EJAZ AFZAL KHAN, J.---With the enforcement of Finance Act, 1997. (N.-W.F.P. Act No,III of 1997) on 7th July, 1997, sections 2, 3, 4 and 7 of the West Pakistan Urban Immovable Property Tax Act, 1958 (W.P. Act No,V of 1958) were amended with the addition of the schedule classifying the urban and its rating areas, lands and buildings therein and prescribing the amount of the tax levied thereon.
When the amendments alongwith the schedule besides changing the mode and method for the assessm ent of property tax also extended the gamut of the Act over the industrial buildings situate even in the Small Industrial Estate, the petitioners questioned their vires through Constitutional Petitions Nos. 605, 606, 607, 608, 832, 833, 834, 835 of 2001 and 713 of 2003. Since a common 'question of law is involved in all these petitions, they are disposed of by this single judgment.
2. It was argued by the learned counsel for the petitioners that the petitioners are lessees and not owners of the plots, they raised their industrial buildings on, in terms of section 2(e) of the Act.
Therefore, they cannot be subjected to the levy of the property tax. The learned counsel next argued that when the Small Industries Development Board is an independent authority in terms of section 31 of the N.-W.F.P. Small Industries Development Board Act, 1973 (N.-W.F.P. Act No,II of 1973), and has already subjected the petitioners to administration, maintenance and service charges, they cannot be subjected to yet another tax as it would amount to double taxation especially when no civic facilities are provided to them by the Municipal Corporation Peshawar, therefore, the amendments and the notices for demand issued pursuant thereto for payment of the property tax being ultra vires, unConstitutional and illegal be struck down. The petitioners counsel to support his contention placed reliance on the case of Jamshaid Waheed v. Government of Punjab through Secretary Excise and Taxation Lahore and 5 others PLD 2001 LA.
395. And National Detergents Ltd. And others v. The Province of Sindh and another 1988 SCM R 1214. If the amendments in the Act V of 1958, the learned counsel urged in the alternative, are assumed for a while to have been validly legislated piece of law even then the petitioners cannot be subjected to the levy of the property tax, when the Small Industrial Estate has not been notified to be an urban area.
3. As against that, the learned A.A.-G. Appearing on behalf of respondents Nos.1 and 3 argued that when the petitioners are lessees in perpetuity, they are owners, in terms of section 2(e) of the Act, of the industrial buildings, they have raised in the Small. Industrial Estate, therefore, they have rightly been subjected to the levy of property tax. The learned A.A.-G. Next argued that when all the amendments have been competently legislated and none of them is either discriminatory or violative of the Constitutional provisions, they cannot be struck down on any count. He by referring to clause 2(iv) of the lease agreement between the petitioners and the Board, submitted that the latter despite being an independent authority has not excluded the payment of charges and taxes etc. As could be levied by the Government or local authority.
4. We have gone through the record carefully and considered the submissions of the learned counsel for the parties.
5. Before we discuss the case one way or the other, it is worthwhile to refer to the relevant provision of the amendments introduced by Act No,III of 1997, whereby the application of the Act was extended to the industrial buildings which thus read as follows:--
(1) in section 2, after clause (g) the following new clause shall be inserted, namely; "(ga) 'Schedule' means the Schedule to this Act;
(2) in section 3, for subsection (2) the following shall be substituted, namely;
(2) there shall be levied, charged and paid a tax on the buildings and lands in rating areas at such rates and in respect of such buildings and lands as prescribed in the Schedule: Provided that different rates may be prescribed for different categories of buildings and lands including building and lands located in different areas: Provided further that Government may, by notification, for reasons to be recorded, remit in whole or in part, the payment of the tax by any class of person in respect of any category of property";
(3) for section 4 the following shall be substituted, namely:-- "4. Exemptions.--The tax shall not be leviable in respect of the following properties, namely:
(a) buildings and lands, other than those leased in perpetuity, vesting in the Federal Government;
(b) buildings and lands, other than those leased in perpetuity, vesting in Government and not administered by a local authority, or owned or administered by a local authority when used exclusively for public purposes and not used or intended to he used for purposes of profit;
(c) buildings and lands the area whereof does not exceed three marlas;
(d) public parks, playgrounds and libraries;
(e) buildings and .Lands or portions thereof used exclusively for public worship or public charity including mosques, churches, dharamsalas, gurdwaras, orphanages, alms houses, drinking water fountains; infirmaries for the treatment and care of animals and public burial or burning grounds or other places for the disposal of the dead: Provided that the following buildings and lands or portions thereof shall not be deemed to be used exclusively for public worship or for public charity within the meaning of this section, namely:--
(i) buildings in or land on which any trade or business is carried on unless the rent derived from such buildings or land is applied exclusively to religious purposes or such public charitable institutions as may be prescribed;
(ii) buildings or land in respect of which rent is derived, and such rent is not applied exclusively to religious purposes or to public charitable institutions; and
(f) buildings and lands belonging to widows and minor orphans who are not assessed to income tax";
(4) in section 7.--
(a) in subsection (1), for the words "five years" the words "three years" shall be substituted; and
(b) after subsection (2) the following new subsection shall be added, namely: "(3) after every three years the tax shall be increased at the rate of fifteen per cent of the tax last assessed and a new valuation list shall accordingly be prepared;" and
(5) the Schedule specified in Schedule I shall be added at the end.
