {{TABLE}}
(4) The above description will show the extent of demolition so far undertaken and the accommodation which will remain until first phase of demolition is over. The demolition of the portion, which now remains will be undertaken in December, 1971/January, 1972, and it will be complete by the close of the current year ending 30-6-1972, and the removal of debris will however be completed in 14 months. The construction of the New Project is expected to start before the close of the current calendar year.
(5) Lastly it is added that all the services and facilities of the hotel are closed. Only 22 rooms for housing the caretakers and those who would be visiting the hotel off and on to supervise the demolition construction, the Project Offices and the offices of two Directors will remain and which too will be demolished after phase I is completed. Thank you. Yours faithfully, for Park Luxury Hotel.
32. (Sd.) (H. K. Khan)."
33. ' On this application, dated 19-10-1971, the Assessing Authority passed the following order on 29-12- 1971 (page 179 of the departmental file):- "Property Unit No, SE-19-R-87 Park Luxury Hotel.
34. ' Mr. Talib Rizvi, Advocate, Counsel for Messrs Park Luxury Hotel is present and heard. In view of the fact that the Park Luxury Hotel is on to its process of demolition and that certain portion has not been demolished. The property is to be re-assessed under section 9 of the Act of West Pakistan Urban Immovable Property Tax Act 1958 in the existing factual position I e. The portion of the building as it stands todate. This assessment shall be brought into force w,e,f, 1-1-1972.
35. ' As reported by the Taxation Sub-Inspector incharge of the circle that at present only 16 rooms on the ground floor are being used for office and residential accommodation of the staff while there are 16 rooms (14 single and 2 double) on the first floor being rented by the owners of lodging purposes only.
36. ' Since the owners are not deriving any benefit from the accommodation on the ground floor, Rs, 500 p. m. Is being assessed w e.f. 1-1-1972.
37. ' For the first floor a formula of Rs< 4 per lodging unit per day has been adopted as the rooms are being used for lodging purposes only and boarding is not provided to the occupants by the management. According to previous formula it was Rs, 5 per day per lodging unit when boarding facilities were also provided. For eighteen lodging units @ Rs, 4 per day per lodging unit the CARY is calculated Rs, 25,920 and after adding Rs, 6,00U for the ground floor, the GARY amounts to Rs, 31,920 which shall come into force from 1-1-1972.
38. (Sd.)
39. Announced 29-12-1971 Assessing Authority, Lahore-II."
3. Reverting back to earlier order dated 22-10-1971, passed on the application of the petitioner, dated 30-6-1971, it may be mentioned that the petitioner filed an appeal which was rejected by the Director, Excise and Taxation, on 17-5-1972. The petitioner filed a revision which also met the same fate and was dismissed by the Commissioner, Lahore, on 31-7-1972. The petitioner tried further and submitted a representation to the Board of Revenue, which was turned down and the petitioner was informed that "with reference to your letter on the subject dated 23-9-1972 addressed to the Governor, as well as Member (Excise & Taxation), Board of Revenue, Punjab, your representation had been considered by Government. It was noticed that the matter had been adjudicated upon and decided by the judicial authorities. Prima facie their findings were such that the Government did not consider it necessary to interfere with their decision". The petitioner has come up in writ petition to this Court against the proceedings pertaining to and orders passed on his application dated 30-6-1971.
4. Learned counsel for the petitioner took me through the various provisions of the West Pakistan Urban Immovable Property Tax Act, V of 1958, (hereinafter called the Act), the West Pakistan Urban Immovable Property Tax Rules, 1958 (hereinafter called the Rules) and the Punjab Tax Manual, Volume II (1948 edition) in order to explain the law and procedure in the matter of making and operation of "valuation Lists" on the basis of which Urban immovable Property Tax is charged. He also referred to West Pakistan Province v. K. B. Andruddin and others (1) and Khan Bahadur Amiruddin and others v. West Pakistan Province (2) where the various relevant provisions have been stated in detail. Learned counsel made particular
(1) PLD 1953 Lah. 433 (2) PLD 1956 FC 220 reference to section 3 of the Act which is headed as "Levy of tax" and lays down that "(1)
40. Government may by notification specify urban areas where tax shall be levied under this Act: Provided that one urban area may be divided into two or more rating areas or several urban areas may be grouped as one rating area; (2) there shall be charged, levied and paid a tax on the annual value of buidings and lands in a rating area at the rate of 10 per cent of such annual value'
41. Provided that where a building is occupied for residential purposes by the owner himself, the tax shall be levied at the said rate of one-half of the annual value of such building if the owner or any member of his does not own any other property in that rating area: Provided further that Government may, by notification, remit fore reasons to be recorded in whole or in part, the payment of the tax by any class of persons in respect of any category of property. Explanation.