P L D 1963 Supreme Court 137 (PLP)

(a) . (b) a terminal tax at rates prescribed by the Corporation with the approval of the Provincial Government on goods imported into or exported from the terminal tax limits. (c) (d) any other tax which the Provincial Legislature has power under the Government of India Act, 1935, to impose in the Province. (3) Nothing in this section shall authorise the imposition of any tax which the Provincial Legislature has no power to impose in the Province under the Government of India Act, 1935 Provided that, if the Corporation was immediately before the commencement of Part III of the said Act lawfully levying any such tax under this section as then in force, it may continue to levy that tax until provision to the contrary is made by the Central Legislature." The constitutional position in 1933 was that under the Govern ment of India Act, 1915, as amended by the Government of India Act of 1919, the Local Legislature of any Province could not, without the sanction of the Governor‑General, make or take into consideration any law imposing or authorising the imposition of any new tax unless the tax was a tax scheduled as exempted from this provision by Rules made under the principal Act of 1915. Under the provisions of subsection (3) of section 80‑A of the said Government of India Act, Scheduled Tax Rules were framed and in Item 8 of the Schedule II thereof it was provided as follows: ‑ "Terminal tax on goods imported into or exported from a local area, save where such tax is first imposed in a local area in which the octroi was not levied on or before the 6th July 1917." Terminal tax was, therefore, a tax scheduled as exempted and in respect thereof legislation could competently be made by the local Legislature of a Province, but the Schedule permitted the Levy of such a terminal tax only with the previous sanction of the Provincial Government. The Municipal Act of 1933, however, w‑is enacted by the Legislature of the Province of Bombay with the previous sanction of the Governor‑General and it actually received his subsequent assent also on the 14th of October 1933. The power to impose the terminal tax was, therefore, validly acquired in 1933 by the Karachi Municipal Corporation. The Municipal Corporation in exercise of the powers given to it under sections 282 and 286 of the Karachi Municipal Act, 1933, framed Rules relating to terminal tax. Under these Rules published in Chapter V of the Karachi Municipal Corporation Rule Book, the terminal tax has been defined under Rule 1 (c) as "a tax levied on the import of goods liable to terminal tax within the terminal tax limits, such tax not being liable to be refunded on the export of such goods from these limits." Under Rule 1 (a) thereof "import" means "the bringing in of goods into the terminal tax limits from outside these limits." By Rule 2 the "Terminal tax limits" are defined as being equivalent to the area shown in Schedule X of the Act of 193? as the limits of the City of Karachi. Rule 5 provided that tax was to be levied on the goods mentioned in the Schedule `A' annexed to the said Rules and at the rates therein specified. Under these Rules, therefore, the terminal tax was levied only on the import of goods within the terminal tax limits either by sea or by rail or road, but there was no terminal tax on the export of goods. Subsequently under the scheme of the Government of India Act of 1935 terminal taxes on goods and passengers carried by railway or air became a Federal legislative subject under Item 58 of List I of the Seventh Schedule to the said Act, and the Provincial Legislature could, under Item 49 of List II of the said Schedule, only make laws in respect of "cesses on the entry of goods into a local area for consumption, use or sale therein", and terminal taxes on goods or passengers carried by sea, not being a subject enumerated in any of the LISCS of the said Schedule, could only be dealt with by the Governor‑General in the exercise of his residual powers of legislation under section 104 of the Act of 1935; where under the Governor‑General could, by notification, empower either the Federal Legislature or a Provincial Legislature to enact a law with respect to any such matt.2r. This distribution of the legislative powers did not, however, affect the levy of taxes or duties which were being levied on the first day of January 1935, by any Province or Municipal, District or other local authority under any law in fore on such date, as the same were expressly saved by subsection (2) of section 143 of the Act of 1935. The Municipal Corporation of Karachi could, therefore, even after the coming into force of the Government of India Act, 1935, levy the terminal taxes which were in force on the first day of January 1935. Then came the late Constitution of Pakistan which made a fresh distribution of the legislative powers and under this terminal taxes on goods or passengers carried by sea or air became a Federal subject under Item 26 of the Federal List in the Fifth Schedule to the said Constitution and terminal taxes on goods or passengers carried by railway became a Provincial subject under Item 89 of the Provincial List in the said Schedule, in addition to the power to levy "taxes on the entry of goods into a local area for consumption, use or sale therein" under Item 78 of the Provincial List. Under this Constitution again