2. The facts forming the background of this Constitutional petition shortly stated are that the petitioner which is a Corporation incorporated under the laws of Republic of Korea (South Korea) having its Branch Office at Kot Ranjeet, Sheikhupura, has been awarded a contract of the construction of Lahore-Islamabad Motorway Project by the National Highway Authority, Ministry of Communications, Government of Pakistan. Since a large quantity of stone was to be used in the construction of the said Motorway the National Highway Authority has acquired on lease certain parts of the stone hills situated near Rabwah Town, District Jhang from the Directorate of Industries and Mineral Development, Government of the Punjab under the Punjab Minor Minerals Concession Rules, 1990. The National Highway Authority i.e. The lessee has authorised the petitioner on its behalf to excavate stone from the leased area which in this case is known as the petitioner's Chiniot Quarry. The petitioner after excavation of the stone from the said Quarry and crushing the same has to transport it to the Project's various work sites for use in the construction of the Project. It is common ground between the . Parties that Quarry which is the subject-matter of this petition is situated within the territorial limits of Town Committee Rabwah, District Mang and in order to approach the work site of the Project, the transport carrying the stone has to pass through the territorial limits of District Council. Jhang and while leaving the limits of the said District Council, Export Tax is charged from the petitioner at the rate of Rs.2 per quintal in pursuance of the impugned notification which has been challenged in this Constitutional petition.
3. Learned counsel for the petitioner in support of. This petition raised the following contentions:--
(a) that under the relevant rules respondent No.2 has been authorised to charge export tax only on such goods which are produced within its territorial limits and since the stone is not produced within its territorial limits, therefore, the export tax could not be charged;
(b) that even if it is held that export tax is chargeable the same cannot be levied at the rate of Rs.2 per quintal according to the impugned notification in the presence of Model Schedule prepared by the Government of Punjab which has been held by the SupremeCourt in the judgment reported as Zila Council, Sheikhupura through its Chairman v. Messrs Mian Tyre and Rubber Co. (Pvt.) Ltd., Lahore Cantt. And others PLD 1994 SC p.212 to have overriding effect as against the rates fixed by the Zila Council.
4. Before proceeding further to examine the merits of these contentions it is necessary and appropriate to deal and discuss the preliminary objections raised by Mr. Shahid Hamid, Advocate, learned counsel for respondents Nos.2 to 3. He contended:--
(i) that the writ petition is not competent as the petitioner in the first instance has not availed of remedies under sections 153, 156 and 157 of the Local Government Ordinance, 1979, which is by all means an adequate remedy. In support of this, reliance has been placed on judgment reported as Al-Akram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal 1993 SCMR 29, Wealth Tax Officer and another v. Shaukat Afzal and 4 others 1993 SCMR 1810 and Nur Muhammad v. Deputy Commissioner/Controlling Authority, D.G. Khan and others 1992 PLC (C.S.) 368.
(ii) the petitioner is guilty of concealment and suppression of material facts inasmuch as no mention altogether has been made in the writ petition that the petitioner had also filed a suit challenging the imposition of export tax in question before a Civil Court;
(iii) As is evident from a series of letters forming part of negotiations by the petitioner with respondent No.2 in particular letters, dated 6-3-1993, 17-4-1993, 27-4-1993, agreement, dated 18-8- 1993 and application under section 20 of the Arbitration Act, made by the petitioner before the Civil Court dated 9-5-1994, the petitioner did not raise the question of vires of the impugned notification or leviability of the export tax in pursuance thereto, therefore, it is estopped from raising any objection through this Constitutional petition as the leviability of the export tax on the stone has almost been admitted.
5. Under section 153 the general superintendence over the affairs of the Local Council is vested in the Provincial Government whereas under section 157 the Provincial Government has been invested with the powers to issue directions from time to time to the Local Councils. These two provisions of law, therefore, do not provide any remedy, as such, could not be termed as alternate adequate remedy available to an aggrieved person barring the maintainability of the Constitutional petition. Under section 156 the Government has been vested with the power to - quash proceedings of Local Council if it was of the opinion that the same were not in conformity with law or was in any way against the public interest. Preliminary objection of the petitioner is that no export tax is leviable from him iii respect of the stone even at the rate of 0.50 per quintal which rate has been fixed in the Model Schedule prepared by the Provincial Government itself, therefore, remedy under section 156 cannot be treated to be adequate alternate remedy available to the petitioner to get redressal of its grievance.
6. As regards failure of the petitioner to make mention about the institution of the civil suit it may be observed here that on examining the copy of the plaint of the said suit and application made by the petitioner under section 20 of the Arbitration Act, it is abundantly clear that the petitioner through the said suit wanted to enforce agreement, dated 18-8-1993 executed between the petitioner a .Respondent No 2, Zila Council. According to this agreement the petitioner -undertook to construct and improve Ahmad Nagar Sial Chowk Road as the same was in a dilapidated condition and in lieu thereof the petitioner was to be granted concession as regards payment of the export tax. According to the petitioner this agreement was unilaterally revoked by the Zila Council, therefore, the necessity to file the said suit arose. Since the said agreement also contained an arbitration clause, therefore, section 20 of the Arbitration Act, was also invoked. The scope of the said suit was different and the same was based on independent cause of action, therefore, omission to mention about the same in this petition had no adverse effect on the bona tides of the petitioner or on its merits as such, I am not inclined in exercise of my discretion to dismiss the writ petition on that score.