-The annual value for the purposes of this section shall be the aggregate annual value of all buidings and lands owned by the same person in a rating area; (3) the tax shall be due from the owner of buildings and lands". He then read section 5, which is headed as "ascertainment of annual value" and states that "the annual value of any land or building shall be ascertained by estimating the gross annual rent at which such land or building together with its appurtenances and ally furniture that may be let for use or enjoyment with such building might reasonably be expected to be let from year to year, less:-;a) any allowance not exceeding twenty per centum of the gross annual rent as the assessing authority in each particular case may consider reasonable rent for the furniture let with any such building; (b) an allowance of ten per centum for the cost of repairs and for all other expenses necessary to maintain such building in a state to command with gross annual rent. Such deduction shall be calculated on the balance of the gross annual rent after the deduction, if any, under clause (a); and (c) any land revenue actually paid in respect of such building or land: Provided that in calculating the annual value of any building or land under this section the value of any machinery in such building or on such land shall be excluded". According to section 7 (1) 'A valuation list shall be made by the prescribed authority in accordance with the rules framed under this Act for every rating area so as to come into force either on the first day of July, or the first day of January, and thereatter a new valuation list shall be made from time so that the interval between the dates on which one valuation list and the next succeeding valuation list respectively come into force shall be a period of five years:-Provided that Government may by order: (a) reduce by a period not exceeding one year or extend by a period not exceeding three years the interval which would otherwise elapse between the coming into force of any two successive valuation lists for any rating area, or, where a valuation list has been lost or destroyed by operation of circumstances beyond control, cancel the list, direct the preparation of a new list and order recovery of pending tax to be made on the basis either of the last preceding valuation list or the new list prepared under this proviso; and (b) divide any rating area into parts for the purposes of a new valuation list and determine the years in which the next following valuation list for each of such parts respectively shall be made and come into force". Subsection (2) of section 7 states that "subject to the provisions of any such order as aforesaid, every valuation list shall come into force on the first day of July or the first day of January as the case may be, next following the date on which it is finally approved by the assessing authority and shall, subject to the provisions of this Act and the rules made thereunder (including the provisions with respect to the alteration of and the making of additions to the valuation list) remain in force until it is superseded by a new valuation list". Procedure for prepartion of valuation list is contained in section 18, which states that "
(1) in every case where a new valuation list is intended to be made for any rating area, the assessing authority shall give public notice of such intention in such manner as may be prescribed, and may serve a notice on the owner, occupier or lessee or any building or land in the said area, or on any one of them, requiring him, or them, to make a return containing such particulars as may be prescribed. (2) Every person on whom a notice to make a return is served in pursuance of the provisions of this section shall, within thirty days of the date of the service of the notice, make a return in such form as is required by the notice, and deliver it in the manner so required to the assessingauthority. (3) If any person on whom such notice has been served fails within the required period to submit such return, the assessing authority may proceed to value such property in such manner as it deems fit". Section 19 deals with powers of assessing authority to require returns at any timeand states that "if the assessing authority at any time desires any person, who is the owner, lessee or occupier of any building or land wholly or partly within the rating area, to make a return with respect to any of the matters regarding which a return may be prescribed, it may serve a notice on that person requiring the return, and that person shall, within thirty days from the service of the notice send the required return to the assessing authority: Provided that the assessing authority may, in its discretion, extend the period for the delivery of any such return". In Section 9 it is written that "subject to such rules, if any, as the Government may think fit to make in this behalf, the assessing authority may at any time make such amendments in a valuation list as appear to it to be necessary in order to bring the list into accord with existing circumstances and in particular may: (a) correct any clerical or arithmetical error in the list; (b) correct any erroneous insertion or omission or any misdescription; (c) make such additions to or correction in the list as appear to the authority to be necessary by reasons of: (i) a new building being erected alter the completion of the valuation list; (11) a building included in the valuation list being destroyed or substantially damaged or altered since its value was last previously determined; (iii) any change in the ownership or use of any building or land: Provided that not less than fourteen days before making any such amendment in the valuation list for the time being in force, other than the correction of a clerical or arithmetical error, or the correction of an erroneous insertion, omission or misdescription, the assessing authority shall send notice of the proposed amendment to the owner of the building or land and shall also consider any objection thereto which may be made by him".
42. This is to be read with rule 12, which states that "(1) the owner of every property shall, within a period of one month from the date of occurrence of any transfer, demolition, destruction, or addition, report to the assessing authority of the rating area: (a) all transfers thereof by sale, gift, exchange or perpetual lease; (b) any increase in rent subsequent to the date on which the value of such property was last assessed; (c) the demolition or destruction of the property or any portion thereof; and (d) any substantial addition to the property whether or not such addition has occasioned an increase in sent. (2) If a building occupied by an owner for his residence and exempted from tax under clause (c) of section 4 of the Act ceases to be so occupied, the owner shall, within thirty days, report the fact to the assessing authority". Section 12 is headed as "tax when payable" and states that "the tax shall be payable half-yearly by such dates as may be prescribed: Provided that Government may, by notification, direct that in any rating area; (I) the tax shall be paid yearly; (Ii) the tax for a specified period shall be paid separately".
