KARAMAT NAZIR BHANDARI, J. -- This judgment will dispose of writ petitions Nos. 14197/1994, 11180/1995, 15555/1995, 1046/1996, 1547/1996, 14630/1996, 14631/1996 and 7541/1997, since common question of law; viz validity of various schedules issued by respondent-Zila Councils prescribing rate of Export Tax on various items (like cement/sugar) is involved. It will be necessary to enumerate the facts of these cases.
2. In Writ Petition No. 14197 of 1994, it is asserted that the petitioner-Company established cement production plant at Chanki, District Khushab and started production in October, 1994. For the export of cement respondent-Zila Council was charging Rr.1/- per quintal and the petitioner-Company was paying the same. Vide Notification No. 1362, dated 14th July, 1994 (Annexure 'A') the respondent-Council raised the rate to Rs. 3/-per quintal. The company, therefore, filed this petition praying that this raise in rate be declared illegal as the Notification in question has not been lawfully issued.
3. In Writ Petition No. 11180 of 1995, the same company challenges the Notification dated 14.7.1995. By virtue of this Notification (Annexure 'A') the Zila Council amended the Notification dated 14.7.1994 and revised the rate of tax on cement to Rs. 2/- per quintal, w.e.f. 1.8.1995. Both in this petition as in earlier Writ Petition No.1 4197 of 1994, the case of this company is that respondent-council can charge the goods exit tax at the rate of Re.1/- per quintal only.
4. In Writ Petition No. 15555 of 1995, the petitioner-company is manufacturing sugar in Bhalwal District Sargodha. By way of Notification dated 29.8.1995, (Annexure 'A') issued by respondent-Zila Council the rate of Goods Exit Tax on sugar has been increased to Rs. 4.80 per quintal w.e.f. 1.9.1995 and it is this notification/increase, which is subjected to challenge in this Constitutional petition. It is also prayed that it be declared that respondent-Zila Council is only entitled to charge Re.1/- per quintal as per the schedule of Goods Export Tax duly notified by respondent No. 1.
5. In Writ Petition No. 1046 of 1996 the petitioner-company is manufacturing sugar at Bhalwal District Sargodha. The respondent-Zila Council issued a schedule of Goods Exit Tax vide Notification No. 3232/DO, dated 6.11.1995, whereby the rate of tax was increased to Rs. 2/- per quintal. Challenge is thrown to this rate with further claim that the respondent-Zila Council is not authorised to charge more than the rate prescribed by Export Tax Schedule notified by respondent-Government, which rate is Re.1/- per quintal.
6. In Writ Petition No. 1547 of 1996 the company is manufacturing sugar in its plant at Joharabad District Khushab and is throwing challenge to the Notification (Annexure 'A/1'), whereby the rate of Goods Exit Tax has been fixed at Rs. 5/- per quintal. In this case also the claim of the company is that the respondent-Zila Council is not entitled to charge higher than the rate prescribed by respondent-Government in its schedule, which is Re.1/- per quintal.
7. In Writ Petition No. 14630 of 1996 the petitioner company is manufacturing sugar at Shahpur District Sargodha. The respondent-Zila Council charged Export Tax as per Schedule dated 21.4.1991, at the rate of Re.1/- per quintal. By Notification No. 7065-T, dated 29.8.1995, the Zila Council issued a fresh schedule of Goods Exit Tax and thereby fixed the rate at Rs. 4.80 per quintal. It is this increase through Notification dated 29.8.1995, which is called in question in this petition.
8. In Writ Petition No. 14631 of 1996 the petitioner-company is having its sugar factory at Nankana Sahib District Sheikhupura and when its sugar leaves the Zila limits it is required to pay the Goods Tax. In schedule dated 21.4.1991 the rate was Re.1/- per quintal. Vide Notification No. 95/TO; dated 30.1.1995 Zila Council issued a new schedule of Goods Exit Tax, by which it fixed the rate of tax at Rs.
5- per quintal. In this case the challenge is thrown to the increase as per Notification dated 30.1.1995.
9. In Writ Petition No. 7541 of 1997 the petitioner-Company manufactures steel billet at its factory at Lahore-Sheikhupura Road, within the limits of Zila Council, Sheikhupura. When the product was exported out of the limits of Zila Council it was subjected to a tax at the rate of Rs. 5/- per quintal as per schedule dated 21.4.1991. Vide Notification No. 95/TO, dated 30.1.1995 the Zila Council issued a fresh schedule on its own and has fixed the rate of tax at Rs. 9/- per quintal. Challenge is thrown to the increase in rate as per Notification dated 30.1.1995.
