JAWWAD S. KHAWAJA, J- The matter in contention between the parties to the present petition involves the interpretation of Section 9 of the Punjab Finance Act, 1997. The facts necessary for the disposal of this petition are simple and undisputed.
2. The petitioner is a company, which runs a private educational institution. By virtue of Section 9 of the Punjab Finance Act, 1997 (the "Act") a cess (the "Education Cess") was levied on all private educational institutions falling within a certain clause. The classification was based on the amount of monthly charges and fees per student received by educational institutions in the Punjab. For ease of reference Section 9 of the Act is reproduced below:- "9. Cess on Educational Institutions.- (1) There shall be levied and collected a cess on private educational institutions @ 5% of the charges including fees exceeding Rs.1000/- received per month per student."
3. On 2.7.1997, the Director General respondent No. 1, issued a memorandum addressed to all Additional Directors General, all Directors and all Excise and Taxation Officers in the Punjab. One of the purposes of this memorandum, apparent from its contents, was to give guidance and directives to the aforesaid functionaries of. The Punjab Excise and Taxation Department for the implementation and collection of the Education Cess under Section 9 of the Act The aforesaid memorandum, in paragraph 7 set of the manner of calculating the amount of Education Cess payable by an educational institution. The relevant portion of paragraph 7 directed all subordinate functionaries of the Excise and Taxation department as under:- "The demand in this regard shall be worked of on the fee of each student beyond Rs.1000/- per month i.e. If the fee is Rs. 1,050/-, the tax shall be charged on the amount of Rs.50/- only and the tax per student will be Rs.2.50."
4. The aforesaid formula appears to have been followed by all Excise and Taxation Officers and other functionaries of the Excise and Taxation Department in the Punjab, In the case of the petitioner, the concerned Excise and Taxation Officer issued a letter dated 2.10.1997 calling upon the petitioner to pay the cess with effect from 1.7.1997. The basis of calculating the Education Cess was made clear by reproducing the above- referred directive contained in the memorandum of the Director General dated 2.7.1997. The petitioner thereafter started making payment of the Education Cess in accordance with the formula communicated to it by the Excise and Taxation Officer, and to date, continues to do so. The respondents and all concerned functionaries of the Excise and Taxation Department also continued to administer and collect, the Education Cess in accordance with the directive contained in the above-referred memorandum as communicated to the petitioner.
5. On 29.5.1999 another memorandum was issued by the Director General, respondent No. 1 to all Additional Directors General, all Directors and all Excise and Taxation Officers in the Punjab. This memorandum (the "Second Memorandum") purported to be a clarification, regarding the amount of Education Cess payable by private educational institutions. The Second Memorandum set of a new basis for calculating the Education Cess which was materially different from that laid down in the earlier memorandum dated 2.7.1997. A new interpretation was given to Section 9 of the Act, resulting in an increased demand against the petitioner. Pursuant to the Second Memorandum, the Excise and Taxation Officer issued a letter to the petitioner dated 12.6.1999. The contention between the petitioner and the respondents has arisen as a result of the Second Memorandum and the increased demand raised by the Excise and Taxation Officer pursuant thereto.
6. To highlight the controversy between the parties, the relevant portion of the Second Memorandum is reproduced as under:- "Cess on private educational institutions is leviable on the total amount received by a Private Educational Institution including all recurring charges @ 5% and not on the amount exceeding Rs.1000/-. Instances have come to the notice of this office where tax assessment has been made on the amount exceeding Rs.1000/- which is incorrect, whereas the institution is supposed to pay cess on the total amount paid by a student."
7. The Director-General, Excise and Taxation Punjab (respondent No. 1) and the Province of the Punjab through its Secretary, Excise and Taxation (respondent No. 4) have jointly filed parawise comments to the writ petition. The said respondents have adopted the position that the Second Memorandum sets of the proper construction of Section 9 of the Act. It appears from the parawise comments that the change of stance reflected in the Second Memorandum is a result of objections raised by an audit team of the office of the Director General. Revenue Receipts Audit.