43. To complete the introduction of the subject in general, it may be mentioned that in Pakistan the property-tax is levied on the annual value of buildings and lands. In America the tax is levied on the capital value, and the property to be taxed is not confined to buildings and lands ; it extends to all property, tangible and intangible, including bank balance. In Pakistan the property tax is payable by the "owner"-(as this word is defined in the relevant statute). In England property tax is payable by the owners while in Scotland it is payable half by the owner and half by the occupier. In Bombay it is payable by the occupier, while in Calcutta half by the owner and half by the occupier like Scotland. In England and America, the tax on property is generally regarded as a local tax, and is placed at the disposal of local bodies. In Pakistan, India, and some other countries property tax is both a provincial and a local tax. (Manual of Municipal Administration Law and Practice by Masudul Husan) (1967 Edition) (Part I, page 261). It may further be indicated that West Pakistan Act V of 1958 follows in general the principles laid down in the Punjab Act HI of 1911 or as a matter of fact of various similar Acts of various other Provinces of Pakistan/India. For further history of this tax in Lahore see Ashfaq-ur-Rehman Khan v. The Government of the Punjab and 3 others (1).
5. Keeping in view the aforesaid provisions of law, the first point argued by the learned counsel for the petitioner was that there is a distinction from the point of view of their enforcement between what he called the Initial valuation list which is of a general type and which is published and framed under section 7(1) of the Act on the one hand, and the individual amendments and alterations of the kind involved in this case made in that list on the other hand. The contention seems to have merit. The initial general list, once it is finally approved, takes effect from the first day of July or the first day of January, as the case may be, next following the date on which it is finally approved by the assessing authority. Once it comes into operation it becomes a current list and is to remain in operation generally for five years as laid down in section 7(1) of the Act. As five years is a long period and it is possible that in between many circumstances may take place which may reflect on valuation of any individual property as given in the initial list hence section 7(2), section 9 and rule 12 authorise and contemplate making of necessary amendments, alterations and changes therein from time to time. The distinction between the amendments and alterations in the current list on the one hand and the initial list on the other hand is that whereas the initial general list comes into operation, as already mentioned, from the next January or July following its approval by the assessing authority but the individual amendments and alterations of the kind involved in this case will take effect from the date when those alterations or amendments actually have taken place and in their case there is no postponement to any ensuing January or July.
44. Another thing to be kept in mind is that the tax is to be charged, B as section 3 states, on the annual value of building and land in a rating area at the rate of (as the law at the relevant time was)-10 per cent. Of that value. For this purpose the procedure is to prepare what are called "valuation lists" which contain the annual value of each property. This list is prepared in advance and takes effect from the first of January or first of July, as the case may be, next following the date on which it is finally
(I) PLD 1975 Lab, 23 ' approved. In other words, if I can say so, it is a provisional advance assessment, from one point of view, of the annual valuation of the property of an owner for a year. However, if during the financial/charge year concerned the value of any particular individual property has dwindled down or the property has been damaged or altered since its value was previously determined the assessee has a remedy within the scope of section 9 to get it amended in order to bring it into accord with existing circumstances. The scope of the phrase "to bring the list into accord with existing circumstances" as laid down in Khan Bahadur Amiruddin and others v. West Pakistan Province is very wide and is not confined merely to the illustrative grounds contained in the section and the circumstances warranting changes may be varied and numerous. However, when such a case is in fact made out during any financial year or charge year concerned and the assessee is in a position to show that the valuation as fixed in accordance with the general initial valuation list is no longer realistic due to the incidents of the kind involved in this case then the effect to that change should be given in that very financial/charge year and not the next financial/charge year, especially when the tax is charged for a financial year in the same year. To emphasise again the phrase "to bring into accord with existing circumstances" in cases of the present kind would mean that those circumstances are to be given effect to there and then, because, if otherwise their effect is to be postponed to some future date then it is not bringing the list into accord with the existing circumstances. The basic general list prepared under section 7(1) may start operating from the dates mentioned in subsection (2) of section 7, but when individual changes of present kind are brought about in the value of the property under section 9 then they are not to be postponed for being given effect to in the next financial year/charge year or next paying period but will reflect on the annual value as a whole for the year concerned. It may be noticed that whereas with regard to initial basic list the time for its enforcement is specifically stated in section 7 but with regard to amendments/ alteration of the present kind no such specific stipulation exists in the Act which means that each matter is to be governed by its own relevent facts and circumstances. Sometime there may crop up cases where alterations and amendments may be retrospective as was the case in Khan Bahadur Amiruddin and others v. West Pakistan Province where while preparing basic general list 'land' was totally omitted and the list was prepared only regarding houses and buildings in a rating area. The Federal Court held that when such a general list is amended so as to provide for the omission hereinbefore mentioned, the general amendments will be retrospective, because, these general amendments constituted supplementary lists in the form of being supplement to and being part of the original basic lists. This means that each case will depend upon its own facts and circumstances and no hard and fast rule in this respect can be laid down.
