' MIAN MUHAMMAD AJMAL, J.--- Through this Constitutional petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 WAPDA through its General Manager and Project Director, Ghazi Brotha Hydropower Project, and Ghazi Brotha Contractors through its site agents, the petitioners have challenged the export tax and educational cess levied by respondent No,1, to be illegal and without lawful authority and further prayed that respondents Nos.1 to 6 be directed not to demand or collect the export tax and educational cess from the petitioners and reimburse the already collected export tax to petitioner No, 1 .
2. Facts forming background of the present petition are that the Federal Government of Pakistan in the year 1993 approved Ghazi Brotha Hydropower Project for generating electricity to the capacity of 1450 MW and the execution of this Project was assigned to petition No,1, who acquired the land for the Project under the Land Acquisition Act, 1894, located in N.-W.F.P. And Punjab. The barrage including ancillary works and part of power channel are situated in Districts Swabi and Haripur of N.-W.F.P. Whereas the remaining power channel and power complex are located in District Attock of Punjab. Petitioner No,2 after award of the contract to it by the petitioner No,1 installed crushing plant and concrete mixing unit in the construction site for the production of various materials to be used in the construction of the barrage. Respondent No,1 imposed export tax and education cess on the building material and asked petitioner No, 2 to pay it to respondent No,6. The petitioner No,1 aggrieved of the levy of export tax and educational cess on transportation of construction material from crushing plant to the construction site protested against it to the respondent No,4 vide letter dated 15-10-1998 but the same was turned down and respondent No,1 vide its letter, dated 31-10- 1998 directed petitioner No,2 to pay export tax to respondent No,6. Accordingly petitioner No,2 started paying export tax and educational cess under intimation to petitioner No,1 that such payment& was to be reimbursed by petitioner No,
1. Since the liability ultimately would fall on the petitioner No,1 who has to reimburse the same to petitioner No,2, hence, it was against Articles 4 and,165 of the Constitution of Islamic Republic of Pakistan, 1973 besides being hit by the provisions of Protection of Economic Reforms Act, 1992. The transportation of construction material was taking place within the construction site of the Project, which had been acquired by petitioner No,1 as such no export of goods were taking place, and thus, no export tax could be demanded on the transportation of the goods within the construction site and such demand was illegal and without lawful authority. Since the Federal Government has an overall control of WAPDA whose accounts are auditable by the Auditor-General of Pakistan and that WAPDA is performing the function of the State as such, it was entitled to exemption from paying the Federal and Provincial taxes.
3. Learned counsel for the petitioners contended that after the approval of the Project by the Federal Government, a memorandum of understanding was executed between WAPDA and Ghazi Barotha Contractors, and under its para. 10 WAPDA had agreed to reimburse to the Contractor the royalties or similar fees, such as exit, export, market fees and others municipal charges that may be levied within the designated site area and for the movement of goods and construction materials between the work sites and approved borrow, stockpile , and disposal areas. As such WAPDA being an employer has to reimburse the royalties and other fees as agreed upon in para. 10 above. He further contended that vide Notification dated 11-6-1998, the Administrator District Council, Swabi in exercise of the powers under section 135 of the N.-W.F.P. Local Government Ordinance, 1979 imposed and levied the export tax on the building materials and minerals which included shingle, bajri, sand, crush, bricks, cement, iron, stone etc., the details of which are given in sub-para. V item 36 to 47 in the schedule. The petitioners in this respect addressed a memo., dated 15-10-1998 to the Chief Secretary Government of N.-W.F.P. Wherein it was requested that since the Crush Plant as well as the Barrage fall within the 'Construction Site' the establishment of an export tax post within the 'Construction Site' is not valid. The Deputy Commissioner/Administrator District Council, Swabi respondent No,1 vide letter dated 31-10-1998 informed the Contractors that the dispute between the District Council, Haripur and Swabi over the levy and imposition of export tax has been resolved by the Provincial Government and the District Council, Swabi has been empowered to levy and realise the export tax and directed the contractor to remit the amount due on account of export tax to the District Council Swabi as early as possible. He referred to Articles 165 and 165-A of the Constitution and argued that in view of the said Articles the Federal Government in respect of its property and income is not be liable to taxation under any Act of the Provincial Assembly and the Provincial Government is not liable to tax on its property or income under Act of Majlis-e-Shoora (Parliament) and if a trade or business of any kind is carried on behalf of the Provincial Government outside the Province, that Government may in respect of any property used in connection with that business be taxed under the Act of the Parliament or under act of the Provincial Government. However, the above provisions are not applicable to the imposition fee for service rendered. Article 165-A of the Constitution provides that Parliament has powers to make law for the levy and recovery of a tax on the income of a corporation, company or any other body or institution established by or controlled either directly or indirectly, by the Federal or Provincial Government. Sections 3, 4, 8, 15, 17(1B), 21, 22 and 28 of the WAPDA Act of 1958 would show that WAPDA is performing functions of the State and is controlled by it, as such it is not liable to taxation under any Act of Provincial Assembly and the Notification issued by the Administrator is not applicable to WAPDA. He submitted that the Notification was not issued after observing proper procedure prescribed in section 135 of the Ordinance and N.-W.F.P. Local Council (Imposition of Taxes) Rules, 1980, thus, on this score too the Notification is against the law and the rules and is liable to be struck down. He submitted that even if the petitioners or the Contractors at any stage had conceded to the payment of tax it would not amount to waiver or estoppel as it is settled law that there is no estoppel against Statute and any act done against the provisions of the law of the land in good faith would not amount to waiver.
