1. ' ZAFFAR HADI SHAH, J.--The facts leading to the filing of the above petition and as disclosed in the petition are that the petitioner is an authority created by virtue of Water and Power Development'
2. Act, 1958. The main object of the petitioner-authority is to create, set up, establish, manage, control the generation, transmission and distribution of electrical power and to improve, explore and envelop water resources by exploring innovating an independent irrigation system free from water logging and salinity for the purpose of boosting agricultural production. The importance of the projects of the petitioner-Company are well within the easy and quick perception of every citizen of the country because of the supply of electric energy for different purposes by which the domestic Homes, commercial establishment, operational factories are illuminated and heavy machines are propelled by mobilization of electric energy and irrigation resources.
3. ' For the purposes of cooperation and coordination amongst the four provinces of Pakistan and the Federal area of capital Islamabad, an Inter-Provincial Coordination Division has been formed in the Cabinet Secretariat, Government of Pakistan which holds its meeting from time to time so that the implementation of the various policies under the public interests are formulated and completed in the minimum possible shortest time. The Coordination Committee in its meeting held on 11-4-1993 under the Chairmanship of senior Minister Government of Pakistan took many decisions. One of the decisions was as under:-- "It was unanimously decided that the Provincial Governments would exempt WAPDA from payment of property tax and octroi on its equipment and materials. It was also decided that WAPDA would charge electricity tariff on street lights and drinking water schemes under its purview throughout the country, on domestic rates. It was further decided that Balochistan Government's proposal to charge domestic rates on Agricultural Water Supply Schemes under the purview of WAPDA, will be taken up in the next meeting of IPCC on receipt of Working Paper from the Government of Balochistan."
4. ' The Provincial Governments of Balochistan and Punjab have implemented the aforesaid decision and the petitioner has already started charging the Government of Sindh, at the lower rates as decided in the said meeting but the respondent Government has not been implementing its part of legal and Constitutional obligations resulting from the said decision.
5. ' If the Government of Sindh does not give response and abide by the decision of the Inter- Provincial Coordination Committee, the petitioner authority is likely to expose to adverse financial position as grave as to put behind the appointed and scheduled time for the completion of its different projects situated in the Province of Sindh. The petitioner also submitted that the respondent may be ordered to abide by the decisions of the Inter-Provincial Coordination Committee and instruct and local and Provincial Authorities not to charge octroi on any goods brought into and taken from the territories falling in the Province of Sindh.
6. ' We have heard Mr. Abdul Qadir Siddiqui, learned counsel for the petitioner and Mr. Muhammad Saleem Sammo, A.A.-G., representing the State.
7. ' The petitioner's counsel contended that under section 8 of the Water and Power Development Authority Act it is the function of the authority to prepare, for the approval of the Government, a comprehensive plan for the development and utilization of the Water and Power resources and to frame schemes. Learned petitioner's counsel further contended that the Government of Sindh, in compliance to the decision of the Inter-Provincial Coordination Committee, had to exempt WAPDA in respect of octroi. He further contended that under Article 165 of the Constitution of Islamic Republic of Pakistan, the properties of the petitioner are not liable to taxation. The petitioner's learned counsel relied upon the following cases: ' PLD 1964 Pesh. 167 (Wali Muhammad v. General Manager Electricity WAPDA Lahore and others); ' PLD 1973 Lah. 188 (Abdul Razzak Malik v. The Water and Power Development Authority); ' PLD 1985 SC 97 (Central Board of Revenue and another v. SITE); PLD 1975 Karachi 128 (SITE v. Central Board of Revenue); 1992 MLD 1730 (Associate Cement (State Cement) Corporation of Pakistan (Pvt.) Ltd. v. Government of Sindh); ' On the other hand, the learned A.A.-G. Opposing the petition, contended, that the petitioner cannot be granted exemption from levy of octroi in respect of their properties and he relied upon the case reported in 1993 SCMR 468.
8. ' A similar circumstances, it has been approved by the Courts that the veil of incorporation can be lifted to find out the realities. Applying this course in the present case, various provisions of Water and Power Development Authority Act, would show that the object of creation of the petitioners was to manage and control the generation, transmission of electrical power and to explore and develop water resources. Section 8 of the WAPDA Act is reproduced as under:-- "8. General powers and duties of the Authority and framing of Schemes.---(1) The Authority shall prepare, for the approval of the Government, a comprehensive plan for the development and utilization of the water and power resources of West Pakistan on a unified and multi-purpose basis.