45. In some cases amendments/ alterations may have retrospective effect and in some cases they may have just immediate effect in presentie onward from the date of the relevant occurrence but reflecting on the annual value of the year concerned as a whole. The words "existing circumstances", in my opinion, have to be interpreted with reference to the subject-matter to which they are sought to be applied. If the subject-matter was such which existed at the time when the basic general list was prepared/approved, for example, by omitting or ignoring the said subject- matter then if the list is amended or altered qua that subject-matter then in the context that subject-matter will be considered to be added into or exist in the said list from the date when the aforesaid list was prepared/approved. In this way the amendment or alteration will bring the basic general list into accord with the circumstances which existed but were omitted at the time of its preparation/approval. This is one aspect of these words. The other aspect is that when the subject- matter, for example, sought to be omitted is such which though existed at the time of the preparation/approval of the basic general list but has thereafter undergone a change due to destruction, demolition or damage etc. Then in that case the list if amended will be brought into accord with the circumstances which prevailed at the time of the incident concerned. In this respect the existing circumstances will be circumstances existing in presentie at the time of the relevant incident whereas in the earlier example they were those which existed at the time of the preparation/approval of the general basic list. It is for this reason that I have said that the conn3tation of these words will depend upon the facts and circumstances of each case and no hard and fast rule on the subject can be laid down. The nature of the circumstances concerned, it is thus obvious, will determine the date of their operation and not the date when they are inserted in or approved for insertion in the list because that process may take a considerably long time. This is further clear from subsection (2) of section 7 itself which states that the initial general valuation list shall remain in force until it is superseded by a new valuation list, but this is "subject to the provisions of this Act and the rules made thereunder including the provisions with respect to the alteration of and the making of additions to the valuation list" which obviously means that before regular quinquennial or new lists are introduced changes of the kind involved in this case can in the interregnum be made and given effect to according to the circumstances brought on record or proved within the scope of section 9. Another consideration which is relevant in this context and at this stage is that when a building is dwindled down, destroyed cry damaged, partially or wholly, by e.g. Vis major, or acts of parties or acts of God, that reflects on the "annual value" (or value of the property for the concerned charge year) as a whole and it cannot be said that for the period before the happening of the relevant incidents, hereinbefore mentioned, the valuation would remain the same as fixed in the valuation list and period affected will always be only that which will ensue from the next charge year and not the current charge year. The tax is on "annual value" of a property i,e, that value which it hypothetically retains throughout the charge year concerned and not on bi-annual value. This is so because levy of charg is not on bi-annual valuation or basis, but on annual valuation and basis. The basis of charge is annual, but its payability is bi-annual. The tax on buildings and land is not in the nature of a fixed levy on the ownership of property, but is in reality and substance a tax on the rental value of buildings and lands. See Chunna Mal Soling Barn of Delhi v. Commissioner of Income-tax Punjab (1) a case under the Punjab Municipal Act which authorised a Municipal Committee to levy a similar tax. In "the Law of Municipal Corporation in British India" by P. D. Aiyanger (second edition) (page 299), it is written with reference to The Chairman of the Municipal Council, Nellore v. Dwarpally Kottemma (2) that "The tax on buildings and lands is a yearly and not a half-yearly tax ; and it is made payable in two instalments for the sake of convenience. The amount due for the whole year has to be ascertained and entered in the assessm ent register. The circumstance that this tax is made payable in two equal half-yearly instalments does not make the amounts two distinct taxes or assessments absolutely independent of
(1) A 1 R 1931 Lan. 320 (2) I L R 30 Mad. 423 each other. In other words, as soon as the assessment for the year is fixed, a liability for the same at once accrues, though that liability may be discharged in two instalments".