SCHEDULE- I (See section 4(2)
"SCHEUDLE (See section 3(2))
PART''- I RESIDENTIAL BUILDINGS S. No.Category Rate of tax at Provincial and Divisional Head- quarters for old city and new extended area.
Head- quartersRate of tax in suburban areas (other than areas covered by column 3) of the Provincial and divisional Rate of tax at District Head- quarters for old city and extended area not covered column No.4 Rate of tax at District Head-- quarters other than areas by covered by column5 of the District Head-- quarters.
1 2 3 4 5 6
1. Exceeding3 Marlas but not exceeding 5 marlasRs.750 Per AnnumRs.325 per AnnumRs.300 per AnnumRs.150 per Annum
2. Exceeding 5 Marlas but not exceeding 10 Marlas.Rs.1500 Per AnnumRs.750 Per AnnumRs.750 Per AnnumRs.500 per Annum
3. Exceeding10 Marlas but not exceeding 20 Marlas.Rs.2000 Per AnnumRsA000 Per AnnumRs.1000 Per AnnumRs.500 per Annum
4. Exceeding15 Marlas but not exceeding 20 MarlasRs.3000 Per AnnumRs.1500 Per AnnumRs.1500 Per AnnumRs.750 per Annum
5. Exceeding 20 MarlasRs.3,000 Per Annum for the first 20- Marlas plus Rs.200 Per additional Marlas.Rs.1,500 Per Annum for the first 20 Marlas plus Rs.100 Per additional Marlas.Rs.1,500 Per Annum for the first 20 Marlas plus Rs.50 Per additional MarlasRs.750 Per Annum for the first 20 Marlas plus Rs.50 Per additional Marlas.
PART - II COMMERCIAL BUILDINGS S. No.Category Rate of Tax for Provincial HeadquartersRate of Tax for Divisional Headquarters (other than Peshawar)Rate of Tax for District Headquarters the than These covered by column 4)
1 2 3 4 5
1. Ground/First Floor Rs.7 Per Sq.ft. Rs. 4 Per Sq.ft. Rs.2 Per Sq.ft.
2. Basement/Upper Storeys Rs.3 Per Sq.ft. Rs. 2 Per Sq.ft. Rs.11 Per Sq.ft.
PART - III OFFICES Building acquired for use as offices by Government or Semi---Government Organi4ations or by Banks and Development Financial Institutions and lands shall be assessed for the purpose of tax on the basis of 20 per cent of the annual value of such buildings or lands.
