I intend to decide W.P. No,11273 of 1999, W.P. No,12257 of 1999 and W.P. No,12596 of 1999 by one consolidated judgment having similar facts and law.
2. The brief facts giving rise to these writ petitions are that petitioners are holding properties situate outside the limit of Municipal Corporation, Faisalabad, therefore, demand of tax under the provisions of Punjab Immovable Property Tax on the basis of Notification dated 28-9-1998 is without lawful authority as the properties of the petitioners are not situated in the Urban area of Municipal Committee.
3. Petitioners' counsel submit that petitioners' properties do not fall in Urban area by virtue of section 2(i) of Punjab Immovable Property Act, 1958 as properties of petitioners are situated in Zilla Council, Faisalabad, therefore, respondents have no authority to levy tax without including the properties petitioners by competent authority in Municipal Corporation under the provisions of Punjab Local Government Ordinance, 1979; they urged that Notification dated 28-9-1998 whereby property tax is proposed to be levy in an area outside the limit of Municipal Corporation is illegal; that said notification is in violation of provisions of Urban Immovable Property Tax Act, 1958 which restricts the levy of property tax to the properties situate within the Municipal limits.
4. Learned Additional A.-G. Submits that petitioners' properties-in- question are situated within the boundaries under the controlled area of Faisalabad Development Authority by virtue of section 3(i) of Punjab Urban Improvable Property Tax Act, 1958 as the word "District Board" is omitted by section 3 of Finance Act, 1994, therefore, it has been declared to be Rating Areas for the purpose of levy of the property tax; that in view of the aforesaid amendment Rating Areas, the land of Zilla Council have since become inoperative. In section 2(1) word "District Board" is omitted in view of amendment through Punjab Finance Act, 1994, therefore, provisions of Punjab Local Government Ordinance, 1979 are not attracted.
5. I have given my anxious consideration to the contentions of learned counsel for the parties and perused the record myself. It is better and appropriate to reproduce relevant provisions of Punjab Urban Immovable Property Tax Act, 1958, impugned notification, provisions of Punjab Local Government Ordinance, 1979 to resolve the controversy between the parties:- "Section 2(i). Urban Immovable Property Tax Act, 1958.--'Urban Area' means an area within the boundaries of a Municipal Corporation, Municipal Committee, Cantonment Board, Small Town Committee, or other authority (not being a District Board) legally entitled to or entrusted by Government with the control of management of a municipal or a local fund." Section 3. Levy of tax.--(1) 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 buildings and lands in a rating area at the rate of 10 per cent. Of such annual value: Provided that where .a building is occupied for residential purpose 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 family does not own any other property in that rating area: Provided further that Government may, by notification remit for 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 buildings and lands owned by the same person in a rating area." The relevant portion of Notification dated 28-9-1998 is as under:- "The Governor of the Punjab is pleased to declare the Urban Area excluding agriculture land, located outside Municipal Limits of the Municipal Corporations of Multan, Gujranwala, Faisalabad and Rawalpindi and within the boundaries of control areas of Multan Development Authority, Gujranwala Development Authority, Faisalabad Development Authority and Rawalpindi Development Authority respectively under the Act of 1975 as pocket Rating Areas for the purposes of levy of Urban Immovable Property Tax with immediate effect." The Punjab Local Government Ordinance, 1979: "Section 2(ix).--Zilla means the Revenue District as notified under the Punjab Land Revenue Act, 1967 (XVII of 1967) excluding its urban areas; but for purposes of tax on export of goods and animals, the Zilla, including its urban areas; and Mere reading of section 2(i) of Punjab Urban Immovable Property Tax Act, 1958 reveals that Urban area must be situated within the boundaries of Municipal Corporation or other authority. The words "other authority" must be read in conjunction with earlier words used by the Legislature in this section; respondents failed to bring on record any notification that the properties of the petitioners are notified to be included in the Urban area by the Municipal Corporation, or by F.D.A. Similarly, by virtue of section 3(1) it is condition precedent that Government must specify Urban areas for the purpose of levy tax under the provisions of Punjab Urban Immovable Property Tax Act by notification. The question arises whether notification issued by authority