46. ' In the case of Khan Bahadur Amjruddin and others v. West Pakistan Province it was held by the Federal Court of Pakistan (now the Supreme Court) that the tax is an annual tax. Section 3(2) of the Act has already been reproduced in para. 4 of this judgment, but to revert to it again and to paraphrase it in my own words, for the purpose of emphasising the point under examination, it says that the tax shall be charged on annual value, it shall be levied on annual value and it shall be paid on annual value of a building or land. Law has always maintained a distinction between charge-8 ability and payability of a tax. See Commissioner of Wealth Tax v. Mst. Fozia Moghis (1) and Sh. Lhsan Ilahi & Co. v. Commissioner, of Income-tax (2). Chargeability is fixed first and period of payability may be postponed. In this case the chargeability is on the annual value of a building as fixed in the valuation list (section 3) but payability is bi-annual as laid down in section 12 i,e, on half-yearly basis. The authorities concerned in this case have not maintained the distinction between these two concepts and have mixed them up which has led to wrong results. What the petitioner was claiming was the change in the basic chargeability for the charge year 1971-72 (i,e, year starting from 1-7-1971 and ending 30-6-1972). His case was that the annual value of the property has dwindled down due to material destruction, therefore, the basis of chargeability may also be proportionately reduced with respect to the charge year concerned. However, what the authorities in this case have done is that while they have accepted the dwindling down of the property, its value and income, they have not given effect to it in the sphere of the reduction of the quantification of tax in that very financial/ charge year as a whole, but have postponed it to be given effect to only partially in the next paying period apparently considering that the two amounts of each half-year were two distinct taxes or assessments absolutely independent of each other.
47. The view of the assessing authority in its impugned order dated 22-10-1971 which was maintained by the higher authorities that "the property tax is charged or remitted on half-yearly basis" is obviously without lawful authority because chargeability as earlier explained is distinct from payability and chargeability is annual and only payability is bi-annual. It is to be remembered that the tax under the Act is not to be levied in vacuum without, for instance, existence of any property during the current financial/charge year and similarly if during any charge year concerned the property has considerably been demolished or destroyed and thus partially does not in fact exist it cannot be considered to fictionally exist so as to ask a person to pay property tax for the same, because, it P existed at the time when the initial list was prepared e.g. Five years ago or at the beginning of the charge year, inasmuch as, if that were so then it would make provisions of section 9 and Rule 12 as redundant which contemplate making of alterations, amendments and changes in the valuation list to bring it into accord with existing circumstances. The tax is on property and not on a person. There is an essential nexus between the property and its annual value on the basis of which tax on a property is charged. The title of the relevant enactment is "the West Pakistan Urban Immovable Property Tax Act". Its description is 'an Act to consolidate the law relating to the levy of a tax on urban immovable property in the
(1) 1975 (32) Taxation 1 (2) P L .11974 Lah. 126 ' Province of West Pakistan". Its preamble states that "whereas it is expedient to consolidate the law relating to the levy of a tax on Urban Immovable Property in the Province of West Pakistan ; It is hereby enacted as follows". This will show that the existence of a property for levy of a tax thereon is very essential, inasmuch as, without property there can be no tax. It is a consistent approach, therefore, in line with the nature of the tax to hold that if with, for example, complete destruction or evaporation of a property the tax evaporates then similar effect should take place when destruction is partial but material and since the tax is on annual value i,e, yearly value in the cases hereinbefore explained, it is the annual value which will be effected and undergo a corresponding change. It is to be remembered that the definition of the annual value and its concept as earlier reproduced shows that it is already based on what may be called "hypothetical tenant" when it says that it is to be fixed with reference to the gross annual value at which a property may be reasonably expected to be let from year to year. In other words, the property to be treated is to be assumed to be let and the fact that it is occupied by the owner is immaterial. See London County Council v. Erith & West Ham (1) and The Queen v. The School Board for London (2). The Act in this respect it is obvious is based on hypothetical tenants but there is no hypothetical fiction regarding existence or continuous existence of a property for the whole of a year which is to exist as a fact and which fact, if does not exist, the other concept of hypothetical tenancy does not arise.
6. Learned Advocate-General, however, referred to paras.
48. 4.6., 4.7., 4.8., and 4.9 of the Punjab Tax Manual, Volume It, Part I (1948 Edition) (a reference book and guide published under the authority of the Excise and Taxation Commissioner in regard to administration of the Punjab Urban Immovable Property Tax Act XVII of 1940, since repealed), which read as follows :- ' Para. 4.6. Amerdment of Valuation List (section 9). -(a) After the period under section 8(2) of the Act for filing objections to a Draft Valuation List is over, an Assessing Authority should not ordinarily amend the Valuation List, except on the grounds mentioned in section 9, clauses (a), (b) or (c) notwithstanding the fact that the objector was not served with a notice in Form 'B'. The question of service of such notice, after the Valuation List has been properly published for inviting objections, becomes immaterial.
