2008 PLP 219 (SCMR)

SARDAR MUHAMMAD RAZA KHAN, J.

Haji Faqir Hussain and others seek leave to appeal from the judgment, dated 12-3-2003 of Peshawar High Court, whereby, a learned Judge in Chambers has dismissed their revision against the judgment and decree, dated 10-6-2000 of learned District Judge, Kohat who, while setting aside the decree, dated 17-5-1998 of learned Civil Judge Kohat, had dismissed the petitioners' suit.

2. The petitioners/plaintiffs are the residents of a Town planned by Kohat Development Authority. Excise and Taxation Authorities of Kohat imposed and demanded property tax from the residents thereof. The stance of the Government is that vide Notification No.AO(LG)8(9)/80, dated 15-1-1984 issued by the Government North-West Frontier Province, Local Government, Elections and Rural Development Department, gazetted on 9th June, 1984 the property having fallen into the urban area as well as Municipal Limits of Kohat had become amenable to taxation under the Urban Immovable Property Tax Act, 1958.

3. The trial Court was of the view that according to the areas mentioned in the aforesaid notification, compared with the site plan, the properties did not fall within Municipal Limits. Hence, it decreed the suit. On the other hand, the learned District Judge and the learned High Court were of the view that on account of the aforesaid notification the property fell within Municipal Limits and thus, within urban areas and hence, was liable to be taxed under the Act aforesaid.

4. An important legal aspect lost sight of all the three Courts that the notification aforesaid was issued by the Government of N.-W.F.P. under section 7(2) of the N.-W.F.P. Local Government Ordinance, 1979 and hence, operated only to include the given areas into the Municipal Limits. No more and no less. Whereas, the unescapable legal facet of the case is, that any area, in spite of having been included into urban area, cannot be subjected to the imposition of the property tax unless an independent notification under section 3 of the Urban Immovable Property Tax Act, 1958 is issued by the Provincial Government. For facility' of reference section 3 of the Act is reproduced below:-- "

3. Levy of tax.

(1) Government may by notification specify urban areas where tax shall be levied under this Act: Provided that one urban area may be divided into two or more rating areas or several urban areas may be grouped as one rating area. (2) There shall be charged levied and paid a tax on the annual value of buildings and lands in a rating area at the rate of ten per cent of such annual value: Provided that where a building is occupied [for residential purposes by the owner himself], the tax shall be levied at the said rate on one-half of the annual value of such building, if the owner or any member of his family does not own any other property in that rating area: Provided further that Government may, by notification, remit for reasons to be recorded in whole or in part, the payment of the tax by any class of persons in respect of any category of property. Explanation.

The annual value for the purposes of this section shall be the aggregate annual value of all buildings and lands owned by the same person in a rating area. (3) The tax shall be due from the owner of buildings and lands."

5. A perusal of subsection (1) of the above section would indicate that the mandatory provision of levying of tax is subjected to the issuance of notification, which shall specify the urban areas. The Government may or may not issue a notification but the property tax shall be levied only if the urban areas are specified through a notification. We are of the firm view that no property tax could be imposed on the residents of the area in question merely on the basis of notification issued by Local Government Department unless a specific notification is issued under section 3 of the Urban Immovable Properly Tax Act, 1958. It was on this principle that a Full Bench of this Court had accepted Civil Appeal No.437 of 1999 in favour of Government of N.-W.F.P. in case of Government of N.-W.F.P. v. Haji Muhammad Afzal Zia, decided on 20-1-2004 (unreported).

6. While parting, we may remark that had the Government been vigilant and properly advised, it should have issued the required notification under section 3 of the Act of 1958, the moment the instant suit was filed in Court on 12-1-1993. It is high time, the Government realized its obligation.

7. In view of what has been discussed above, the instant petition after conversion into appeal is accepted and the impugned judgment, dated 12-3-2003 of the learned High Court is set aside, holding, that property tax cannot be levied in an urban area without a specification thereof through notification under section 3 of the Urban Immovable Property Tax Act, 1958. S.A.K./F-15/SC Appeal accepted.