PAKISTAN GUM & CHEMICAL LTD. Versus CHAIRMAN, KARACHI MUNICIPAL CORPORATION

This suit is for the refund of a sum of Rs. 49,671.51 allegedly over paid by the plaintiff to the Karachi Municipal Corporation, as terminal tax.

2. Pakistan Gum & Chemicals Ltd., Karachi, the plaintiff, imported into the terminal tax limits of the Karachi Municipal Corporation, the defendant: from the up‑country by railway during the period 23‑9‑1965 to 2‑2‑1966, a,. total quantity of "Gower Meals" weighing 102258 mounds and 12 seers in, 40671 bags. "Gower Meals" are dried seeds of the "Gower" vegetable, and in large quantities are used also as a cattle fodder. The Karachi Municipal Corporation levied terminal tax on the said goods at the time of clearance of the bags from the Railway Stations, at the rate of 0.94 paisa per maund under item No. 3 (b) of Class V which read "seeds of vegetables and flower", of the Revised Schedule of Terminal Tax which came into force with effect from 1st September 1965 (Exh. 6). The total amount of Rs. 96,098.93, was recovered from the plaintiff as terminal tax in respect of the good so imported during the said period, The Revised Schedule of Terminal Tax was, amended by West Pakistan Government Notification dated 20th January 1966 (Exh. 6/1). and inter alia, item 14(c) of Class I of the Revised Schedule. which formerly read "14 Fodder . . . ., (c) Oil cakes . . . . . 0.16", was substituted by the following

"14. Fodder....

(c) Oil cake,, fish meals, gowar meals, fish pastes, and other feeds for animals and poultry not specified elsewhere .0.16."

Despite the amendment which came into force on 20‑1‑1966, the Karachi Municipal Corporation, continued to levy terminal tax at the old rate of 0.94 paisa per maund under Item 3 (b), Clause V of the Revised Schedule as "Seeds of Vegetables and Flower".

3. The plaintiff applied to the Assessor and Collector, Terminal Tax Department, K. M. C., for refund of a total amount of Rs. 80,743.56 as terminal tax recovered in excess. As the plaintiff's request for the refund was, not acceded to, it preferred an appeal to the Chairman, who heard the appeal and passed the following order on 19‑3‑1968

"Heard the appellant. The Government had accepted to classify the item separately at 16 paisas per maund instead of 94 paisas therefor; the refund should be allowed in all fairness. The question of time should not be agitated as it is a question of fairplay. This disposes of all other appeals relating to Gowar Meals.

(Sd.)

19‑3‑1968 Chairman, K. M. C."

Despite the Chairman's aforesaid order for refund, the defendant made a refund only of Rs. 34,963.46. The plaintiff's case is that the balance of Rs.45,780.21 still remains outstanding against the defendant, which has remained unpaid in spite of repeated demands. Hence the plaintiff has filed the present suit to claim the said amount.

4. The Karachi Municipal Corporation submitted a written statement in which it submitted that the levy of terminal tax at the rate of 0.94 paisa per maund on the goods was perfectly valid and lawful for the period prior to 20‑1‑1966, when the change was brought about by the notification of that date. Therefore, as no refund was legally permissible for this period the order passed by the Chairman dated 19‑3‑1968 ordering refund, was‑ ultra vires, illegal, and not binding. It was admitted that for the period after 20‑1‑1966 (when the Revised Schedule was amended by notification) until 2‑2‑1966, a period of 12 dais, the levy was wrongly made at the old` rate of 0.94 paisa per maund, instead of at the new rate of 0.16 paisa per mound. The total amount thus recovered in excess during those 12 days was Rs. 34,963.46 which amount has been refunded to the plaintiff on 15‑10‑1968. That the plaintiff's claim for refund of the balance amount of Rs.45,780.21 in suit was misconceived and prayed that the suit be dismissed.

5. Several issues were framed by consent of the parties. But when the matter came up before me for evidence, counsel submitted by consent that no oral evidence was necessary as the question in issue is one of law on the admitted documents and that only two issues were material namely, Nos. 3 ‑and 6, which read as follows :

(3) Whether the orders passed by the then Chairman, Karachi Municipal Corporation who heard and allowed the appeal of the plaintiffs in respect of refund .for the excess amount recovered by the Terminal Tax= Department of the defendant is not legal, proper and binding on the defendant ?