7. As to the argument as regards estoppel law is firmly settled that there cane no estoppel against law.. The petitioner has raised objection to the validity of leviability of export tax under the rules under which the same has been levied as per their own force, therefore, even if the petitioner had not earlier to the negotiations raised any objection about the chargeability thereof he is not estopped under the law to raise objection if according to the rules and the law the same in fact is not chargeable.
8. Reverting to the contention raised by Mr. M.R. Sheikh, Advocate learned counsel for the petitioner as to the levy of export tax on the stone in question it tray be mentioned that ' it is necessary in the first instance to examine the law under which the export tax has been levied. The export tax is levied under the Punjab Zila Councils (Export Tax) Rules, 1990. Rule 5 of the said Rules under which such a tax is levied is reproduced below in extenso for facility of ready reference:-- "Rule 5. Presentation of goods at Tax Posts.--- (1) The Zila Council shall levy and collect export tax on export of goods produced within its limits or which during their transit through the limits of Zila Council beyond the time allowed for the purpose under rules.
(1-A) Notwithstanding anything contained in this Rule, with effect from the first day of July, 1992;
(a) a Zila Council shall levy and collect the goods exit tax only on the export of goods produced within its limits; and .
(b) , sub-rules (3), (4) and "(5) shall be omitted.
It is manifest from this rule that the export tax is leviable only if the goods are produced within the limits of Zila Council and then exported from its limits. The term "produce", therefore; is significant in order to determine as to whether export tax on any goods can be charged or not. This term has not been defined either in the Local Government Ordinance, 1979 or the Rules, therefore, we have to rely on its ordinary dictionary meaning. However, in the Book entitled Words and Phrases Legally Defined by Johan B. Saunders. Volume 4, Second Edition, at page 87 it has been defined as under:- - "in relation to minerals or other substances, includes the getting thereof, and in relation to animals and fish, includes; the taking thereof. "
"The thing (or things collectively) produced, either' as a natural E growth or as a result of action or effort."
"The product of natural growth, labour or capital to make, originate; or yield, as gasoline. To bring to tote surface, as oil."
"To bring forward, to make longer, to bring forth; to bear; to exhibit; to yield; to bring about. "
The Quarry/Hill from where the stone is excavated is a mine within the meaning of the term "Mining" ,and the same has been so treated under the law as the lease to excavate the stone was granted to the National Highway Authority under the Mining Rules, therefore, the definition of the word "produce" given in the Book entitled Words and Phrases Legally Defined by Johan S. Saunders, Volume 4, Second Edition as regards minerals is aptly applicable to this case, therefore, the production, of the stone is to deemed to have taken place when the same was excavated from the said F Hill/Quarry. Since the said Hill/Quarry is admittedly situated within the limits of Town Committee, Rabwah, and not the territorial limits of District Council Jhang, therefore, it can safely be held that the said stone is not produced within the limits of the said District Council, as such, in relation to its place of production no export tax could be levied on the transportation of the same to a place outside the limits of District Council, Jhang though. It passes through the said limits to bring it to the Project site.
9. Mr. Shahid Hamid, learned counsel for the respondent facing with this difficulty placed reliance on judgments reported as Superintendent to Central Excise Lyallpur v. Ch. Faqir Muhammad PLD 1959 SC 103, Pakistan v. Muhammad Aqil PLD 1960 SC 4, Colony Sarhad Textile Mills Ltd. v. Collector, Central Excise and Land Customs and another PLD 1969 Lah. 228, Federation of Pakistan v. Messrs Noori Trading Corporation (Private) Limited and 14 others 1992 SCMR 710, Messrs Sethi Straw Board Mills Ltd. v. Pakistan through the Secretary to the Government of Pakistan, Ministry of Finance and 3 others 1994 SCMR 1872 to argue that since the stone is crushed within the territorial limits of District Council Jhang where the crushing Machines have been placed by the petitioner, therefore, the production of crushed stone can be held to have taken place within the limits of District Council, Jhang, therefore, on the export of the crushed stone the export tax can be levied.
10. Learned counsel for the petitioner in answer to this question has relied upon judgment reported as Noori Trading Corporation (Pvt.) Ltd. v. Federation of Pakistan PLD 1989 Quetta page 74 in which it was held that the breaking of a ship into a number of pieces in order to obtain iron and steal plates did not amount to production of such iron and steel plates, therefore, it was held to be not chargeable with any excise duty.
