RUPALI POLYESTER LIMITED vs GOVERNMENT OF THE PUNJAB through Secretary, Local Government and Rural Development and 2 others
This matter concerns two consolidated constitutional petitions challenging the imposition of export tax by the Zila Council, Lahore, on goods in transit. The petitioners, industrial entities, import raw materials and machinery through the Dry Port, Lahore, which are then transported to their manufacturing plants in District Sheikhupura. The core legal question was whether the Zila Council could levy export tax on goods merely passing through its jurisdiction while in transit. The Court held that the goods, being in transit and not intended for use or consumption within the Lahore district, did not constitute an 'export' under the relevant statutory framework. Consequently, the Zila Council lacked the authority to impose export tax on such transit goods. The Court clarified that the reliance by the respondents on the Punjab Zila Council Export Tax Rules, 1990, was misconceived, as the mere physical presence of goods within the district limits for a short duration does not trigger tax liability where no actual export occurs. The petitions were accepted, affirming that transit goods are exempt from such local taxation.
- Can a Zila Council levy export tax on goods that are merely in transit through its district?
- Does the presence of goods within a district for less than 24 hours justify the imposition of export tax under the Punjab Zila Council Export Tax Rules, 1990?
- What constitutes an 'export' of goods for the purpose of taxation by a Zila Council under the Punjab Local Government Ordinance, 1979?
- Section 137, Punjab Local Government Ordinance 1979
- Section 144, Punjab Local Government Ordinance 1979
- Rule 5, Punjab Zila Council Export Tax Rules 1990
' This judgment shall dispose of Writ Petition Nos.8147 of 1991 and 8448 of 1991, as common question of law is involved therein.
2. M/s Rupali Polyester Limited, the petitioner in Writ Petition No, 8147 of 1991 is running a factory in District Sheikhupura. Similarly, Millat Tractors Limited, the petitioner in the other Constitutional petition, is owner of a plant for manufacture of Tractors in district Sheikhupura. Petitioner No,1 is importing raw material while petitioner No,2 imports knocked down Tractors from abroad through Dry Port, Lahore. The goods, after the clearance from the Dry Port are taken to the manufacturing plants of the petitioners to district Sheikhpura. Respondent No,2, who is the Contractor for collection of export tax of Zila Council, Lahore, has started demanding the export tax on these goods, while the same are in transit through Lahore District. The charge of the export tax has been challenged by the petitioners by filing these petitions.
3. It has been contended by the learned counsel for the petitioners in support of these petitions that as the goods in question are neither manufactured nor used for Lahore district but remains in transit while being taken from Dry Port to the plants of the petitioners and no export tax is payable thereon. On the other hand, the learned counsel for the respondent has contended that as the goods in question remain for a period of 24 hours within the limits of Zila Council, Lahore, the respondents are entitled to charge tax on these goods, in accordance with rule 5, sub-rule (5) of the Punjab Zila Council Tax, 1990.
4. Section 137 of the Punjab Local Government Ordinance, 1979; empowers a Zila Council for levy of any of the taxes mentioned in the schedule. Section 144 of the Ordinance provides that the taxes levied by the Local Council shall be imposed, assessed, leased, compounded, administered and regulated in such like manner as may be provided by rules. According to subsection (2), the rules framed under this section may inter alia provide for the obligation of the tax-payers. It is in the exercise of these powers that the Government of the Punjab has framed Punjab Zila Council Export Tax Rules, 1990. Rule 5 empowers the Zila Council to levy and collect the tax on the `export' of goods.
In the present case as the goods remain in transit, there is no export from the Zila and no tax can be charged by the respondents on these goods. This view is supported , by the judgment of this Court in Multan Chemical Limited v. District Council, Lahore etc. 1991 M LD 910.
5. The reliance of the learned counsel for the respondent on sub-rule (5) of rule 5 is misconceived.
It is not disputed that as soon as the goods are cleared from the Dry Port, Lahore, the same are taken out of the Lahore district, much before the expiry of 24 hours of the clearance. It has also been specifically undertaken that the petitioners shall take away the goods from the district within 24 hours of the clearance.
As a result of what has been stated above, these petitions stand accepted in the above terms, with no orders as to costs.
Cited by 4 cases
- CHENAB FABRICS AND PROCESSING MILLS LTD. through Chief Executive 1995 CLC 486
- Seth NISAR AHMAD vs TASSAWAR HUSSAIN and another 1993 MLD 2316
- SUNNY WOOLLEN MILLS (PVT.) LTD. vs GOVERNMENT OF THE PUNJAB 1993 MLD 2170
- Messrs RUPALI POLYESTER LIMITED vs GOVERNMENT OF THE PUNJAB through Secretary, Local Government and Rural Development Department, Civil Secretariat, Lahore and 2 others 2002 CLC 1566