ASSOCIATED HOTELS OF PAKISTAN LTD. Versus PROVINCE OF WEST PAKISTAN
This order will dispose of two writ petitions, namely, Writ Petitions Nos. 724 and 2132 of 1964. The petitions have been moved in this Court under Article 98 of the Constitution of Islamic Republic of Pakistan 1962 by Associated Hotels of Pakistan Limited and Amin Sons Limited respectively, throwing challenge to the vires of West Pakistan Finance Act, 1963, by section 15 of which surcharge has been imposed on the persons who use the amenities and entertainment provided by the: residential hotels of which the petitioners are the proprietors. According to clause (b) of subsection (2) of section 15 of the Act the charge on account. of amenities and entertainment includes the charge on account of sale of liquor consumed in the hotel, and service charges, if any. Clause (c) deals with charge on account of amenities and entertainment which has to be calculated at 75 per cent. of the gross amount charged by the hotel, the remaining 25 per cent. being deemed to be the charge on account of foodstuffs and manufactured goods sold.
2. The case has been argued at length by two eminent counsel of this Court Messrs M. A. Rahman and Abid Hassan Minto mainly on the ground that tax on the sale and purchase of goods could be levied under Article 131 of the late Constitution of Islamic Republic of Pakistan 1962 by the Central Legislature as shown at item No. 43 (f ) of the Third Schedule. Primarily according to them the sale of the goods, by the management of the hotels, comes within the mischief of taxation under the Sales Tax Act and another levy under the Finance Act amounts to double taxation. Mr. M. A. Rahman cited the following few lines of page 268 from Maxwell on the Interpretation of Statutes, Tenth Edition, under the heading "Statutes imposing Burdens"
"A construction, for example, which would have the effect of making a person liable to pay the same tax twice in respect of the same subject matter would not be adopted unless the words were very clear and precise to that effect. In a case of reasonable doubt the construction most beneficial to the subject is to be adopted."
He also placed reliance on second paragraph of page 140 from Maxwell on the Interpretation of Statutes, Twelfth Edition by P. St: J. Langan, .published in 1969, which reads :‑
"Although statutes imposing pecuniary burdens are construed strictly in favour of those on whom the burden is sought to be imposed, and in revenue statutes in particular Vie subject is aided by presumptions such as that against double taxation, the question is primarily that of the full and fair application of particular statutory language to particular facts as found."
At page 141 the words "just as the Courts will not narrow provisions designed to curb evasion, so they often apply ordinary charging sections with an eye to the substance of the transaction to be taxed rather than its form," are worthy of consideration.
3. It was next submitted that the imposition of such a tax was discriminatory as per grounds mentioned in paragraphs 8(ii)(a) to (h) of Writ Petition No. 724 of 1964 which deal with various kinds of discrimination about persons and hotels of different status and classes. Mr. Abid Hassan Minto left this point entirely to his learned friend Mr. M. A. Rehman to deal with. The latter on the first day of his arguments tried to canvass before me the discrimination to which I could not see eye to eye with his submissions. Today he himself has conceded that he will not be able to agitate the question of discrimination in the matter of taxation. He produced Syed Sharifuddin Pirzada's Fundamental Rights and Constitu tional Remedies in Pakistan, on page 376 of which it is mentioned "thus it will be within the power of the State to impose a tax on sales of virginia tobacco exempting the country tobacco". This contention of the learned counsel, therefore, loses its force. The elementary principle of taxation is to tax the luxuries so that rich people should bear the burden and the necessities of life should be exempted rather subsidised so as to provide relief to mediocre persons who do not unluckily fall in the category of rich.
4. Now I deal with the vires of the Finance Act. It is quite obvious. that the Legislature has been careful in making the law. Clause (b) of subsection (2) of section 15 mentions that the charge on account of amenities and entertainment shall include the charge on account of sale of liquor consumed in the hotel and service charges, if any. Clause (c) is to the effect that charge on account of amenities and entertainment shall be calculated at 75 per cent. of the gross amount charged by the hotel, the remaining 25 per cent, being deemed to be the charge on account of foodstuffs and manufactured goods sold. The position, therefore, is clear that persons who are residents of such hotels and consume liquor, Foodstuffs and manufact goods within the premises thereof are certainly liable to the payment of such a cess i.e. primary education surcharge and it cannot be held that they can be exempted from the payment, but the obvious distinction is in case or those persons who just enter the premises of the hotel, purchase these article and go out. They cannot be subjected to this levy for the simple reason that they have not enjoyed the amenities and entertainment provided by such hotels.
5. It was argued that it would be difficult for the hotels to keep separate accounts. It is not the headache of this Court to give a guide line or to provide methods for the maintenance of separate accounts of such sales, but I am absolutely positive that such an arrangement is possible. The Act is, obviously intra vires of the Provincial Legislature since it does not infringe the principle of double taxation at all. Sales‑tax is leviable on the sale and purchase of goods by the Central Legislation but the present Coss has been imposed on those persons who enjoy the amenities and entertain ment such as liquor bar, cabaret etc. provided by the hotels, while staying. therein and consume manufactured goods within these precincts.
6. Mr. M. M. Saeed Beg learned counsel for the respondents has raised a preliminary objection that the petitioners are not the aggrieved persons because the hotels are not to pay the tax but the persons who come and reside in the hotels are made liable. Aggrieved persons have been interpreted by superior Courts on several occasions and the judgment of the Supreme Court in Mian Fazal Din v. Lahore Improvement Trust, Lahore and another ( P L D 1969 S C 223 ) is one of them. The petitioners are obviously aggrieved persons because they would be losing customers on account of the imposition of this L tax as also it will effect their sale to outsiders, as I have already observed above. The submission has, therefore, no force.
7. Lastly he contended that the primary education surcharge is leviable under the Finance Act on all persons irrespective of the fact whether the articles are consumed in the hotel or not. For the reasons given above this submission of the learned counsel also does not find favour with me and is, therefore, repelled. I, therefore, hold that the Finance Act is intra vices or the Provincial Legislature but the interpretation of section 15 gives benefit of non‑payment of the levy to those who do not use the amenities and entertainment in the hotel but simply make purchases of certain articles fore their consumption at some place other than the hotels.
8. For the reasons given above both the writ petitions are accepted to the extent only that the imposition of education surcharge on the sale of goods to persons who do not enjoy the amenities and entertainment shall be invalid. In view of the difficult question involved the parties are left to bear their own costs.
. Petitions partly accepted.