10. The common and in fact the sole ground of attack on the enhanced rates in all these cases is that the Model Schedule of tax issued by the Government is binding on the Zila Councils and they cannot make departure from the Nome. In support of the contention reference is made to the relevant statutory provisions as contained in the Punjab Local Government Ordinance, 1979 (Sections 137, 138, 139 and 144) as well as the rules framed thereunder, namely, Punjab Zila Councils (Export Tax) Rules, 1990 and the Punjab Local Councils Texatuon Rules, 1980. Reliance is also placed on Zila Council, Sheikhupura v. M/s. Mian Tyre & Rubber Co. (Pvt.) Ltd. Lahore Cantt and others (PLD 1994 SC 212), Dandot Cement Co. Ltd. v. Deputy Commissioner/Collector and others (PLD 1997 Lahore 533), Qamar-uz-Zaman v. Zila Council Bahawalpur and others (1990 MLD 1748), amongst other Judgments.
11. Both learned Assistant Advocate General Punjab, as well as learned counsel appearing for Zila Councils have refuted the above contention by submitting that the Model Schedule prepared by the Government is not binding, inasmuch as, taxation is basically business of the local councils, although in some cases the directions of the Government are binding. It is contended that whenever a binding direction is issued, the Zila Council has to comply with the taxation procedure before it can be said to have assumed legal efficacy. It is claimed that direction on its own does not become enforceable although the delinquent local council may be taken to task by the Government in accordance with law. It is argued that the Judgment of the Supreme Court in the case of Mian Tyres (supra) is based on the direction of the Government contained in Memo. Dated 13.8.1990. It is argued that this memo. Has since been modified and in the Memo. Dated 21.4.1999 it has been clarified that the Export Tax Model Schedule is to serve as a guideline for Zila Councils.
Preliminary objections as to maintainability of the petitions in view of availability of alternative remedy before the Government, absence of locus standi of the petitioners to file the writ petitions on the ground that they themselves never exported their products nor paid the tax to the Zila Council, and in some cases the failure of the petitioners to question the earlier notification, have also been raised. It is also submitted that when the Zila Council invited objections, the petitioners did not raise any, and therefore, they are not estopped from doing so.
12. I take up preliminary objections first. It is correct that the revised rates could have been questioned before the Government in exercise of its supervisory powers and in some of the decided cases, this remedy has been found adequate. All these petitions pertain to the years 1994 to 1996. The decision of the petitions depends upon the resolution of question of law. In the circumstances, I am not inclined to uphold this preliminary objection as it would be unjust now after 4/5 years to divert the petitioners to alternative remedy. This objection is overruled.
13. The objection of locus standi of the petitioners has also to be overruled. Apart from the fact that in some cases receipts have been produced to show that the disputed tax has in fact been recovered from the petitioners, it cannot be emphatically saki that petitioners are not interested in the controversy. As manufactures of cement and sugar, petitioners have a legal interest to see that their products, when taken out of the district limits, are subjected to tax in accordance with law, notwithstanding the fact that the actual carrier is somebody else or the goods are being exported under a contract. As has been held in well-known case of Mian Fazal Din v. Lahore Improvement Trust, Lahore and another (PLD 1969 S.C. 223), to maintain a Constitutional petition it is not necessary that a person should have a right in stricto senso. It is sufficient if it is shown that the performance of a legal duty or action in accordance with law by the respondent has the tendency to benefit the person. I, therefore, overrule this preliminary objection.
14. Similarly it does not matter that at the time when the Zila Council invited objections, the petitioners or some of them failed to respond. As noted the controversy being raised in these Constitutional petitions is purely legal and a question of law can always be urged in Constitutional petition notwithstanding the earlier failure to agitate. On the basis of facts brought to light, it is difficult to non-suit the petitioners on this ground. Failure to raise legal objections at the relevant time does not amount to acceptance of the legal position maintained by respondents.