49. ' Implications of section 9.-Section 9 aims at correction /of clerical mistakes only, e g , where a wrong person has been shown as the owner, or where a property unit has wrongly been held to be taxable, owing to the fact that two persons of the same name held properties, which when taken together were taxable. It is not to be constructed too widely. It is not apparently intended to provide an alternative method by which an assessee who was over-assessed, can move the Assessing Authority to revise any assessm ent originally included in the Draft Valuation List, published under the authority of subsection (1) of section 8 of the Act on the grounds that it was wrong when originally made. Evidently the object of section 9 Is to allow the Assessing Authority to make changes in the List in such cases, where circumstances have altered subsequett to its final approval in such a manner as to necessitate such alterations. Therefore, a person although aggrieved who had failed to object to an assessment under
(1) (1893) A C 562 (2) (1886) 17 Q B D 738 ' subsection (2) of section 8 could not object under section 9, for, there would have been no alteration in the circumstances subsequent to the approval of the List. The remedy for that person lies in his taking action under section 10 of the Act. It is true that the wording of the first paragraph of section 9 may be interpreted so as to infer that the powers of the Assessing Authority to make alterations was not in any way restricted by the provisions of section 8, but the instances quoted in clause (c) of section 9 seem to indicate that the general intention of section 9 is in fact restricted in the manner related above. In view of this the Collector could not in any appeal under section 10 remand an application made in such circumstances under section 9 for decision on merits, since the application should never have been made.
50. ' Section 9 of the Act empowers an Assessing Authority to make such amendments in a Valuation List as appear to him to be necessary in order to bring it into accord with existing circumstances, but at the same time it imposes a statutory obligation on him to send a notice of the proposed amendment to the owner of the building or land in question, and to consider any objection thereto which may be made by him. If the owner contends that he did not object to the original assessm ent for the simple reason that it imposed no financial liability on him, it would be the duty of the Assessing Authority to consider this objection on its merits, and to dispose it of in accordance with law. The mere fact that the objection in respect of the property already owned by him is barred by time, would not prevent the owner from pressing it when proceedings are taken under section 9 of the Act, as it is open to him to make any objection that he likes.
51. ' As to whether a current valuation can be amended in order to bring it into accord with existing circumstances on the ground of fluctuations in rent of the property concerned, without any change of the type mentioned in clause (c) of section 9 of the Act, it is explained that the scheme of taxation provided by the Act militate against the conversion of the tax into a fluctuating tax, varying with mere changes in rent. This is because the valuation of a property is not based on the rent actually derived from it, but specifically on the rent at which such property may reasonably be expected to let from year to year Le. a hypothetical or assumed figure, which, if unchallenged at the proper stage, becomes the definitive figure and remains so for five years, subject to the other provisions of the Act. The tax is in essence fixed once every five years and variation is only permissible when a major change like the one mentioned in clause (c) occurs in relation to a property.
52. ' After the publication of the Final Valuation List, if some houses are newly built on the land appartenant to a property (consisting of a bungalow with its compound and the outhouses) increasing its rent out of proportion to the extra-accommodation provided, the power conferred under section 9 of the Act is exerciseable for the purpose of bringing the List into accord with the existing circumstances. In case the alteration of such a property is substantial within the meaning of section 9(c) (ii), thereby attracting the exercise of the power of amendment, the authority exercising such power cannot ignore other material changes (e.g. Increase in rent) which have occured, and which are relevant to the valuation. The valuation of the whole property, therefore, needs amendment in accordance with the rent being yielded by it.
53. ' Issue of notices under section 9.-(b) According to the proviso to section 9, it is obligatory for the Assessing Authority to issue a notice in Form 'N' to the person concerned before making the requisite amendment in the Final Valuation List.
54. ' The question whether such notices should issue in respect of the property only which has been newly acquired or in respect of both the properties-the property which was already held by the owner and the new property acquired by him-is one of secondary importance, and must doubtless, be answered with reference to the needs of a particular case. In most cases all the information in respect of an owner's holding is already in the possession of the Assessing Authority and all that is required is that the authority should obtain information in regard to the new acquisitions made.
55. ' Under the proviso to section 9 of the Act, it is necessary to issue a notice in Form 'N' only in those cases pertaining to amendment of the Final Valuation List, which fall under clause (c) of that section.
56. ' In the case of any change in the ownership of a property either by reason of death of the assessee or sale of the property, notice of amendment of the List should be issued to the heirs of the deceased assessee, and the vendor (owner) as well as to the vendee so that all persons likely to be affected by the change might have an opportunity to file necessary objections. Further in order to avoid any hardship, it is desirable that notices sbould also be issued when amendments are proposed to be made to rectify the omissions or mis-descriptions mentioned in clause (b) of the section, where this is likely to entail imposition of or increase in the tax".
57. ' Para. 4.7. "Amended entry in the list.-Whenever any alteration is necessitated in the List, the existing entry should be crossed out and a revised entry made under a new number at the end of the block concerned. The number of the new entry should be noted against the original entry and vice versa".
58. ' Para. 4.8. "The date from which an amendment in a Valuation List under Section 9 takes effect.-(i) In the case of clerical or arithmetical errors mentioned in clause (a) and misdescriptions mentioned in clause (b) of section 9 of the Act, the amendment will take retrospective effect, i,e, from the date on which the current Valuation List came into force.