(6) Whether the amended list issued by the Government of West Pakistan dated 20‑1‑1966 does or does not classify the commodity of Gowar Meals to be substituted under item 14(c) of Class I of the. Terminal Tax Schedule operated on and from Ist September 1965 ?

6. I have heard counsel for the parties and after giving my best consideration to the points raised in argument, I am of the view that the suit ought to be dismissed for the following reasons :

7. Issue No. 6.‑I will take up this issue first. Item No. 14 (c) of Class I of the Revised Schedule (Exh. 6) which was introduced on 1‑9‑1965 was amended by Gazette Notification dated 20‑1‑1966 (Exh. 6/1) and the goods "Gower Meals" inter alia, were added to "Oil cakes", without, however.. changing the rate of tax, which stood @ 0.16 paisa per maund. It is the submission of Mr. Musani, learned counsel for the plaintiff, that the original item 14(c) of Class I of the Revised Schedule is to be deemed to have .been amended with retrospective effect. In other words, that the plaintiff is entitled to the benefit of the reduced rate of 0.16: The argument is that the very same article cannot be taxed at one time as ",seeds of vegetables and, flower" arid at another time as an item of "fodder". Therefore. according to the plaintiff, as "Gower Meals" were wrongly taxed as "Seeds of Vegetables and Flower" under item 3(b) of Class V at the higher rate of 0.94 paisa per maund during the period prior to 20‑1‑1966, the plaintiff is entitled to a .:refund at the rate of 0.78 paisa per maund charged in excess during the" period 23‑9‑1965 to 20‑1‑1966.

8. But as rightly submitted by Mr. Muslim Naqvi for the defendant, "Gower Meals" was not specifically provided for in the original Revised Schedule of I‑9‑1965 (Exh. 6). Therefore, at the relevant time, it was appro priately charged under item "Seeds of Vegetables and Flower" at 0.94 paisa per maund under item 3(b) of Class V. Incidentally, it is not the case of " the plaintiff that no terminal tax was leviable at all on "Gower Meals" because that item (described as such) was not provided for in the original., Revised Schedule. In fact, no objection was taken to the levy until after the amendment was introduced on 20‑1‑1966. It is also clear that the Notification dated 20‑1‑1966 does not, in terms, state that the amendment shall be deemed to be retrospective. Therefore, in the absence of an express provision to the contrary, the presumption will apply that a taxing statute is not retrospective but prospective. Just as a taxing statute which imposes a new burden is presumed not to be retrospective, so a taxing statute which confers a benefit or reduces the tax does not relieve persons subject tot the burden before it was abolished or reduced. In this connection, Maxwell on "Interpretation of Statutes" 10th Fdition, pp. 206, 209 may be referred to. Therefore, in my view, by adding "Gowar Meals" under the description "Fodder" in item 14, Class 1, by the notification dated 20‑1‑1966, the Legislature made it precise and clear that the lesser tax shall be imposed on "Gowar Meals" as an item of "Fodder" with effect from 20‑1‑1966. In my view, the submission of Mr. Musani is therefore, fallacious and it is rejected. This issue is decided against the plaintiff.

9. Issue No. 3.‑In view of my finding that the amendment introduced by the notification dated 20‑1‑1966, is not retrospective, the order of the Chairman dated 19‑3‑1968 allowing refund of the alleged excess for the period prior to 20‑1‑1966 is without jurisdiction and illegal. The Chairman had no power or jurisdiction to waive or remit a tax or to order a refund . of tax validly and legally levied. The order bring without jurisdiction, it is a nullity and did not require to be set aside in appeal to the Controlling Authority by the K. M. C. There cannot be an estoppel against a taxing statute. Therefore, the submission of Mr. Musani that the Chairman's C order became final or that a similar refund was made to some other party cannot make an invalid order valid. The order passed by the Chairman on 19‑3‑1968 in so far as it is an order for refund of the alleged excess tax for the period prior to 20‑1‑1966 is of no legal effect. The issue is decided accordingly.

For the foregoing reason, the suit is dismissed. As the plaintiff appears to have been misled by the order of the Chairman, I would leave the parties ‑ to bear their own costs.

K. B. A. Suit dismissed.