15. The whole case of the petitioners is based on the existence of Model Schedule of Export Tax and direction of the Government contained in Memo. Dated 2.5.1990 addressed to all Chairmen Zila Councils in Punjab, to follow the same and act accordingly. The Model Schedule lays down the rates of tax to which the various items shall be subjected to. This direction is repeated in the Memo.
Dated 13.8.1990 again addressed to all the Chairmen which states:- "....You are hereby directed to impose/notify the Export Tax in accordance with the Model Schedule prepared by the Government under Rule 10 of the Punjab Local Council Taxation Rules, 1980 (copy enclosed). It is further ordered that the condition of previous publication of the imposition of Export Tax as required under Sections 137 and 138 ibid read with the Punjab Local Councils Taxation Rules, 1980 is hereby dispensed with in exercise of powers under Section 138 ibid."
The memo. Expressly states that this direction is being issued under Section 139 of the Punjab Local Government Ordinance, 1979.
16. In the case of Mian 7)re (supra), decided by the Supreme Court and strenuously relied by learned counsel for the petitioners the legality of the modification made by the Zila Council was examined by the Supreme Court and a close examination of the Judgment shows that the Judgment of the Court was based on the circular dated 13.8.1990 reproduced above. After reviewing the relevant provisions in the Ordinance and the rules, the Court held:- "Not only the Export Rules framed by the Government incorporating the export Schedule were in the field but there was a direction of the Government contained in the circular dated 13.8.1990 with which Model Export Tax Schedule was annexed/circulated. The levy of the Export Tax under the Schedule notified by the Zila Council and at variance with the directive of the Government dated 13.8.1990 was without lawful authority and of no legal effect. The liability of the tax would arise and would be recoverable under the Model Export Tax Schedule on the strength of the directive issued by the Government and protected under Section 137 of the Punjab Local Government Ordinance, 1979."
17. Mr. M. Mohyuddin Qazi, Advocate, appearing for Zila Councils in some of the cases is, therefore correct in asserting that the Judgment of the Supreme Court in Mian Tyres case (supra) is based on the circular dated 13.8.1990. He further seems to be correct in submitting that by a subsequent circular dated 21.4.1991, the Government itself had withdrawn the obligatory nature of the earlier direction. This circular addressed to the Chairman reads:- "As you are aware the Government has been seriously considering improvements in the levy and collection of Export Tax by Zila Councils. Your views were also invited in this connection. After due consideration the Government have decided to prepare Export Tax Model Schedule to serve as a guideline for Zila Councils. It must be added that this does not absolve the Zila Councils of the responsibilities to observe all formalities prior to imposing the Export Tax as required by the rules.
This Schedule is intended to introduce a measure of uniformity among th. Zila Councils.
2. You are requested to take up the completion of all procedures /codal formalities well in time to be able to launch the collection of Export Tax in time."
Mr. Qazi has further relied on the circulars including dated 14.5.1994 which are addressed to all the Heads of Local Councils in the Province. Circular dated 14.5.1994 advises that "all Local Councils should review and rationalize the Tax Schedule with a view to augment their financial resources to meet budgetary requirements for the next year, in the light of earlier Circular No. SOV (LG)1-59/84, dated 18.6.1984". He has also relied on circular dated 20.7.1994, which reads:- "Please refer to this Department Letter No. SOV(LG)5- 26/89, dated 21.4.1991 on the subject noted above.
2. It is clarified that Goods Exit Tax Model Schedule dated 21.4.1991 has been circulated to serve as guideline and to facilitate the Zila Councils in preparation of the schedules and Zila Councils may in their discretion follow or depart from the same."
18. The above clearly establishes the non-application of the Judgment in Mian Tyres case (supra) to the facts and circumstances of these petitions. It is clear that this circular dated 13.8.1990, the basis of the Judgment of the Supreme Court stands modified. The subsequent circulars clearly describe the Model Tax Schedule as a guideline and leave it with the individual Zila Council to modify the same. It is not in question that the source for issuing the circular is the same viz, Section 139 which enables the Government to issue directions to the Local Council to levy and tax or to increase or reduce any such tax or to suspend or abolish the levy of any such tax.
19. Mr. Mansoor A.I Shah, Advocate, for petitioners in some of the cases, has relied on the circular dated 20.5.1997 issued under Section 149 (139 of the Ordinance) of the Punjab Local Government Act, 1996 which ordains:- .............. All Zila Councils in the Punjab are directed to impose and notify the Goods Exit Tax in accordance with the Model Schedule prepared by the Government under rule 10 of the Punjab Local Councils Taxation Rules, 1980."