an express saving was made in Article 230 (6) to the effect that "notwithstanding anything in the Constitution all taxes and fees levied under law in fore, immediately before the Consti tution Day, shall continue to be levied until they are varied or abolished by Act of the appropriate Legislature." Unfortunately the attention of the High Court does not appear to have been drawn to this Article making express provision for the continuance of the taxes already in force but reference was made to Article 224 of the late Constitution for the purpose of showing that the Karachi Municipal Act of 1933 was an existing law which was thereby continued in force with necessary adaptations. The position, therefore, that emerges from a consideration of the above provisions is that on the date the impugned Noti fication was published in the Gazette of Pakistan on the 14th of June 1957, the Provincial Legislature had no power to legislate in respect of terminal tax on goods or passengers carried by sea or air or to levy the said tax upon such goods, but it possessed the power to legislate in respect of terminal taxes in respect of goods or passengers carried by railway, which had, under the Government of India Act of 1935, previously been vested in the Federal Legislature. In 1957, therefore, the Chief Commissioner of Karachi, even though he was the Provincial Government for the City of Karachi, could not have exercised the power of sanctioning any variation of the rate of terminal taxes in force immediately before the Constitution Day in respect of goods or passengers imported by sea or air. The Notification above referred to, which introduced the revised Schedule of terminal tax, added many new items of goods which were made liable to terminal tax as also altered the rates of the tax. It did not purport to levy such terminal tax on the export of goods from the terminal tax limits but even so the revised Schedule could not validly operate to alter the rate at which terminal tax was being levied on the Constitution Day referred to in Article 230 of the late Constitution in respect of goods imported by sea or air, or impose the tax on new kinds of such goods. To that extent, therefore, the revised Schedule was clearly ultra vires and beyond the powers of the Chief Commis sioner acting as the Provincial Government of Karachi, because the Provincial Legislature itself could not, after the coming into force of the late Constitution, have legislated in respect of terminal tax on goods carried by sea or air. The powers that were conferred upon the Chief Commissioner of Karachi by the Ministry of Interior Notification No. 3/4/52‑Kar‑II, dated the 21st October 1952, in respect of the administration of the Federal Capital enabled him only to exercise the executive, authority of the Government of Sind. That executive authority could only be exercised with regard to the matters in respect of which the Provincial Legislature could validly legislate. The power of, sanctioning the revision of the terminal tax schedule could not, therefore, extend beyond those limits. The terminal tax on goods imported by sea or air, however, could still be levied at the old rates in force on the late Constitution Day as mentioned in Schedule A of the Terminal Tax Rules, Chapter V, Schedule VIII of the Municipal Corporation Rule Book but only on the kinds of goods therein specified. So far, however, as the terminal tax on goods imported by railway is concerned, it must be held that the Chief Commis sioner could validly sanction the revision of the Schedule, for, he being the Provincial Government for the City of Karachi would be the competent authority to grant such sanction in 1957 under the Act of 1933. The latter Act was an existing law which was continued in force by Article 224 of the late Constitution. The sanction of the Chief Commissioner, therefore, to the revision of the tax in respect of such goods was competently given in his capacity as the Provincial Government of Karachi whose executive power certainly extended to all matters in respect of which a Provincial Legislature could legislate. The argument that in respect of these kinds of goods also there was a variation of the tax, by reason of the increase in the rates and the introduction of new items of taxable com modities, by an authority which was not an appropriate Legislature does not appear to us to be correct. Under the Karachi Municipal Act, 1933, the Municipal Corporation was already vested with the power to levy a terminal tax on all kinds of goods imported into or exported from the terminal taxi limits at such rates as it thought fit to prescribe. This Act also gave the Municipal Corporation power to frame rules for prescribing the classes of goods on which and the rates at which the tax may be imposed. The only limitation that was imposed upon this power was that the rates could only be prescribed with the approval of the Provincial Government. This power necessarily included the power to vary or alter these rates from time to time. Hence if the limitation above‑mentioned had not been there, the Municipal Corporation could have even after the coming into force of the late Constitution competently varied these rates in exercise of its powers under the Act, as the same continued to subsist as an existing law. The necessity of obtaining the approval of the Provincial Government