The petitioner-Company is stated to be engaged in the work of construction of Multah-Mian Channun Additional Carriage Way (N-5). In order to execute the said work the petitioner has to bring "Boulder" mixed with red clay from the District of D.G. Khan. The said stone is used for the works which are being carried out in the District of Khanewal. Since the stone is brought on large carriers and the said vehicles are not allowed to cross Taunsa Bridge, the Boulder has to be brought on small trucks while crossing Taunsa Bridge and the goods are then unloaded within the limits of Muzaffargarh District to be loaded on long vehicles to be carried to Khanewal. The precise case of the petitioner is that while the goods are so in transit the respondent Zila Council levies and charges export tax from the petitioner. The respondents in its comments has not questioned the plea that the said goods are in transit while in Muzaffargarh. However, it is the stance of the respondent Local Council that the goods are retained in the limits of the respondent Local Council in excess of the period prescribed and as such the said tax is rightly levied and charged by it.
2. Mr. Muhammad Rafique Rajwana, Advocate relying on the case of Hilal Tanneries Ltd. v. Zila Council, Gujrat through Chairman and another (1994 M LD 2366) as also Mitchell's Fruit Farm (Pvt.)
Ltd. v. Zila Council, Okara (1996 M LD 1617) argues that the respondents cannot levy or charge the said tax on the said goods of the petitioner for the reason that they are not exported out of the limits of the respondent Zila Council, by the petitioner. Mr. Muhammad Khalid Alvi, Advocate, on the other hand, presses the position taken up in the comments and relies on Rule 5(1) and Rule 5(5) of the Punjab Zila Council (Goods) Exit Tax, 1990 in support of the said contention.
3. I have considered the respective pleas of the learned counsel for the parties and I tend to agree with the learned counsel for the petitioner. The power to levy tax vests in the respondent Zila Council under section 137 of the Punjab Local Government Ordinance, 1979. Under the said provision of law the respondent Local Council, may and if directed by the Provincial Government shall levy all or any of the taxes enumerated in the Second Schedule. The tax in question is relatable to Item No.7 of Para.II of Second Schedule of the said Ordinance. I may reproduce the said item:-- "7. Tax for the export of goods and animals from the Zila."
The only interpretation possible on the said item is that the respondents can impose a tax on the export of goods and animals from its limits. The aforementioned Rules being relied upon by the learned counsel for the respondents have been framed by the Governor of the Punjab in exercise of powers vesting under section 144 read with section 167 and the said section 137 of the said Ordinance. I have already referred to section 137 above which of course is the main charging section. Section 144 provides for the manner of imposition, assessment, leasing, compounding, administering, and regulation of the, taxes which are levied by a Local Council. Section 167 provides for the power of 'the Provincial Government to make Rules for carrying out the purpose of the Ordinance.
4. A reading of the afore-referred provisions of the said Ordinance would lead only to one conclusion that a Local Council can levy only such taxes as it is authorised to levy under section 137 read with the Second Schedule. Section 144 provides for the manner of imposition etc., of the tax which a Local Council is authorised to so levy under the said section 137 while section 167 empowers the Government to make Rules for the said. Purpose. It is a settled proposition that the power to frame Rules under the parent Statute does not include the power to enhance or curtail the effect thereof. I deem it proper to reproduce here Rule 5(1) to judge the vires of the same in the light of the said provisions of the said Ordinance:---- "5.---(1) The Zila Council shall levy and collect goods exit tax on export of goods produced within its limits or which during transit through the limits of the Zila Council beyond the time allowed for the purpose under these rules."
The said later part of the said Rule 5(1) has no nexus whatsoever with Item No.7 of para. II of the Second Schedule to the Punjab Local Councils Ordinance, 1979 read with section 137 thereof. Zila Council has been authorised only to levy a tax for the export of goods or animals from the Zila. The term "1/3rd export" does stand defined in Rule 2(c) of the said Rules as to mean export from the Zila Council limits. Thus, the respondent Council has no jurisdiction to levy and consequently to charge the said export tax/goods exit tax on the goods which are in transit.
5. The judgments cited by the learned counsel for the petitioner are also laid down in the similar terms that the Zila Council has no jurisdiction to levy or charge tax in respect of the goods in transit.
It will not be out of place to mention here that in both the cases of Hilal Tanneries Ltd., and Mitchell's Fruit Farm (Pvt.) Ltd. The plea similar to one raised by Mr. Khalid Alvi, Advocate was raised for the Zila Council. The said plea was rejected. In fact in the said cases there is a reference to an amendment brought about in the said Rules in the year 1992 whereby it was provided that w.e.f. 1- 7-1992 the Zila Council shall levy and collect the Goods Exit Tax on the export of goods within its limits. I have already reproduced the that the goods being taxed are produced within its limits and are exported as such by the petitioner.
6. As a result of the above discussion I do hold that the levy, imposition and charge of export/goods exit tax by the respondents from the petitioner in respect of the "Boulder" of the petitioner is illegal and without lawful authority and I declare the same as such.
7. This leaves the question of the refund of the tax to the respondents by the petitioner. I find that in both the said judgments relied upon by the learned counsel for the petitioner after holding the levy of such tax to be illegal this Court directed refund thereof. The respondents are accordingly directed to refund the said tax recovered from the petitioner in respect of the said goods in transit on production by the petitioner of:--
(a) Transit passes issued under Rule 5(3); and
(b) Receipt issued under Rule 6(3) of the said Rules.
The writ petition is accordingly allowed in the above terms. No orders as to costs.