8. Learned counsel for the petitioner contended that the earlier interpretation of Section 9 of the Act given by the Excise and Taxation Department on 2.7.1997 was the correct interpretation. The same had been adhered to by the petitioner as well as the respondents for a continuous period of two years without any objection by the department. The petitioner further contended that the said interpretation, which was mutually accepted as correct is also the natural and most appropriate interpretation of Section 9. The learned Advocate General on behalf of the respondents, however, supported the interpretation given by the department in May, 1999 in the Second Memorandum.
9. However, before proceeding to discuss the merits of the competing contentions of the parties. I need to note that in their parawise comments respondents Nos. 1 and 4 have objected to the maintainability of the present petition on the ground that the petitioner has not availed the departmental remedies which, according to the respondents, are efficacious. Reference in this regard has been made to Rule 10(2) of the Cess on Private Educational Institutions Rules, 1998 (the "Rules") which appear to have been notified on 23.4.1998. According to the Rules, a person aggrieved by an order of the Excise and Taxation Officer, may prefer an appeal against such order to the Director, Excise and Taxation. The remedy or revision against the Appellate Order has also been provided for in the Rules. Admittedly, the petitioner in the present case has not filed an appeal under the Rules.
10. The learned Advocate-General at the outset laid emphasis on the aforesaid objection. He contended that the remedies of appeal and revision provided for in the Rules were adequate and efficacious. According to him, the Constitutional jurisdiction of this Court was not available to the petitioner without it first having exhausted the remedies provided under the Rules, In support of his contention, the learned Advocate- General referred to the case of Adamjee Insurance Company Ltd. Vs. Pakistan (through the Secretary to Government of Pakistan in the Ministry of Finance, Islamabad, etc. (NLR 1993 Tax 227). I have gone through the cited precedent and note that, for the reasons discussed below, the same is not applicable to the circumstances of the present petition.
11. The cited case relates to action taken by an Income Tax Officer under the provisions of the Income Tax Ordinance, 1979. The Honourable Supreme Court while deciding the precedent case held that the decision of the Income Tax Officer was appealable within the hierarchy of forums provided for in the Income Tax Ordinance, It was also noted by the Hon'ble Supreme Court that the aggrieved party in the said case had itself invoked the remedy of appeal provided by the Income Tax Ordinance, and as such it was not open to such party to invoke the Constitutional jurisdiction of the High Court without exhausting its administrative remedy.
12. A further point distinguishing the aforecited case from the present one is that the concerned administrative functionaries who could have provided redress to the aggrieved party in the said case had not expressed their opinion on the matter in contention and had also not issued directives to their subordinate officers to at in a specific manner, In the present case, as noted above, the highest departmental functionary namely the Director General, has issued a directive which preempts any difference of opinion on the part of the departmental functionaries entrusted with the task of providing redress in administrative proceedings. Additionally, the Province as respondent No. 4 has also adopted the position taken by the Director General, In these circumstances the remedies of appeal and revision provided for in the Rules would be inadequate and illusory, It would not be reasonable to expect any functionary of the Excise and Taxation Department to interpret the Act in a manner which is different from that set of by the Director General in the Second Memorandum and endorsed by the Secretary, Excise and Taxation.
13. While distinguishing the case of Adamjee Insurance Co. Ltd. There is yet another point to be noted. The matter in issue in the said case related to a question of fact on which findings were required to be given by the Income Tax Officer in the light of the law. He had to decide if there had been concealment of income on the part of the assessee and to make a determination as to the legality of the reserve created by the assessee to make provision for taxes. A dispute had thus arisen between the assessee and the Income Tax Department, relating to the admissibility of such provision as a deductible allowance for the purposes of taxing the assessee. In the present case, however, no such determination is required. The facts, as noted above are not disputed by the parties. The only contention between them relates to the correct interpretation of Section 9 of the Act.