(ii) in all other cases mentioned in clauses (b) and (c) of section 9, the amendment will take effect from the 1st April or October (according as the current Valuation List came into force in April, or October) (now it should be read as January or July) following the date of the amendment, and
(iii) the tax is charged or remitted for an assessment year, and the actual date of an amendment is, therefore, immaterial".
59. Para. 4.9. "Register for proceedings under Section 9.-A record of the proceedings taken under section 9 should be maintained by the Assessing Authority for each rating area in the register in P. T. Form 6 for the purpose as in Appendix B".
60. ' The learned Advocate-General submitted that alterations in the valuation (or valuation list) take effect from the January or July next following the date when the alterations and amendments were made. In other words amendments and alterations also take effect in the same way as the basic original valuation list takes effect. As already explained this cannot be a correct approach because, firstly such an interpretation does not flow from section 9 and Rule 12 and even otherwise the above provisions themselves indicate certain alterations/amendments to be rather retrospective. The Assessing Authority who was present in person submitted that there appears to be a conflict between para. 4.8 (ii) and 4.8 till) inasmuch as, the former indicated some different period for operation of amendments and the latter indicated that the tax was to be charged on annual basis and the actual date of amendment was immaterial which means that changes and alterations will affect the whole annual value for the charge year concerned. He also clarified that tax is being charged by the department for a particular charge year in the same year hi-annually and that each charge year is the same as the financial year. The actual process is that, for example, for financial/charge year 1971-72 starting from 1-7-1971 and ending on 30-6-1972 demand for tax for first half of the year I e. 1-7-1971 to 31-12-1971 will be issued in the month of July 1971, because, as explained to me by the Assessing Authority, the demand is always made in advance. Similarly for the second half of the aforesaid financial year/charge year i,e, 1-1-1972 to 30-6-1972 the demand will be made in advance somewhere in January 1972. He further submitted that the tax is really an annul tax though its payment is demanded bi-annually in the manner hereinbefore explained by him. Keeping all these aspects in view, I am of the opinion that if the tax is on annual value then if within the scope of section 9 any relevant material change of the kind involved in this case has taken place the same should be given effect to in that and for that very year as earlier elaborated. Otherwise for example if after start of a financial/charge year from first July a property is completely destroyed, damaged or demolished, say by a blast, or any other catastrophe of the kind of vis major or act of God, then will it mean that despite the non-existence of the property the tax shall have to be paid on it, or in the alternative, suppose the owner applies for alteration and amendment of the valuation of his property by a bringing the aforesaid catastrophe to the notice of the authorities concerned who unfortunately take time to finalise it, with the result that the financial year concerned has, in the mean time, run out then can it be said that effect of the occurrence shall be given in and postponed to January or July next following the date when actual entry of alteration/amendment is made in the list. In that eventuality the owner will have to go on paying tax without any fault on his part and without the existence of the property in the field. I do not think that the law contemplates taxation on so fictional and notional basis. No doubt in the comments as contained in the Punjab Tax Manual with regard to section 9 of the Punjab Act XVII of 1940, which corresponds to section 9 of the West Pakistan Act V of 1958, there is an indication that amendments and alterations will also take effect from the ensuing January of July following the date of amendment, but, in my opinion, the said construction is not available on the relevent provisions of the statute especially when such a construction, as pointed out by the assessing authority himself, was in conflict with Para. 4.8 (iii) as earlier noticed. That this cannot be a universal rule is evident from the fact that certain alterations and amendments instead of taking effect on the dates hereinbefore mentioned rather take effect retrospectively. At this place, just for the sake of comparison, I may refer to subsection
(10) of section 37 of an English Statute known as the Rating and Valuation Act 1925 (15 & 16 G E 0. 5, c. 90) (as reproduced at pages 1117-1118 in "Ryde on Rating" eighth edition) which states that "subject as hereinafter provided, an amendment made in the valuation list in pursuance of this section shall, in relation to any rate current at the date when the proposal in pursuance of which the amendment was made was served on the rating authority, or, where notice of the proposal was given to the occupier or owner, as the case may be, of the hereditament affected, current at the date when the notice was so given, be deemed to have had effect as from the commencement of the period in respect of which the rate was made, and shall, subject to the provisions of this section, have effect for the purposes of any subsequent rate, and the provisions of subsection (2) of the last preceding section of this Act shall have effect accordingly (they are provisos authorising refund if any excess tax is paid in that respect)-Provided that, in the case of an amendment consisting of the inclusion in the valuation list either of a newly-erected or newly constructed hereditament or an altered hereditament which has been out of occupation on account of structural alterations, or of the alteration in the valuation list of the value of any hereditament, where the value thereof has been affected by the making of structural alterations or by the total or partial destruction of any building or other erection by fire or any other physical cause, the amendment shall have effect only as from the date when the new or altered hereditament comes into occupation, or as from the happening of the event giving rise to the alteration of the value of the hereditament as the case may be, or in a case where tithe, tithe commutation rent-charge or other payment in lieu of tithe is extinguished in whole or in part, as from the date on which the extinction takes effect. Provided also that in the case cf an amendment made on or after the first day of October nineteen hundred and twenty-nine, by reason of any hereditament having become or ceased to be an agricultural, industrial or freight transport hereditament the amendment shall have effect only as from the date when the hereditament became or ceased to be such a hereditament". This will show that in the absence of any specific indication that the effect of an amendment of the kind involved in this case is to be postponed to any particular future date it will be a natural construction-(which if I can say so is accepted in various rating Acts)-to hold that the amendment of this type will be operative on the current financial/charge year concerned because it is to be reckoned from the date of the relevant Incident itself. This is natural construction and interpretation of the Statute under examination and in the absence of any indication to the contrary, I am not prepared to accept any fictional construction as suggested by the learned Advocate-General, in this case. I must clarify that I have quoted the English law just to illustrate my point of view that distinction of the type which I have made regarding incidents of the kind involved in this case and the view which I have taken is statutorily in force in various rating Acts in England and the West Pakistan Act V of 1968 on its own wording and phraseology is also capable of and susceptible to a similar construction and result.