4. Learned counsel for the respondents on the other hand submitted that the petitioners are estopped by their own conduct to challenge the imposition of export tax as petitioner No,2 has been paying the export tax from 1995 when they commenced the construction work and are still paying the same to the District Council Haripur and Attock. He submitted that due to the dispute between the two District Councils of Swabi and Haripur, as to which one of them was entitled to receive the export tax, the petitioner took an undue advantage of it and made a issue of exemption and prior to it, it was not the case of the petitioners that they are exempt to pay the tax to the District Council. He referred to the minutes of the meeting held in the office of Commissioner Mardan Division on 19-11-1998 wherein it was observed that in the light of the Letter No,AO-11/LCB/2- 5-98 dated 18-11-1998, the Provincial Government has turned down the request of petitioner No,2 and directed the local council to realise the tax due and legal measures be taken for the recovery of Rs,1,04,69,09. He also referred to the correspondence between petitioner No,2 and the Deputy Commissioner/Administrator District Council Swabi and the minutes of the meeting held on 5-12- 1998 with regard to the payment of export tax. He urged that according to para.9 of the Memo. Of understanding it was agreed between WAPDA and the contractor that duties and taxed paid by the contractor on the items enumerated therein would be reimbursed by WAPDA and that para.10 is not applicable to the facts of the present case. He in view of section 137 of the Ordinance submitted that there is no provisions of exemption therein and also submitted that principle of principal and agent is not applicable in the present case as Constitutional concession or privilege, if any, cannot be delegated or passed on to other. He also submitted that no Notification has been issued by the competent Authority exempting the petitioner No,2 from the payment of taxes. He contended that writ petition in so far as WAPDA is concerned, is not competent as it has been filed through its General Manager/Project Director of Ghazi Barotha Hydropower Project, and not by its Chairman, therefore, writ petition to the extent of WAPDA is not maintainable.
5. Learned counsel representing the District Council argued that the construction material on which exemption has been claimed do not belong to WAPDA but to a contractor, therefore, the contractor cannot claim any exemption under the garb of Articles 165 and 165-A of the Constitution.
6. We have duly considered the submissions of the learned counsel for the parties and have gone through the record with their assistance.
7. Admittedly, petitioner No,2 was awarded a contract for the construction of a barrage and ancillary works of Ghazi Barotha Hydropower Project vide contract agreement dated 9-12-1995 by petitioner No,1 and thereafter number of documents was executed between them. It is also undisputed that the assignment of the contractor was to undertake construction of barrage and ancillary works, therefore, he had to arrange for the construction material and equipment at his own, for which he was to be paid, as such Article 165 of the Constitution would not be applicable to the present case. For convenience sake, Article 165 is reproduced hereinunder:-- "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 of 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 that trade or business is carried on.
(3) Nothing in this Article shall prevent the imposition of fees for services rendered."
' It is to be seen whether the property belonging to and trade or business carried out by the contractor can be said to vest in the WAPDA and any income generated by it would be liable to exemption under the aforesaid provisions of the Constitution.
8. As stated earlier, petitioner No,2 is a contractor who under the contract has to carry out the construction of barrage and ancillary work, for which he has to use and apply construction equipment's and material which would obviously be his, own arrangement for which he would be paid by WAPDA and in his trade or business of contract, it is likely to earn income for itself. During the course of construction, the Project will not yield any profit or income for WAPDA rather WAPDA would be an investing party, who would pay to the contractor under the contract executed between them, therefore, neither WAPDA's property would be involved nor it would earn any income, as such provisions of Article - '165 of the Constitution would not be attracted to the present case, which imply that Federal Government shall not be liable to taxation on its property or income under the Act of Provincial Assembly and likewise Provincial Government shall not be liable to taxation on its property or income under Act of the Parliament or of the Provincial Assembly of any other Province. Under Article 165-A of the Constitution income of the corporation, company or other body under the direct or indirect control of the Federal or Provincial Government, shall be taxable under the Federal laws, which is not a case herein, and thus, these provisions have no application in the present case.