14. The learned counsel for the petitioner, in support of the maintainability of the petition, argued that the mere existence of remedies by way of appeal or revision under a statute or statutory rules was not itself sufficient to take away the jurisdiction vested in this Court under Article 199 of the Constitution. He argued that the appeal or other administrative remedy needed to be efficacious and adequate in order to effect the maintainability of a Constitutional petition, In support of this contention, learned counsel cited various precedents of which the case of Messrs Chenab Cement Product (Pvt.) Ltd. Vs. Banking Tribunal Lahore and others (PLD 1996 Lah' 672) is most apposite. The cited precedent arose under the Banking Tribunals Ordinance, 1984. The petitioner in the Chenab Cement case had directly invoked the Constitutional jurisdiction of the High Court even though the aforesaid Ordinance provided for an appeal to this Court. The remedy of appeal, however, was circumscribed by stringent restrictions, including one requiring the appellant to deposit the decretal amount in Court in order to avail the remedy of appeal. According to the Full Bench of this Court, such requirement rendered the appellate remedy inadequate and illusory. The Full Bench of this Court, in the circumstances, held that the existence of an alternate remedy, would not by itself, bar the High Court from exercising its jurisdiction under Article 199 of the Constitution, It was further held that the Court would exercise such jurisdiction notwithstanding the availability of an alternate remedy where the Court came to the conclusion that the alternate remedy was not efficacious, In the present case, as noted above, the right of appeal provided by the rules, has been rendered nugatory by the fresh directive dated 29.5.1999 issued by the highest departmental functionary requiring the concerned subordinates to construe Section 9 of the Act in a manner which is disputed by the petitioner.
15. Learned counsel for the petitioner also argued that where the alternate remedy was available before a functionary who had expressed his mind on a controversy in question or who had received directives from a superior officer would not constitute an alternate remedy. Such remedy according to the learned counsel would, in substance, be non-existent. To further his contention, learned counsel referred to the case of Sky Rooms Ltd., Karachi Vs. Assistant Collector of Central Excise and Land Customs, Karachi (PLD 1982 Karachi 244) and the case of Collector of Customs, Lahore \/s. S.M. Ahmad and Company (Pvt.) Ltd. (1999 SCMR 138). These precedents support the argument advanced on behalf of the petitioner, In the present case, learned counsel for the petitioner argued, the highest functionary of the Excise and Taxation Department namely the Director General, had issued the memorandum dated 29.5.1999 whereby a new interpretation had been placed on Section 9 of the Punjab Finance Act, 1997. He further argued that the said memorandum had been issued to all functionaries of the Excise and Taxation Department including the Excise and Taxation Officer respondent No. 3 and the Director, Excise and Taxation who was the functionary deputed for the purposes of hearing appeals against the orders passed by the Excise and Taxation Officer, In these circumstances, according to learned counsel for the petitioner, there could be no expectation that any appeal filed by the petitioner could be decided contrary to the directive issued by the Director General, respondent No. 1.
16. Learned counsel for the petitioner cited a number of other precedents to support his contention that the present writ petition was maintainable notwithstanding the provision in the Rules of the remedies of appeal and revision. I have, however, not discussed the said authorities in this judgment because his contentions are well-founded and I am of the opinion that the present writ petition is maintainable in the circumstances discussed above.
17. I would like to advert to one further aspect of this case which makes it eminently suited for the exercised of jurisdiction under Article 199 of the Constitution without requiring the petitioner to have prior resort to administrative remedies. A pronouncement of this Court on a question of law itself becomes law for the Punjab until it is varied by the Supreme Court or by legislation. The present case involves a pure question of law relating to the correct construction of Section 9 of the Act The two competing interpretations put forth by the petitioner and the learned Advocate-General respectively, need to be adjudicated upon. There are numerous educational institutions throughout the Punjab where fees in excess of Rs.1,000/- per student per month are being charged. Likewise various Excise and Taxation Officers are exercising functions under the Act in various parts of the province for the purpose of levying and collecting the Education Cess. A judicial pronouncement interpreting Section 9 of the Act would constitute precedent for functionaries of the Excise and Taxation Department throughout the province and would obviate the necessity of wasteful litigation before the High Court or before the functionaries of the Excise and Taxation Department in relation to the meaning of Section 9 of the Act. This is another reason why the objection raised by the learned Advocate-General against the maintainability of the present writ petition cannot be upheld.