7. In the face of the aforesaid legal position, if we attend to the peculiar facts and circumstances of this case, it is the view of the departmental authorities themselves that the property did substantially dwindle down and was destroyed, speaking broadly in the financial year/charge year 1971-72. This is a finding of fact and has to be accepted in the course of writ jurisdiction especially when it is based on relevant evidence and attending circumstances. If that is so then to hold that the demolition will not affect the annual value for the whole financial year/charge year concerned is without lawful authority and indies respect the departmental authorities have refused to exercise jurisdiction which on the subject vested in them under the law by assuming that the two amounts of each half year period were two distinct taxes of assessment absolutely independent of each other and that effect to the demolition of the building was to be given on some future date and not in the same charge year concerned as a whole. Holding accordingly the present writ petition shall have to be accepted with the declaration that the impugned orders are without lawful authority and of no legal effect against the petitioner and shall have to be accordingly quashed, with the result that the case shall have to be remanded to the assessing authority to make fresh assessm ent of the tax in the light of the findings recorded and observations made above. It may be mentioned that the learned counsel for the petitioner argued that the method of evaluation adopted in this case, when about more than half of the building stood demolished and was not let- able, was not in accordance with law on the subject. Reference in this respect was made, to Corporation of Calcutta v. Moti Chand Chowdhury and others (1) which was a case under Calcutta Municipal Act III of 1923 and where the relevant provision was contained in section 127 of that Act, and where it was held that where one half of a building is ordinarily let out but the other half is generally not let, assessm ent of the entire building shall be based on one method i,e, either letting value or building value and not under two different methods for different portions of the same building. Reference was also made to Corporation of Calcutta v. Province of Bengal (2) where it was held that where a small portion of a building however, is let out, but the major portion of the building cannot be assessed on "rental basis", the whole of the building should be assessed on "valuation basis". Learned counsel argued that on the facts and in the peculiar circumstances of this case the authorities concerned applied wrong law even in the matter and method of evaluation besides not comprehending the scope, extent and effect of demolition and the impugned orders suffered from inherent vice and invalidity as was the position in the case Corporation of Calcutta v. Moti Chand Chowdhury and others where it was laid down that each building is treated as a unit of valuation and its value must be ascertained in conformity with one or other of the two prescribed methods and that it cannot be valued as to one part by one method and as to another part by another method, for in that case the building as a "unit" could not be said to have been valued by either method and that in cases where any portion of a building is to be assessed separately from the other portion of such building it is to be deemed as a separate building or a separate unit by itself. These guidelines and principles, it was argued, had not been kept in view by the assessing authority in a hybrid building of the present kind. I would have attended to this aspect of the case as well, but as I am minded to remand the case, therefore, the point is left open and the petitioner will be at liberty to raise the same before the assessing authority if he is so advised. Before parting with this case I may observe that the present is a case of demolition, destruction or damaging of property and the enunciation of law made by me is to be confined to such incidents, leaving other cases to be determined on their own facts and circumstances and the respective incidents involved therein.
8. The upshot of the above discussion is that the present writ petition is accepted, the orders impugned in this case are quashed and the case is remanded to the assessing authority to make fresh assessm ent of the tax in the light of the findings recorded and observations made above. As the point was of an original and first impression and was not free from difficulty, there shall be no order as to costs. d.
(1) AIR 1939 P C 20 (2) AIR 1940 Cal. 47