to declare any area falls under Urban Areas under section 3(1) has become automatically Urban Area or the competent authority has to include area as urban area either by Municipal Corporation or F.D.A. Under the provisions of Punjab Local Government Ordinance, 1979. Even otherwise the aforesaid Notification also excluded the properties of the petitioners from Municipal Limits. In my view Municipal Corporation, Faisalabad has to issue a notification to include the properties of the petitioners in Urban area for the purpose of imposition of tax under the provisions of Immovable Property Tax Act, 1958. In arriving to this conclusion I am fortified by judgment of this Court "K.S.B. Pumps Company Ltd. v. Town Committee PLJ 1973 Lahore 1 = PLD 1973 Note 123 at p.190 and relevant observation' is as follows: "The respondent-committee is demanding urban tax regarding property which is situated outside its municipal limits. This tax is being demanded under the West Pakistan Urban Immovable Property Tax Act (V of 1958). In this Act, section 2(g) defines, 'rating area' so as to mean urban area where tax is levied under the provisions of this Act. Section 2(h) states that, 'tax' means the tax leviable under the provisions of section 3. Section 2(i) states that 'Urban Area' means an area within the boundaries of a Municipal Corporation, Municipal Committee, Cantonment Board, Small Town Committee or other Authority not being District Board legally entitled to or entrusted by Government with the control or management of a municipal or local fund. Section 3 which is the charging section reads as follows:--
3. Levy of tax.--(1) Government may by notification 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 buildings and lands in a rating area at the rate of ten per cent. Of such annual value: Provided that where a building is occupied by the owner, the tax shall be levied at the said rate on one-half of the annual value of such building, if the owner or any member of his family does not own any other property in that rating area: Provided further that Government may, by notification remit for reasons to be recorded in whole or in part, the payment of the tax by any class of person 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 buildings and lands owned by the same person in a rating area."
6. The above-quoted provisions of law will show that the tax of the kind involved herein could be laid in an urban area as defined hereinbefore. The property in dispute not being within an urban area any demand of tax in respect thereof by the respondent-committee is without lawful authority and of no legal effect against the petitioner. See M/s. Qadri Brothers v. Assessing Authority and Kameshwar Parshad v. Chairman of the Bhabua Municipality. The aforesaid proposition of law was considered by the Division Bench of the Karachi High Court in M/s. Qadri Brothers v. Assessing Authority in PLD 1969 Kar. 47 and observed as under: The terms used in definition of the 'urban area' were not an innovation introduced by the West Pakistan Urban Immovable Property Tax Act. These terms have been recognized to have a particular meaning and have always been used in a particular context. Indeed even in clause (i) the terms 'other authority' has been used in continuation of such authorities as the Municipal corporation, Municipal Committee, Cantonment Board, Small Town Committee". Reliance is also placed on Ashfaq-ur-Rehman Khan v. Government of Punjab PLD 1975 Lahore 23 and the relevant observation is as under: 'This is clear from the definition of the words 'rating area' 'urban area as given in the said statute; where all that is prescribed is that the area should be within the municipal area. Even otherwise the point is also covered by M.Y. Siddiqi v. Muhammad Abdul Majeed 1970 Law Notes 720 and need not be probed further."
It is well-settled that in taxing statute, the words used are to be understood in the sense in which these words are used in their popular sense and should be understood to have that meaning which everybody conversant with the trade business or transaction knows. In arriving this conclusion reliance is placed on M/s. Usmania Glass Sheet Factory Ltd., Chittagong v. Sales Tax Officer, Chitagong PLD 1971 SC 205 and Collector of Custom's Appraisement, Karachi and others v.
M/s. Abdul Hameed Khan 1977 SCMR 371; H.M. Wilayatullah v. Civil Station Sub-Committee, Nagpur AIR 1950 Nagpur 223. It is also to be remembered that fiscal statute which imposes taxes have to be strictly construed and doubt, if any, must be resolved in favour of the subject as per principle laid down by the Hon'ble Supreme Court in Commissioner of Agricultural Income-tax East Bengal v.
B.W.M. Abdul Rehman 1973 SCMR 445. Reliance is also placed on Income Tax, A.C. v. Mrs. E.V.H. Millah PLD 1956 Lahore 45. In view of what has been discussed above, these writ petitions are accepted with no order as to costs.