was the only obstruction that stood in the way. The granting of this approval was an executive function but since the latter could only extend to matters in respect of which the Provincial Legislature could legislate, its validity with regard to the goods carried by sea or air has been successfully challenged but the approval of the new rates in respect of goods carried by railway does not suffer from the same defect. Its validity cannot, therefore, be questioned. The variation of the rate at which the tax was to be realized did not amount to a variation of the tax itself within the mischief of Sub‑Article (6) of Article 230 of the late Constitution, because the tax had been imposed by an existing law which itself merely left the filling in of the details of the rates to the Municipal Corporation with the approval of the Provincial Government. The position with regard to goods carried by road will also be the same as this was a residuary subject in respect of which the Provincial Legislature could validly legislate under Article 109 of the late Constitution. The question that next arises is as to whether the abrogation of the late Constitution, in any way, altered this position? In our view it did not, for, under sub‑clause PLD 1961 SG 145=(1961) 1 PSCR22 of Art. 4 of the Laws (Continuance in Force) Order, 1958, the Federal Capital (Powers and Duties of the Chief Commissioner) (Declaration) Order, 1958, was expressly continued in force until altered, repealed or amended by competent authority. This Court has already held in the case of Chief Commissioner, Karachi v. Jamil Ahmad PLD 1961 SG 145=(1961) 1 PSCR22, that the Chief Commissioner of Karachi was the Provincial Government for the City of Karachi and the abrogation of the late Constitution does not appear, in any way, to have affected the position of the Chief Commissioner of Karachi. Again, so far as the Municipal Administration Ordinance of 1960 is concerned, we do not thins that its provisions could have any relevancy in determining the powers of the Chief Commissioner vis‑a‑vis the Karachi Municipal Corporation in 1957, for the validity of the revised Schedule introduced by the Notification of 1957 had to be judged by the state of the law prevailing on that date. In any event, its provisions do not make any appreciable change, for, under section 3 (19) thereof "Government" still means in the case of the Federal Capital the Central Government and in other cases the Provincial Government and the power of taxation given by section 33 thereof extends to the items enumerated in the Third Schedule. Terminal tax finds no specific mention in this Schedule, but in Item 26 of the said Schedule a general power is given to levy "any other tax which the Government is empowered to levy by law." If terminal tax is taken to fall into this general category, then again it must be a tax which the Government is empowered to levy by law. Ins April 1960 when Ordinance X of 1960 was promulgated the City of Karachi was no longer the Federal Capital, hence the appropriate Government was the Provincial Government of West Pakistan which bad no power to levy any terminal tax on goods imported by sea or air. It now remains to consider as to whether the Municipal Corporation could, even after accepting that it had under the law the power to do so, have realized the tax in respect, of the goods brought by the appellants by railway to Karachi and then transported to their Mill outside the terminal tax limits. The contention of the learned counsel for the appellants is that in respect of the goods whose ultimate destination is outside the Municipal limits of the Municipality the terminal tax cannot be levied merely on the ground that they pass through the Municipal limits in transit to their ultimate destination. He has sought to support this contention of his by a decision of the Supreme Court of India in the case of The Central India's Spinning, Weaving and Manufacturing Company Limited, The Empress Mills, Nagpur v. The Municipal Committee, Wardha AIR 1958 SC341, where it was held that the terminal tax "is not leviable on goods which are in transit and are only carried across the limits of the Municipality", because the word "terminal" must be "construed as having reference to terminus and has to be read to connote the idea of the end of something connected with a motion and not that of an intermediary stage of a journey." In that case the appellant‑Company transported cotton bales from Yeotmal where it had its Mills to Nagpur by road and vehicles carrying them had to pass through the limits of the Wardha Municipality but did no more than use the road which traversed the said Municipal limits. That was a case purely of goods passing through the Municipal limits. There was no loading or unloading done at any point within those limits. The facts of the case before us, however, are different, for, the goods brought in even by rail are unloaded at railway stations or yards within the Municipal limits, then reloaded into other transport vehicles and carried to the Mills of the appellants either at Landhi or Manghopir. Reliance has also been placed on a decision of the Federal Court in the case of Punjab Flour and General Mills Company Limited v. Chief Officer, Corporation of City of Lahore and Province of the Punjab AIR 1947FC

