1. This judgment shall dispose of Writ Petition No.21323 of 1996 and 19962 of 1998 titled Zakaullah Khan v. District Council, Kasur etc. And 20669 of 1998 titled Muhammad Anwar v. District Council, Faisalabad etc. As in both of them identical question of facts and law are involved.
2. Facts briefly in Writ Petition No.19962 of 1998 are that the petitioner secured the lease for the collection of goods exit tax of Zila Council, Kasur for a consideration of Rs.8,05,000 for the period effective from 1-9-1998 to 30-6-1999. Exception has been taken to the demand of 5 % security amounting to Rs.40,25,000 through Notification No.TO/3285, dated 25-8-1998 as well as revolving fund amounting to Rs.5,00,000 apart from Rs.7 lacs demanded through subsequent Notification No.TO-3333, dated 31-8-1998.
3. Similarly in Writ Petition No.20669 of 1998 petitioner Muhammad Anwar secured lease rights for the collection of goods exit tax of Zila Council for a consideration of Rs.13 Crore for the period effective from 1-10-1990 to 30-6-1999. Exception has been taken to the notice bearing No.2077/GET, dated 26-9-1998 whereby 5% security as well as advance refund security amounting to Rs.65 lacs and 21 lacs respectively has been demanded from the petitioner.
4. Dr. M. Mohy-ud-Din Qazi learned counsel has argued that the demand of 5 % security is illegal and arbitrary as the same has got no sanction of law. According to him the respondents are entitled to receive security at the rate of 12% of the total consideration. As far as the payment of revolving fund is concerned learned counsel has argued that the same has got no sanction of law.
5. Mr. Ashtar Ausaf learned Advocate-General has not only challenged the very maintainability of this Constitutional petition but has also taken me through certain provisions of the Punjab Local Government Ordinance, 1979 and the Rules framed thereunder in support of his stance.
6. I have considered the contentions. Section 39 of the Punjab Local Government Ordinance, 1979 provides as under:-- "39. Contracts. ---(I) All contracts made by or on behalf of a local council shall be---
(a) in writing and expressed to be made in the name of the local council; (b)executed in such manner as may be prescribed; and (c)reported to the local council by the Chairman at the meeting next following the execution of the contract."
7. "16Lease of collection of Zila Councils Goods Exit Tax.--- (1) The Zila Council may lease out by public auction for a period not exceeding one year, the collection of Goods Exit Tax on such terms and conditions and in such manner as may be specified by the Government.
8. (3)The person whose bid is accepted as the auction shall forthwith deposit with the officer conducting the auction a sum equal to one percentum of the amount of the bid as security for the performance of his obligation in regard to the collection of Zila Councils Goods Exit Tax and payment of lease money to the Zila Council.
9. (8)(i) In addition to the security deposit referred to in sub-rule (3) the person whose bid is confirmed by the Zila Council (hereinafter referred to as the lessee) shall within seven days of such confirmation deposit with the Zila Council fifteen per cent. Of the amount of his bid, and the balance of the amount of his bid shall be paid by him to the Zila Council in ten equal monthly instalments.
10. (ii)Each instalment shall be paid by the 15th day of the month for which it is due.
11. (9)The successful bidder shall furnish sureties on an amount equal to the total amount of the monthly instalments to the satisfaction of the Chairman, Zila Council or in the form of a Bank guarantee from a Scheduled Bank."
12. A reference is also made to Letter No.SOVI(LG)2-5/97, dated 27-7-1998, issued by Government of the Punjab Local Government and Rural Development Department, whereby certain instructions were issued to regulate the collection of goods exit tax. Instructions Nos. VIII and IX of para. 2 are relevant which are quoted below for facility of reference:--
(viii) It should also be specifiably mentioned in the terms and conditions of auction and agreement deed that the amount equal to the average amount per year calculated on the basis of refund claims received in the Zila Councils during the years 1996-97 and 1997-98 shall be paid by the contractor in advance before taking possession of the contract for settling the refund claims. If this amount falls short due to the amount refunded on account of refund claims, it shall be recouped by the contractor at the end of the every month. It should also be mentioned in the terms and conditions of auction that the over charge/illegal charged amount of Goods Exit Tax will be refunded with 11 times penalty to the concerned person. In addition to this section the contract shall also be cancelled on account of over charging and illegal charging of Goods Exit Tax.
13. (xi)5 % of the bid should be obtained as security from the contractor of Goods Exit Tax before handing over the possession of the contract. This security should be refunded after 6 months of the expiry of the lease period'.
14. The Government of the Punjab Local Government through Memo. Bearing No.SOVI(LG)2-5/97, dated 31-8-1998, further made certain amendments in the aforementioned instructions to stream line of collection of goods exit tax.
15. The reading of section 39(1)(b) of the Punjab Local Government Ordinance, 1979, makes it very clear that a contract would not be binding upon the Local Council unless and until it is strictly executed in accordance with the provisions of law and the rules framed thereunder. Punjab Zila Council (Goods Exit Tax) Rule, 1990, also provides that the terms and conditions of the contract would not only be regulated by the *rules but also such other terms and conditions as may be specified by the Government. The aforestated instructions issued by Punjab Government provides 5 % security to be deposited by contractor before embarking upon the collection of goods exit tax.
16. Similarly the local councils are also authorised to secure certain amount calculated on the basis of refund claims of the preceding year from the contractor as revolving fund so as to settle the refund claims. The instructions/conditions in this regard have been laid down generally by the competent Authority so as to streamline the grant of contract for the collection of goods exit tax. They were applied uniformly without any discrimination so as to protect both sides i.e. Contractor as well as the tax payer. The petitioners being contractors are bound to abide by these instructions before embarking upon the collection of goods exit tax. In these circumstances the challenge of the learned counsel to the charge of 5 % security as well as of revolving fund is not apt. Reference in this respect is made to Khan Faiz Ullah Khan v. Government of Pakistan through the Establishment Secretary, Cabinet Secretary and another PLD 1974 SC 291 to fortify that such like instructions have got the force of statutory rules.
17. I have also noticed from the comments submitted by Zila Council, Kasur in Writ Petition No. 19962 of 1998 that at the request of the petitioner the Administrator, Zila Council had accepted the deposit of Rs.27 lacs as revolving fund instead of Rs.50 lacs as were demanded. In this background, if the petitioners are aggrieved of the quantum of revolving fund they may if so feel 8 approach the respective Administrator who would make demand on the basis of refund claims during the last two years. Resultantly both these writ petitions are disposed of with the direction that if the petitioners are aggrieved of the quantum of demand of revolving fund they may approach respective Administrator, Zila Council, however, no exception whatsoever can be taken to the charge of 5 security of the total consideration in the presence of the aforesaid instructions. Writ petitions are disposed of in the above terms.