The petitioner owns House No,85-B, Jail Road, ,Lahore. The respondent Excise and Taxation Department of the Government of Punjab has issued a demand for payment of Rs,43,031 as property tax in respect of the aforesaid house. It is this demand, which has been challenged by the petitioner in the present petition.
2. It has mainly been contended on behalf of the petitioner that the demand being made by the respondent department by way of property tax, is violative of the provisions of the Punjab Urban Immovable Property Tax Act, 1958 (the "Act"). Learned counsel for the petitioner has made reference to the provisions of section 3 of the aforesaid statute, which is the charging section and to the provisions of sections 5 and 5-A thereof.
3. Section 3 of the Act, inter alia, provides for the charge and levy of a tax on the annual value of buildings and lands in any rating area at a given rate, which is a percentage of such annual value.
Section 5 provides the basis on which annual value of lands and building is to be ascertained. This section, inter alia, stipulates that the annual value shall be ascertained by A estimating the gross annual rent at which a building may be let for use or might reasonably be expected to be let from year to year. By virtue of the Finance Act, 1998, section 5-A has been inserted in the Act. Section 5-A provides that the annual value may be determined on the basis of such valuation tables and for such localities as may be notified by or under the authority of the Government.
4. It is the case of the Government and the Director-General Excise and Taxation Department that valuation tables have been prepared under section 5-A of the Act and the demand raised against the petitioner is based on such tables. I have gone through the written statement, which has been filed on behalf of the respondents. It has been averred therein that the gross annual rental value has been calculated as a percentage of the capital costs of the properties which are subject to tax under the Act. This has been done by relying on valuation tables which have been prepared by the Deputy Commissioners of various districts in the Province for the purpose of determining the minimum sale price of properties located in their respective districts. .It is not disputed by the learned Law Officer, representing the respondents, that as a result of applying the aforesaid system for assessm ent of gross rental value the respondent department had not prepared any valuation tables to assess the rental value of buildings/properties located within different rating areas.
Instead valuation tables, which are based on the capital value of properties and which have been prepared for the purpose of assessing stamp duty and registration fee, have been used for the purposes of section 5-A of the Act.
5. The procedure adopted by the respondent department is not in accordance with the provisions of sections 5 and 5-A of the Act. It is true that section 5-A empowers the relevant authority of the Provincial Government to determine gross annual rental value on the basis of valuation tables.
However, the said provision does not empower the Government to prepare those valuation tables on the basis of the capital value of the properties involved, as has been done by the Government. It is clear from the written statement submitted by the respondents that the valuation tables, which have been used by the Provincial Government in determining the gross annual rental value of properties for the purposes of the Act, admittedly, have no nexus whatsoever with the rental value of the properties in question.
6. In this view of the matter the use of valuation tables, prepared by Deputy Commissioners of various districts in the Province for the purposes of Stamp Act and Registration Act cannot be treated as valuation tables for the purposes of section 5-A of the Act. In the circumstances, the demand raised against the petitioner, which is based on valuation tables prepared on the basis of the capital value of properties, is declared to be illegal.
7. This order, however, shall not prevent the Provincial Government from preparing valuation tables which are based on the annual rental value of properties within different rating areas, provided such valuation tables otherwise comply with the provisions of section 5-A and the other provision of the Act.
8. Before parting with this judgment, I need to address the preliminary objection, which was raised by the learned Law Officer to the maintainability of this petition. His objection is that section 10 of the Act provides for an appeal in case a person is not satisfied with the assessment of tax made in respect of his property. On this basis, he argued that the petitioner, who has approached this Court in Constitutional jurisdiction without availing the remedy of appeal, should, in the first instance, be directed to pursue his remedy by way of appeal. In a case titled ALM (Pvt.) Limited v. Director- General Excise and Taxation, Punjab, Lahore PLJ 2000 Lahore 1202 in circumstances not materially different to those of the present case, I have repelled a similar objection to maintainability raised on behalf of the Province and the Excise and Taxation Department. For the reasons given in the cited precedent, I hold that the present petition is maintainable notwithstanding the existence of a remedy by way of appeal given section 10 of the Act.
9. In view of the above discussion, this petition is allowed and the demand raised is declared to be illegal. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.