PART - IV PETROL PUMPS
(i) Petrol Pumps with Convenience Stores Rs. 1000 Per Annum
(ii) Petrol Pumps without Convenience Stores Rs.5000 Per Annum PART - V INDUSTRIAL BUILDINGS Industrial buildings within the limits of urban areas shall be assessed for the purpose of this tax at the rate of one rupee per square foot. "
6. The amendment which was introduced by the "North-West Frontier Province Finance Ordinance, 2000" (Ordinance II of 2000), is also reproduced and thus reads as under:--
3. Amendment of W.P. Act V of 1958.---In the West Pakistan Urban Immovable Property Tax Act, 1958 (W.P. Act V of 1958), in the Schedule,--
(i) For Part II the following shall be substituted, namely:--- "PART-II COMMERCIAL BUILDINGS AT PROVINCIAL HEADQUARTER S. No.Category of locality where the property is situated.Rate of tax per square feet of covered area. Ground Floor 1st Floor and BasementUpper Storeys 1 2 3 4 5
1. A Rs.10 Rs.7 Rs.5
2. B Rs.7 Rs.5 Rs.3
3. C Rs.5 Rs.3 Rs.2
4. D Rs.3 Rs.2 Rs.1 Note.--For the purpose of column 2, the categories 'A', 'B', 'C' and ' D' shall be such as respectively notified by Government in the official Gazette,";
(ii) after Part II, as so substituted, the following new part shall be inserted, namely; "PART - II-A COMMERCIAL BUILDINGS LOCATED AT THE PLACES OTHER THAN THE PROVINCIAL HEADQUARTER S. No. Category Rate of tax per Square feet of covered areas at Divisional HeadquartersRate of tax per square feet of covered areas in the Districts other than the District of Provincial and Divisional Headquarters 1 2 3 4
1. Ground/First Floor Rs.4 Rs.2
2. Basement/Upper stories Rs.2 Rs.1" and
(iii) for Part V the following shall be substituted, namely: "PART-V INDUSTRIAL BUILDINGS Industrial buildings within the limits of rating areas shall, for the purposes of this tax, be assessed at the rate of Rs,2.50 per square feet of the covered areas of such buildings."
7. The above quoted provisions reveal that the industrial buildings have been for the first time subjected to the levy of the property tax but this is not something unprecedented as in every part of the country Industrial buildings or for the matter any building which earns profit is subject to the levy of property tax.
8. A perusal of clause 2(iv) of the agreement between the petitioners and the SIDB would show that imposition of such tax was apprehended all along even by the latter that is why this clause was specifically inserted by it and accepted by the petitioners at the time of execution of the lease deed which clearly stipulated that all the charges, taxes, assessments, premiums, rates including water rates and outgoing whatsoever now or hereafter imposed, levied or charged by any authority upon, in connection with or in respect of the demised property and the buildings and structures erected thereon, shall be paid by the lessee. In this view of the matter, the argument of the learned counsel for the petitioners that the Small Industrial Development Board being an independent authority has already subjected the petitioners to administration, maintenance and service charge, therefore, they cannot be subjected to yet another tax, shall be stripped its force if at all it had any.
9. The argument that the petitioners are the lessees and not the owners of the plots on which they have raised their Industrial Buildings, therefore, they cannot be subjected to the levy of property tax is unfounded altogether for the simple reasons that their lease, peing spread over a period of 99 years, would bring their case in the mischief of lessees in perpetuity, as such they being owners to all intents and purposes of the Act have rightly been subjected to the levy of property tax. Needless to reiterate that according to the dictionary meaning, perpetuity means a fairly long time.
10. The last limb of the argument of the learned counsel for the petitioners is also vacuous both factually and legally when the Industrial Estate falls within the boundaries of the urban area, vide Notification No,S.O.(LG-I)LG-12(33)/76(1), dated July, 1978 and that when it has been held by the Hon'ble Supreme Court in a Judgment rendered in the case of Government of N.-W.F.P. And others v. Haji Muhammad Afzal Zia in Civil Appeal No,437 of 1999, decided on 20-1-2004 that the Small Industrial Estate falls within the urban area.
11. The case of Jamshaid Waheed v. Government of Punjab through Secretary Excise and Taxation Lahore and 5 others (supra) will not be relevant to the case in hand as in that case valuation table prepared for the purpose of Stamp and Registration Act was held to be inapplicable for the purpose of the Punjab Act V of 1958. The case of National Detergents Ltd. And others v. The Province of Sindh and another (supra) is also not applicable to the instant case solely because it was relating to section 3(3-AA) of the Punjab Urban Immovable Property Tax Act whereas there is no provision in the N.-W.F.P. Act No,V of 1958 in parameteria therewith conditioning the levy of tax with the provision of civic facilities.
12. Above all else when nothing has been convincingly canvassed at the bar to show that any of the amendments in the Act or its extension to the Industrial Estate is either illegal, un-Constitutional or ultra vires, we do not think, a case for striking them down is made out.
13. The upshot of the foregoing discussion is that these petitions being without substance are thus dismissed alongwith C.M.