18. This brings me to the merits of the petition. The contention of the learned counsel for the petitioner is that the provisions of Section 9 of the Punjab Finance Act, 1997 are capable of only one construction. According to him the department itself had interpreted Section 9 in July, 1997 contemporaneously with the passing of the Act The said interpretation had been accepted by the petitioner which had also made payments of the Education Cess in accordance with such interpretation for a continuous period of close to two years. During this period the Excise and Taxation Department had also adhered to the said interpretation. According to him, there was no ambiguity in the language of the statute. I have to agree with him that the most natural and unstilted interpretation of Section 9 of the Act would be the one reflected in the Director-General's Memorandum dated 2.7.1997, relevant portions of which have been reproduced in paragraph No. 3 above.
19. During the course of his arguments I put it to the learned Advocate-General that the interpretation which has now been placed on Section 9 of the Act by the department is somewhat convoluted and would require stretching of the English language in order to support it. The drafting of the statute, in my opinion, would have been different if the latest departmental construction of the Act were intended. I suggested to the learned Advocate-General that the wording of Section 9 in such event would have provided for the levy and collection of education cess on private educational institutions charging fees exceeding Rs.1000/- per month per student @ Rs.5% of such fees and charges. The learned Advocate-General agreed that the statute was not happily worded for the purpose of supporting the interpretation of Section 9 of the Act now adopted by the Excise and Taxation department, It is implicit in the learned Advocate General's concession that Section 9 of the Act is capable of the meaning put on it by the petitioner. Indeed he did not argue that such meaning was not possible.
20. Learned counsel for the petitioner argued that the words of a statute should be given their ordinary and natural meaning. He further contended that fiscal statutes were liable to be construed strictly and if there was any ambiguity in the wording of such statutes the same had to be resolved in favour of the subject and against the state, In support of this well- settled proposition of law, learned counsel cited the cases of Collector of Customs, Customs House, Lahore, and 3 others Vs. Messrs S.M. Ahmad and Company (Pvt.) Ltd., Islamabad (1999 SCMR 138) and Commissioner of Sales Tax Central Zone, Karachi Vs. Crescent Pak. Soap and Oil Mills Ltd., Karachi (PLJ 1986 Karachi 182) and a number of other precedents with which I will not burden of this judgment
21. Even if it is for a moment conceded that the departmental interpretation is possible, it certainly is not the most natural one. The language of Section 9 lends itself more easily to the interpretation placed on it by the petitioner, which was also the interpretation adopted and adhered to by the Excise and Taxation Department since the inception of the Act till the end of May, 1999.
22. The learned Advocate-General argued that Section 9 of the Act should be read as providing an exemption to the petitioner from payment of the Education Cess in respect of the first one thousand rupees of charges and fees received by it. The language of the said section, I am afraid, does not support the construction suggested by the learned Advocate General, It is to be noted that Section 9 of the Act levies a tax on private educational institutions such as the school being run by the petitioner. There is no mention of any exemption at all in the said statutory provision. If an exemption had been intended, the provisions of Section 9 of the Act would have been made applicable generally to all private educational institutions and from such general body the category of exempted institutions would have been carved of. The statute would then have mentioned educational institutions receiving charges and fees of less than Rs.1000/- per student per month as exempted institutions, In the alternate it would have been specified, for institutions such as the petitioner's school, that the first one thousand rupees of charges and fees received per month would be exempt from the levy of Education Cess. The wording of Section 9 of the Act, however, does not make any mention of exemptions in the aforesaid manner. The plain meaning of the Section, as noted above, is to levy the Education Cess only on such charges and fees received by a private educational institution as are in excess of Rs.1000/- per month per student.
23. The learned Advocate General referred to the case of Messrs Bisvio Spinners Ltd. Vs. Superintendent, Central Excise and Land Customs Circle Sheikhupura and another (PLD 1988 SC 370) and the case of Central Cotton Mills Ltd. Vs. The Collector, Central Excise and Land Customs (1992 CLC 841) in support of his argument that exemptions from taxing Statutes should be strictly construed against a person claiming exemption, In view of my finding that Section 9 of the Act does not provide for any exemption, the authorities cited by the learned Advocate General are not applicable to the present case.
24. Based on the above discussion, I hold that the demand raised by the respondents requiring the petitioner to pay the Education Cess on the entire amount of charges and fees received by it is illegal, void and of no legal effect. As a result this petition is accepted with costs.