9. Under the West Pakistan Water and Power Development Authority Act, 1958, WAPDA was established for carrying out unified and coordinated development of the water and power resources of the country. Its functions and duties have been enumerated in section 8 which reads as follows:-
(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 house and grids;
(iii) flood control;
(iv) the prevention of waterlogging and reclamation of waterlogged and salted lands;
(v) Inland navigation;
(vi) the prevention of any ill effects on public health resulting from the operations of the authority.
(vii) Privatise or otherwise restructure any operation of the Authority except the hydel generating power stations and the National Transmission Grid; and
(ii) after subsection (4), the following new subsection shall be added, namely--
(5) Where a scheme is sanctioned by the Government under subsection (4), the Authority may---
(a) undertake any joint venture work in association with the Provincial Government, an agency, corporation, company, authority or any person and may subscribe to the equities and acquire such other rights and obligations as may be necessary for such joint venture or association;
(b) promote, form or sponsor any company or companies having objects of installation of thermal and hide projects and development and utilization of any resource of energy for generation, transmission and distribution of power and for survey, investigation, exploitation and utilization of resources of energy for generation, transmission and distribution of power;
(c) subscribe for, take or otherwise acquire, hold and dispose of shares, bonds, debentures, commercial papers or other securities of any company promoted, formed or sponsored under clause (b) and receive dividends or other payments therefrom and transfer to it any of its land or any other property, movable or immovable, tangible or intangible, against cash, shares, bonds, debentures, commercial papers or other securities as is desirable or necessary to enable it to privatise or otherwise restructure any operation of the Authority;
(d) Enter into any of the following arrangements which may be consistent with its objects, namely:- -
(i) provision of service and personnel;
(ii) provision of goods, appliances, plants, machinery and other material; and
(iii) purchasing of electrical capacity and energy from any company specified in clause (b); and
(e) enter into any contract or agreement with any company or companies specified in clause (b).
'The Authority consists of a Chairman and Members, who are appointed by the Government, and the service under the Authority is service of Pakistan and every person holding a post under the Authority would be deemed to be civil servant for the purpose of Services Tribunal Act, 1973. The Authority has to submit yearly reports and returns to the Government and its accounts are auditable by the Comptroller and Auditor-General of Pakistan in such manner as prescribed by the Government. All these provisions of the Act would show that Federal Government has complete control on WAPDA and it is performing functions of the State like a department of the Government, therefore, it is entitled to the same exemptions as are permissible to the Federal Government under Article 165 of the Constitution, thus, its property or income can be said to be the Government property and income and stand exempted from the liability of tax. As stated above, no property belonging to WAPDA or its income would be involved in the construction work, as it has awarded the contract to petitioner No,2 who under the contract is obliged to construct the barrage and ancillary work, therefore, anything used or required in construction has to be arranged by the contractor himself and he cannot claim any Constitutional exemption which is only meant for the Federal Government under the Article 165 of the Constitution, and the same cannot be extended or passed on to anybody else.
' The plain reading of Article 165 of the Constitution would manifest that exemption from provincial tax has only been given on the property or income of Federal Government and similarly such exemption has been given to the Provincial Governments on their properties and income from the liability of Federal taxes. No other meaning or interpretation can be attached to the aforesaid Constitution provisions. The interpretation as given by the learned counsel for the petitioners that such exemption is extendable to the contractor who is assigned the contract either by the Federal Government or by an Authority or Corporation, performing the function of the State, cannot be accepted. If such interpretation is accepted then on this analogy every contractor who is awarded a contract either by the Federal Government or by any Authority or corporation which is performing the State's functions, would claim exemption of taxes which is not at all the intention of the legislature and such interpretation would be violative of the spirit of Constitution provision. If WAPDA has agreed to reimburse the taxes to the contractor, it is purely its own contractual liability.
Since WAPDA has no authority to extend or pass on Constitutional concession to anybody else, therefore, petitioner's plea in the writ is without any substance. The contract between two petitioners in so fat para.10 is concerned is ultra vires of the Constitution, therefore, it cannot be pressed into service. The contractual liability of WAPDA with regard to para.10 cannot be enforced through the Constitution Petition.
10. Petitioner No,2 has admitted that it has been paying export tax to the District Council with the concurrence of petitioner No,1, therefore, they are estopped by their conduct to question its recovery later on in writ jurisdiction.
' In view of foregoing reasons, this writ petition is dismissed alongwith