11. Mr. Shahid Hamid; Advocate, learned counsel for the petitioner submitted that this judgment has been set aside by the Supreme Court in 1992 SCMR 710 (supra) and it was held that the excise duty could be levied on such iron and steel plates obtained through breaking of ship. I have gone through the judgment of the Supreme Court and find that the view taken by the High Court that the breaking of ship into small pieces did not amount to manufacture of iron and steel plates obtained through such breaking was neither examined nor overruled. The said judgment was set aside on the main ground that the question of manufacture was not so relevant because the law otherwise provided levy of excise duty on iron steel plates obtained by the ship breaking. In this view of the matter the rule laid down by the Quetta High Court that mere breaking of ship into small steel and iron plates did not amount to production of such iron and steel plates still holds good. The said principle can aptly be applied .To the facts of this case inasmuch as the breaking of a stone through crushing to smaller pieces of stone cannot be held to amount to production of the stone as it is manifest from the impugned notification that the export tax was levied on stone. Bairi Chalk Mittee sand, earth, brick Pacca of all kinds irrespective of its size and not on the act of crushing of the stone. As observed above this stone itself in this ease originated from the quarry/hill from which it was excavated, therefore, according to the definition of the word "produce" as noted above the same shall be deemed to have been produced at that stage which did not take place within the limits of District Council, Jhang. It has been held by a Division Bench of this Court in judgment reported as Hilal Tanneries Ltd. v. Zila Council Gujrat and.Others 1994 MLD 2366 that unless any good originated from the limit of District Council no export tax can be levied if the same is exported from its limits. There is no dispute that the Hill/Quarry is situated within the limits of Town Committee, Rabwah and not District Council, Jhang. This rule also finds support from judgment reported as Pakistan Petroleum Ltd. v. The Collector, Central Excise and Land Customs, Hyderabad and another PLD 1971 Kar..221 in which it was held that there can be no doubt that "Gaseous hydrocarbons" become exercisable goods as soon as they are brought out from wells as a natural product" and the argument raised that the same would be exercisable only after it was purified and ready for sale was repelled on the ground that the same shall be deemed to have been produced the moment it was brought out from the well. The upshot of the above discussion is that no export tax can be recovered from the petitioner on the export of stone excavated from the Hill/Quarry in question with reference to place of production.
12. Adverting to the controversy as regards rates of export tax it may be mentioned that the reliance of learned counsel for the petitioner in this regard is on the rule laid down in case reported as Zila Council, Sheikhupura through its Chairman v. Messrs Mian Tyre and Rubber Co (Pvt.) Ltd., Lahore Cantt. And others PLD 1994 SC 212 in which it was held that the Goods Exit Tax Model Schedule, dated 24-9-1990 issued by the Provincial Government had overriding effect as against the rates of taxes given in the schedule sanctioned by the Zila Council, therefore, the export tax could riot be recovered in excess of the rates given in the said Model Schedule. In this case the Model Schedule rates were issued by the Provincial Government on 24-9-1990 alongwith a directive to all the Chairmen of the Zila Councils in the Punjab that the export tax could be levied and charged according to the rates given in the said Model Schedule. In view of these facts it was held by the Supreme Court that the Zila Council was left with no authority to fix rate of taxes higher than the rates given in the said Model Schedule. In the present case the Goods Exit Tax Model Schedule was issued by the Provincial Government on 21-4-1991 with a clear mention made in the same that it had been prepared to serve as a guideline for Zila Council and that the same did not absolve Zila Councils of their responsibilities to observe all formalities prior to imposing the export tax. No directive of the like nature, however, has been shown to have been issued by the Provincial Government in this case to the Chairmen of the Zila Councils that the said Model Schedule should be given overriding effect qua the schedule of rates issued by the Zila Council rather through letter, dated 20-7-1994 issued by the Provincial Government it has been clarified that the Goods Exit Tax Model Schedule issued on 21-4-1991 had been circulated to serve as guideline and to facilitate the Zila Councils in the Province in preparation of their schedules and Zila Councils may in their discretion follow or depart from the same. In view of this clear directive issued by the Provincial Government which is vested with the power to supervise the affairs of the Local Councils and to frame rules, the rule laid down in the reported judgment of the Supreme Court is no longer applicable, therefore, Zila Council could recover the export tax at the rates mentioned in the schedule sanctioned and issued by itself i.e. Rs.2 per quintal. However, since it has already been held that the stone in question having not originated from any place within the limits of Zila Council, Jhang, therefore, on that basis the said tax is not recoverable from the petitioner.
13. For the foregoing reasons this writ petition is accepted. The act of respondent No.2 regarding recovery of export tax on the stone excavated by the petitioner from the hill situated within the territorial limits of Rabwah is hereby declared to be without lawful authority and of no legal effect and respondent No.2 is hereby restrained from levying and collecting export tax qua the said stone from the petitioner on the assumption that it originated within its limits. There will be no order as to costs.
14. Through an interim order the respondent-Zila Council was allowed to recover the export tax from the petitioner at the rate of 0.50 per quintal. The amount so far recovered in pursuance of the said stay order shall be refunded to the petitioner forthwith.