14. The Mills of the appellant in this case were situated at Shahdara, Lahore, where it carried on its business of milling wheat which it imported by rail to its Mills. The wagons carrying the wheat were taken to a point known as the point of intersection immediately outside the premises of the appellant from there the wagons were pushed by hand into a private siding in the premises of the appellant and there unloaded. The wheat after being converted into flour and other consumable pro ducts was again transported in the same manner from the Mills to the point of intersection from where the wagons were drawn by railway engines. In that case in 1938 the Municipal limits were extended to include the Mill's premises and in 1940 a tax called "octroi (without refunds)" was imposed on consignments including grain imported into the limits of the Municipality. The appellant contended that the tax by whatever name called was in reality a terminal tax and, therefore, was not imposable after the coming into force of the Government of India Act, 1935, by any Province or a local authority, as it was a subject of legislation within the Federal List under the said Act. The Municipality, on the other hand, argued that the tax fell within the Provincial Legislative List, as it was merely a cess on the entry of goods into a local area for consumption, use or sale therein. The point to be decided in that case was as to whether the tax was really an octroi or a terminal tax on goods imported by rail. The Court came to the conclusion that the tax was not a terminal tax, but was a cess on the entry of goods into a local area, because a terminal tax, it was said, "must be chargeable at a rail or air terminus and be referable to services (whether of, carriage or otherwise) rendered or to be rendered by some rail or air transport organization." Learned counsel has, therefore, argued (that in the present case the tax sought to be levied not being referable to services rendered or to be rendered by the railway organization is not a terminal tax. We do not, however, think that these decisions support the contention of the learned counsel that this is a case merely of goods passing in transit through the Municipal limits of Karachi. According to the appellants' own case the goods are brought in by rail at rail heads within the Municipal limits and are unloaded there, and then again reloaded into transport vehicles which carry them through those limits to the Mills of the appellants. Even according to the principle accepted in the case of The Central India Spinning, Weaving and Manufacturing Company Limited, The Empress Mills, Nagpur v. The Municipal Committee, Wardha, such goods would not nave been exempt from the levy of the terminal tax. Again, according to the decision of the Federal Court in the second case the impugned tax being leviable at the railway terminus would be referable to some service rendered by the railway by way of transport and would clearly fall within the category of a terminal tax. Under the definition given in the Rules framed by the Municipal Corporation the word "import" means the bringing in of goods into the terminal tax limits from outside those limits. In the present case the goods are, in fact, so brought in, unloaded and stored there along with other goods similarly brought in, then reloaded for transhipment to the factory. In every sense of the term, therefore, the goods are, in our view, imported into the Municipal limits of Karachi. We see no reason, therefore, to give any artificial meaning to the word "import" as sought to be contended by the learned counsel. "Import" and "export" in their ordinary and natural sense mean to bring into or to take out of or away from a particular place. The introduction of the notion that there must also necessarily be a mixing up in mass with other goods within those limits seems to us to impose an unjustifiable restriction upon the meaning of the word "import." In a taxing statute, as in any other statute, we see no reason to depart from the general rule that words used in a statute must first be given their ordinary and natural meaning. It is only when such an ordinary meaning does not make sense that resort can be made to discovering other appropriate meanings. In the present case no such difficulty is created by giving the words "import" and "export" their ordinary and natural meaning. The word "terminal" must also have reference to a terminus a quo or ad quem. Thus goods merely in transit are not liable for such a terminal tax, as their journey has really no terminal point within the Municipal limits. In the case of the goods of the appellants, on the other hand, there is clearly such a terminal point, namely, the rail head, and the tax is levied ate such terminal point. We see no justification, therefore, for holding that the levy of the terminal tax upon goods brought in; by rail was, in any way, illegal or ultra vires. In the result this appeal is allowed in part. The revised Schedule is held to be invalid and inoperative so far as goods imported by sea and air are concerned, but its validity is upheld in respect of goods imported by road and rail. A writ of mandamus will, accordingly, issue to the respondents herein directing them to cancel and/or withdraw the revised Schedule in so far as it relates to goods carried by sea or air. Since the success is divided, we make no order as to costs. A. H. Order accordingly.