The Government further dispensed with the condition of previous publication in exercise of the power under Section 148 of the Act (138 of the Ordinance). Paras-3 and 4 of the circular further state:- "3. The Model Schedule 1997 shall be imposed with effect from the next financial year i.e. 1.7.1997 or after the date of expiry of the contracts of the current financial year as the case may he.
4. This Model Schedule will come into force in supersession of all previous Model Schedules and consequential instructions issued therewith."
He has argued that if the rates mentioned in the impugned Schedules of the Zila Councils are not in accord with the Model Schedule-1997, the rates mentioned in the Model Schedule-1997 are payable.
20. Circular dated 20.5.1997 is not directly under challenge or consideration in these petitions.
However, as this is germane to the resolution of primary controversy and it will also help in finally putting end to litigation between the parties, the same is taken under consideration.
21. This contention of Mr. Mansoor A.I Shah is correct and is in line with the declaration of law in Mimi Tyres case. The circular dated 20.5.1997 is leaving no option with the Zila Councils to act otherwise like the circular dated 13.8.1990, which was interpreted by the Supreme Court in Mian Tyres case.
None of the counsel appearing for respondents have disputed the validity and the consequential effects of the circular dated 20.5.1997.
22. It has also been argued that rule 10 (2) of the Punjab Local Council Taxation Rules, 1980, obliges the Chairman "to he guided by the Model Schedule". The language used is "shall he". From this it is argued that the rate of tax stated in the Model Schedule cannot be deviated. I am afraid, this argument cannot be accepted. When it is stated that the Schedule will serve as a guideline, it is different from saying that schedule will be followed and implemented. The distinction is too obvious. As found above, the circular dated 20.5.1997 and in the Mian lyre case, circular dated 13.8.1990 were made obligatory and Zila Councils were required to act in accordance with the same. To be guided from something is altogether with the same. To be guided from something is altogether different from acting in accordance with the same. In the former discretion to deviate is clearly there. The submission of Mr. Mansoor A.I Shah, Advocate, therefore, that for the period 24.4.1991 to 20.5.1997. Zila Councils were obliged to follow the Model Schedule without any right of deviation, has to be rejected.
23. It has also been argued that the increase of rate from Re.1/- to Rs. 4.80 and Rs. 5/- in respect of sugar in Writ Petitions Nos. 14630/96 and 14631/96 is almost 400 percent and, in the absence of any valid justification, the same cannot be upheld. On the same lines it is stated that increase of the rate from Rs. 5/- to Rs. 9/- in respect of steel billets in Writ Petition No. 7541/97 is 80 percent. The argument is that in the absence of any rational basis for such increase, the exercise will have to be declared as arbitrary and mala fide.
24. This argument has once again to be rejected as it involves appraisal of factual scenario which has not been properly pleaded in the Court. It can also not be ignored that the petitioners did not file any objections to the various increases when the Zila Council invited objections for the same.
Had they done so, the increase may have been examined by Zila Councils and if the objections were overruled, the petitioners could have got them examined from the Government in exercise of the supervisory powers. As pleaded in the written statements/comments, this Court can take notice that over the years the price of every thing is rising and the Local/Zila Councils require additional funds to meet nor only their running expenses like pays and salaries but also need funds for development purposes. In any case, as the petitioners did not raise factual objections before the Zila Councils on the quantum of increase, I am not minded to examine the same objection in the Constitutional jurisdiction.
25. For all that has been stated above, it is declared and held that the obliging/binding nature of the Model Tax Schedule came to an end with effect from 24.4.1991 and the changes made in the Model Schedule by the Gila Councils from that date onwards cannot he said to be without lawful authority. It is further declared that with effect from 20.5.1997 until abolition of export tax, the Zila Councils were again obliged to follow the Model Tax and recover the export tax on the rates provided in the same. These petitions are disposed of in the light of above declarations, without any order as to costs.
26. Under the interim orders the petitioners were permitted to pay the tax at the specified rates with the direction that proper accounts be maintained by both the parties so that the final adjustment takes place in light of decision of these petitions. Now that the question of law has been decided, the parties are directed to settle their accounts in accordance with the declarations made in this Judgment.