(2) The Authority may frame a scheme or schemes for the Province or any part thereof providing for all or any of the following matters, namely:--
(i) irrigation, water supply and drainage and recreational use of water resources;
(ii) the generation, transmission and distribution of power, and the construction, maintenance and operation of power houses and grids;
(iii) flood control;
(iv) the prevention of waterlogging and reclamation of waterlogged and salted lands;
(v) inland navigation; and
(vi) the prevention of any ill-effects on public health resulting from the operations of the Authority.
(3) Every scheme prepared by the Authority under subsection (2) shall be submitted for approval to the Government, with the following information:--
(i) a description of the scheme and the manner of its execution;
(ii) an estimate of costs and benefits; the allocation of costs to the various purposes to be served by the scheme and the amounts to be repaid by the beneficiaries; and
(iii) a statement of the proposals by the Authority for the re-settlement or rehousing of persons likely to be displaced by the execution of the scheme.
(4) The Government may sanction or may refuse to sanction or may return for reconsideration any scheme submitted to it under this section, or may call for such further details or information about the scheme, or may direct such further examination of the scheme as it may consider necessary."
9. ' Section 10 of the said Act is also reproduced as under:-- "10. Survey and experiments.-The Authority, if it considers this necessary or expedient for carrying out the purposes of this Act, may:--
(a) cause studies, surveys, experiments or technical research to be made; or
(b) contribute towards the cost of any such studies, surveys, experiments or technical research made by any other agency."
10. ' Further section 17(1B) is as under:-- "(1B) Service under the Authority is hereby declared to be service of Pakistan and every person holding a post under the Authority, not being a person who is on deputation to the Authority from any Province, shall be deemed to be a civil servant for the purposes of the Service Tribunals Act, 1973 (LXX of 1973)."
11. In view of the above, we find that the petitioner is carrying on its functions on behalf and for the Government as such the properties, equipments A and material belonging to the petitioner, in fact, vest in the Federal Government. The above observation finds further support from the minutes of the Inter-Provincial Coordination Committee which will be referred to and dealt with hereinafter.
12. ' The contention of the petitioner's learned counsel that the Government of Sindh should grant exemption to the petitioner, in respect of octroi, is inter alia based on the decision of the Inter- Provincial Coordination Committee, minutes of which appear at page 53 of the record produced by the petitioner alongwith the petitioner and the decision arrived at is reproduced as under:-- "Decision.--It was unanimously decided that the Provincial Governments would exempt WAPDA from payment of property tax and octroi on its equipment and materials. It was also decided that WAPDA would charge electricity tariff on street lights and drinking water schemes under its purview throughout the country, on domestic rates. It was further decided that Balochistan Government's proposal to charge domestic rates on Agricultural Water Supply Schemes under the purview of WAPDA, will be taken up in the next meeting of IPCC on receipt of Working Paper from the Government of Balochistan.
13. ' Action by: (1) All Provincial Governments.
(2) WAPDA."
14. It is not disputed by the respondents' counsel that pursuant to the aforesaid decision, the petitioner has started charging electricity tariff on street lights and drinking water on domestic rates from the respondents meaning thereby that the petitioners have performed their obligations under the decision but the respondents have not performed their obligations by granting exemption to WAPDA from payment of octroi on its equipments and materials. As far as the case law cited by the petitioner's counsel is concerned, in the case reported as PLD 1973 Lahore 188, it has been held that Water and Power Development Authority is a statutory public corporation and not a private corporation. In PLD 1975 Karachi 128 (Sindh Industrial Trading Estate Ltd., Karachi v. Central Board of Revenue and 3 others) it has been observed:-- "The Government may discharge its functions through a Corporation, but the Corporation may still, in substance, operate as a department of Government."
15. ' The Division Bench of the Court then after discussing the case-law, observed in para. 10 of the report as under:- "Thus, the Sindh Industrial Trading Estate Ltd., being nothing more than a department of the Provincial Government, though clothed with juristic personality, performs the essential functions entrusted to the Province with regard to the development of trade and industries. Of necessity, therefore, the income of this body corporate is the income of the Provincial Government, and under the various Constitutional provisions referred to above, this income is not assessable to tax under the Income Tax Act, 1922."
