P L D 2006 Supreme Court 302 (PLP)

NASIR-UL-MULK, J.

Ghulam Shabbir purchased a bus stand through public auction, held on 28-1-1998, by the Punjab Privatization Board, in Talagang Town, owned by Punjab Road Transport Corporation. The payment of the sale price was completed by 13-7-1998, whereupon the Punjab Privatization Board directed the Secretary, Board of Revenue Punjab, Lahore, to transfer the property to the auction-purchaser. The Secretary in turn directed the Deputy Commissioner, Chakwal to effect the transfer through a sale-deed to be stamped and registered at the expenses of the purchaser. Shamshad Iqbal, who was given contract by the Municipal Committee Talagang for collection of Tax on sale of immovable property (called `Transfer Tax') under the Punjab Local Councils (Tax on Transfer Immovable Property) Rules, 1981 (hereinafter referred to as the 1981 Rules) demanded tax on the sale of the bus stand. The purchaser contested this demand on the ground that the contract period was for a period of one year, from 1-7-1998 to 30-6-1999, whereas the sale had not been registered till the expiry of the contract period. The Municipal Committee in writing supported the stand of the auction purchaser that the Transfer Tax was not payable until after the registration for the sale. The contactor thereupon made representation to the Commissioner, Rawalpindi Division,. invoking an, arbitration clause in his contract with the Municipal Committee, challenging the stand taken by the Committee. The auction-purchaser was not made a party to these proceedings, in which the Commissioner eventually held that the auction-purchaser was liable to pay the tax as the sale of the land stood completed on payment of sale price even though registration thereof had yet to be made. Consequently the District Collector, Chakwal, was ordered to effect the recovery of the transfer tax from the auction-purchaser to the tune of Rs.13,39,000 as arrears of the land revenue. The auction-purchaser challenged these proceedings in a Civil Suit filed on 9-9-1999. The Civil Judge suspended the recovery of the tax, which order was suspended by the Additional District Judge on appeal by the contractor. The auction-purchaser thereafter filed a writ petition before the Lahore High Court questioning the legality of the demand of payment of the transfer tax. The writ petition was dismissed by a single Bench on 27-3-2.000, on the ground that the civil suit filed by the auction-purchaser on the same subject-matter was still pending and secondly, the property stood transferred to him even prior to the registration of the sale in view of the definition of the `sale' in section 54 of the Transfer of Property Act. On Intra-Court Appeal by the auction-purchaser the Divisional Bench set aside the judgment of the Single Bench, holding that in view of sub-rule (1) of rule 4 of the 1981 Rules the Transfer Fee leviable on the transfer of immovable property becomes due only upon its registration. As to the other ground on which the single bench of the Lahore High Court had dismissed the auction-purchaser writ petition, the Divisional Bench relied upon the judgment of this Court in the case of Ghulam Nabi and others v. Seth, Muhammad Yaqub and others PLD 1983 SC 344 and held that the writ petition was not barred under Order XXIII, rule 1, C.P.C. when the civil suit filed was withdrawn subsequent to the filing of the writ petition on the same subject-matter. The judgment of the Divisional Bench of Lahore High Court dated 22-5-2003 has now been questioned in this petition by the Municipal Committee, Talagang.

2. From the impugned judgment it transpires that the transfer tax stood abolished prior to the registration of the sale of the bus stand in favour of the auction purchaser. Mrs. Afshan Ghazanfer, Advocate Supreme Court appearing for the petitioner submitted that the sale of the bus stand in favour of the auction-purchaser was completed and the ownership thereof transferred to him upon his payment of the entire sale consideration, which even took place prior to the expiry of the relevant contract period for the collection of the transfer tax and its subsequent abolition. The learned counsel therefore contended that the auction purchaser was liable to pay the tax under sub-rule (3) of rule 4 of the 1981 Rules under which the payment of tax is not dependent upon registration of the sale.

3. In order to appreciate the contention of the learned counsel it is necessary to reproduce rule 4 of the 1981 Rules and the same reads as follows:--

4. Assessment and collection of the tax.

(1) Where an immovable property is transferred through a registered-deed, the tax shall become due as soon as the sale-deed is registered and may be assessed and collected by the taxation officer either directly or through the Registrar or sub-Registrar concerned if so authorized by the Board of Revenue either by a general or special order.

2. Where an immovable property is transferred orally and such transfer is followed by a mutation in the revenue office, the tax shall become due as soon as the mutation is sanctioned and may be assessed and collected by the taxation officer either directly or through the Revenue Officer concerned if so authorized by the Board of Revenue either by a general or a special order.

3. Where a transfer is not covered by sub-rule (1) or sub-rule (2), the tax shall become due as soon as the sale takes place and may be assessed and collected by the taxation officer at the office of Local Council. The above rule primarily covers two situations: when the immovable property is transferred through a registered deed or orally, followed by mutation in the Revenue office, when the transfer tax becomes due upon registration of the sale-deed or the sanctioning of the mutation, as the case may be. When the transfer of property has neither been through registered deed nor through mutation only then the - residuary provision of sub-rule (3) would come into play and the transfer tax would become payable on the completion of the sale itself. In the present case the property purchased by the auction-purchaser, according to the direction of the Secretary Board of Revenue Punjab given to the Deputy Commissioner, was to be transferred only upon registration of the sale-deed, expenses of which were to be paid by the auction purchaser. Although the sale-deed has not been appended with this petition, it appears from the impugned judgment that the same was registered, albeit after the abolition of the transfer tax. As the transfer of the bus stand was to be effected by a registered deed the tax became due in terms of the provision of sub-rule (1) of rule 4 of 1981 Rules and not the residuary sub-rule (3). Thus, undoubtedly the Divisional Bench of the Lahore High Court came to the correct conclusion in law. We therefore A see no merits in this petition, which is dismissed and leave declined. M H /M-36/S?????????????????????????????????????????????????????????????????????????????????????? Petition dismissed.