RAB NAWAZ Versus ZILA COUNCIL, DISTRICT SHEIKHUPURA
The relevant facts for the decision of this Constitutional petition are that the petitioner got a contract for the collection of Exit Tax of Zila Council, Sheikhupura for the period from 22‑10‑1998 to 30‑6‑1999 being high bidder for Rs.12,55,16,713. The detailed terms and conditions are incorporated in the agreement, Annexure "C" executed between them. The grievance voiced though this Constitutional petition is that respondent No.4 issued directions for release of the goods of respondents Nos.5 to 21 against bank guarantee. The petition was admitted to regular hearing. Notices were issued to the respondents who appeared and contested petition.
Learned counsel for the petitioners argued that respondent No.4 has no authority or jurisdiction to direct the petitioner to release the goods of respondents Nos.5 to 21 without payment of the Exit Tax. It is added that the exemption from the Exit Tax is available only under rule 8 of the Punjab Zila Councils (Export Tax) Rules, 1990 in respect of the goods exported by charitable or welfare institutions for its use that too with the prior approval of the Government. It is added that the direction contained in the Memos. 'F to F/15 by respondent No.4 is illegal. It is argued even the bank guarantees ‑are mostly not genuine but fake and photo copies. Besides this the documents submitted by respondents Nos.5 to 21 to prove the export are also fake, the, purpose is to, avoid payment of Exit Tax.
2. On the other hand, Rana Muhammad Asif, Additional Advocate General argued that the Government exempted goods meant for export to the other countries from the payment of Exit Tax by a Zila Council vide circular, dated 24‑5‑1984 and 10‑9‑1984 issued under section 139 of the Punjab Local Government Ordinance, 1979. It is added that the bank guarantees are furnished in accordance with . the notification of the Government. The.' purpose is that if the exporters i.e. respondents Nos.5 to. 21 failed to prove that the consignment has been exported abroad then the bank guarantee is to be encashed for the benefit of the contractor. It is added that contractor is associated with all such matters.
3. Mr. Ali Ahmad Awan, Advocate for respondents Nos. 1 to 4 argued that the tax is leviable under section 137 of the Ordinance, 1979 read with Part‑II of Second Schedule while section 138 deals with notifications regarding levy of taxes enumerated in Second Schedule and ultimately section 139 deals with the notification of powers of the Government. It is argued that the Government has issued the notification dealing with the refund and provided that the proof of export of the goods abroad is to be furnished within 90 days.
4. Mr. Salman Akram Raja, Advocate for respondents Nos. 5 to 21 argued that the petitioner cannot challenge any exemption lawfully granted by respondent No.4 under the orders of the Government in view of clauses 19 and 20 of the agreement, Annexure "C", between respondent No.l and petitioner. It is added that the petitioner is bound by the terms and conditions of the contract and cannot object to the exemption being granted. In this behalf reliance is placed on Inpak Tech Industries (Pvt.)Ltd. v. Government of Punjab 1998 MLD 1383 and 1996 CLC 1970. It is added that the bank guarantees are collected by the contractor at the time of export of the goods and till today none had been found bogus; fake, forged and fabricated.
5. I have given my anxious consideration to the arguments and gone through the record. The first question for determination is whether the goods exported out of the District Council limits can be exempted from the payment of Exit Tax. Learned counsel for the petitioner has relied on Rule 8 which reads as under:‑‑
8. Exemption .‑‑ A charitable or welfare institution exporting goods for its use may, with the prior approval of the Government be exempted from the tax. "
On the other hand, respondents have referred to section 137 of Ordinance, 1979 which deals with the manner the taxes are to be levied. The same reads as under:‑‑‑
"137. Taxes to be levied .‑‑ A Local Council subject to the provisions of any other law may, and if directed by the Government shall levy all or any of the taxes enumerated in the Second Schedule.''
While Part‑II of the Second Schedule of Ordinance, 1979 deals with the taxes of Zila Council. The relevant item is No.7 which reads as under:‑‑ `
"Tax for the export of goods and animals from the Zila. This is followed by section 138 which provides for notification and enforcement of taxes and the next relevant section is 139 which reads as under:
"139. Increase and decrease in tax .‑‑‑(1) Government may direct a local council‑‑‑
(a) to levy any tax;
(b) to increase or reduce any such tax or the assessment thereof to such extent as may be specified; or
(c) to suspend or abolish the levy of any such tax.
(2) If a direction issued under subsection (1) is not complied with within the specified time, if any, Government may make an order giving effect to the direction."
6. The Government vide Circular, dated 24‑5‑1984, Annexure‑D, proceeding to abolish Local Council Exit Tax on goods which were being exported from the Pakistan to the other countries. This was followed by Circular, dated 10th of September, 1984, Annexure‑E, whereby the exporter has to make cash payment or furnish bound or bank guarantee to the satisfaction of Zila Council and was allowed 90 days for claiming refund/settlement W accounts. It is clear from clause of subsection (1) of section 139 of Ordinance, 1.979 that the Government has the powers to suspend or abolish levy of any tax. Moreover, the petitioner was fully aware of the exemption as is clear from clauses 19 and 20 of the agreement between the parties and particularly the latter clause which reads as under:‑‑
7. The relation between respondent No. l and the petitioner is governed by this agreement, therefore,, both are bound by the same. The petitioner cannot claim to collect anything over and above the agreement. This point is merely an academic discussion as in the end it was not seriously pressed by the learned counsel for the petitioner.
8. The ultimate argument, which was advanced on behalf of they petitioner and had merit was that the bank guarantees furnished are not always genuine and enforceable being photo copies and similarly the documents produced by the exporters in proof of the export of the consignment to other countries were also by and enlarge fake and not coming from authentic source. The allegations are pretty serious, therefore, with the consent of the parties the following conditions are laid down:‑‑
(i) The bank guarantee should be.in favour of the Contractor, who would be at liberty to verify its genuineness from the bank before clearing a consignment;
(ii) The bank guarantee shall be encashable only after expiry of 90 days:
(iii) The documents to prove the export to the other countries shall be submitted to the Taxation Officer of the Zila Council who should fix a date within 7 days of the receipt of the documents for the scrutiny. The meeting shall be attended by the Contractor and exporter or their nominees. The contractor would allow an opportunity to prove that the documents are not fake.
9. _ The upshot of this discussion is that this writ petition is disposed of with the above terms.
H.B.T./R‑109/L Order accordingly.