16. ' The decision reported in PLD 1975 Karachi 128 was appealed against before the Hon'ble Supreme Court and the said appeal was dismissed and the judgment is reported in PLD 1985 SC 97 and the Hon'ble Supreme Court at page 106 of the report observed that:- "But as stated earlier, the facts found by the High Court and its conclusions on the questions raised by learned counsel are unexceptionable. The respondent-Company was carrying on the function of Industrial Development and the trade and business connected therewith for and on behalf of the Government, notwithstanding the incorporation; which as explained earlier will not make any difference regarding the relevant Constitutional provision on exemption from Federal Taxation."
17. ' In the other case reported in PLD 1964 Peshawar 167 (Wali Muhammad v. General Manger Electricity WAPDA Lahore and others) it has been observed that:-- "It is thus clear to us that the authority is a person performing functions in connection with the affairs of the Province of West Pakistan."
18. ' The case reported in 1992 MLD 1730 is a case in which petition was accepted and the appeal filed against the judgment was allowed and the judgment has been reported as 1993 SCMR 468. The Hon'ble Supreme Court while allowing the appeal observed as under:- "The company was engaged in manufacture and sale of cement like any other private or public limited company which was engaged in manufacture and sale of cement. If the Court was to invoke the doctrine of lifting of veil of incorporation in the case in order to enable the company to have the benefit of Article 165, though otherwise it was not applicable to a private limited company, it would place the company in an advantageous position to the detriment of the companies which were also engaged in manufacture and sale of cement as they would not be entitled to the benefit of exemption of octroi. This would be violative of, inter alia, Article 25 of the Constitution which enjoins that the person placed in the same position cannot be discriminated. That the octroi is levied by the Union Council in order to raise funds for the development of the rural area which is under-developed and badly needs funds. Grant of exemption to the company by lifting the veil of incorporation would not, in any way, foster the case of justice but in fact retard the development of the rural area."
19. The observation of the Supreme Court is based on consideration of the fact that the company was engaged in manufacture and sale of cement like any other private or public limited company which was engaged in manufacture of sale of cement therefore it would amount to discrimination if the respondent is granted exemption against other similar companies. In the instant case, it is an admitted position that the petitioners are the only and sole suppliers of electricity and there is no other such company which provides electricity to all the provinces as such if the exemption from levying of octroi is granted to the petitioners, there will be no discrimination in any manner against any other company, organization or individual. As mentioned earlier that the Inter Provincial Coordination Committee had unanimously decided that the Provincial Governments would exempt WAPDA from payment of property tax and octroi on its equipment and materials as such the respondents are estopped from levying octroi on equipment's and materials of the petitioner.
20. In this regard, the Provincial Government has power to suspend or abolish octroi on the equipments and material of the petitioner. Section 62 of the Sindh Local Government Ordinance, 1979 reads as under:--- "(1) The Government may direct any Council;
(a) to levy any tax, rate, toll or fee which the council is competent to levy under this Ordinance;
(b) to increase or reduce any rate, tax toll or fee to such extent as may be specified;
(c) to suspend or abolish the levy of any tax, rate, toil or fee.
(2) If a direction issued under subsection (1) is not complied with, within a specified time, if any, Government may make an order giving effect to the direction."
21. In view of the provision of clause (c) of subsection (1), the Government has undoubtedly the power to suspend or abolish the levy of any tax. Considering the functions of the petitioners and in view of the decision of the Inter Provincial Coordination Committee, the respondents are liable to suspend/abolish the levy of octroi on the equipments and materials of the petitioners. Further, under Article 165 of the Constitution of Islamic Republic of Pakistan, no octroi could be levied and charged in respect of the equipments and materials of the petitioners as the same, being in substance, vest in the Federal Government. Article 165 of the Constitution is reproduced as under:-- "165. Exemption of certain public property from taxation.--(1) The Federal Government shall not, in respect of its property or income, be liable to taxation under any Act of Provincial Assembly and, subject to clause (2), a Provincial Government shall not, in respect of its property or income, be liable to taxation under Act of Majlis-e-Shoora (Parliament) or under Act of the Provincial Assembly of any other Province.
(2) If a trade or business of any kind is carried on by or on behalf of the Government of a Province outside that Province, that Government may, in respect of any property used in connection with that trade or business or any income arising from that trade or business, be taxed under Act of Majlis-e-Shoora (Parliament) or under Act of the Provincial Assembly of the Province in which what trade or business is carried on.
(3) Nothing in this Article shall prevent the imposition of fees for services rendered."
22. In view of the above, we allow the petition with direction to the respondents to suspend and abolish the levy of octroi and not to charge octroi on the equipment's and materials of the petitioners.