1988 PLP 1259 (SCMR)

ZAFFAR HUSSAIN MIRZA, J.‑‑These four appeals are being disposed of by this common judgment as similar question of law as to disposed the validity of the imposition of Terminal Tax under section 96(26) of the City of Karachi Municipal Act, 1933 (hereinafter referred to as the Act of 1933' ) arises for determination. C.A. 98‑K/1972 M/s. Harjina Salt Chemicals (Pak) Limited, the respondents have a large salt works at Gharo situated in District Thatta where they manufacture salt for being exported to foreign countries. According to their practice the salt, which is intended for export is removed from the salt works in trucks under the supervision of excise authorities and transported to Dhabeji Railway Station from where it is booked in wagons to Keamari for being shipped to foreign countries. According to their case the procedure involved in transporting the goods passes through a continuous operation which is described as under:‑‑ "These wagons are brought to the named ship which is in port along the berth, in stream and are unloaded in the ship. That the salt from the salt works until its loading in the ship is in excise bond. The ship's mate receipt and bill of lading are obtained from the Master of the ship for the salt loaded therein. When this cargo is delivered at the destination, the consignee issues a landing certificate signed by the Customs Officer in respect of the same, which is then produced before the Excise Authorities, who then cancel the Bond executed in their favour by the petitioners and exempt duty." The consignee is the ship in each case and consignment is discharged into the ship from the wagons which are brought on the wharf along side the ship on arrival at Karachi. The Karachi Municipal Corporation, the appellant herein, demanded payment of Terminal Tax in respect of the disputed consignments alongwith penalty under rule 8(1) of the Rules relating to Terminal Tax. The respondent disputed the payment of Terminal Tax on the ground that consignments were not imported from "anywhere in Pakistan" and on the contrary the,, consignments were exported, on which no Terminal Tax is leviable under the Rules. The appellant rejected the plea of tie respondents and prosecuted them and initiated coercive proceedings to recover the dues, whereupon the respondents filed a constitutional petition before the erstwhile High Court of Sind and Baluchistan, Karachi, challenging the right of the appellant to recover Terminal Tax and impose penalty upon them.

3. The appellant contested the claim of the respondent in the constitutional petition and maintained its right to levy terminal tax on the ground that the goods of the respondents which after their import in the Karachi Municipal Corporation limits are first unloaded and then reloaded in Karachi Port Trust area which is within the municipal limits. C. A. K‑99/1972 In this appeal the respondents manufacture cement in their factory situated at Shantinagar, Karachi, which is admittedly outside the Karachi Municipal limits. In order to fulfil orders for supply of cement to the then Fast Pakistan, the respondents exported cement in bags which were transported to the ship either in wagons or in trucks. The case of the respondents is that the goods are unloaded at the wharf and reloaded into the ships directly. As or, one occasion during the course of transportation of the goods in trucks, the respondents were coerced to pay the terminal tax, they made a representation to the officers of the appellant against the levy of the tax on the ground that the goods were in transit but their plea was rejected. Thereafter, when a demand was made again to pay terminal tax and penalty on other consignments transported in wagon, the respondents took a similar plea as in the previous case and claimed that the tax was not leviable. A further plea taken by the respondents was that the wharf is included in the term "harbour" which is excluded from the Karachi Municipal Corporation limits and, therefore, the point at which the goods were discharged cannot be regarded as a terminal point within the Municipal limits. On these pleas the respondents filed a constitutional petition in the same High Court claiming the similar relief as in the previous case. The appellant also took up similar defence in this constitutional petition and further denied that the wharf is outside the Karachi Municipal limits. In this appeal also the respondents have a factory in Landhi which is admittedly beyond the Karachi Municipal Corporation limits. Some 42 consignments of textile goods were booked from Landhi Railway Station to Kemari for direct shipment to Fast Pakistan and other foreign countries. These consignments were sent in the name of the ships and were directly discharged into the ship from wagons which were brought on the wharf along side the ship on arrival at Karachi. However, the appellant called upon the respondents to pay the terminal tax as well as the penalty imposed upon them. On the rejection of their representation by the appellant and upon service of a final notice of demand, the respondents filed a constitutional petition on the plea that the goods were in transit and consequently were not liable to be levied with terminal tax, as well as that the wharf at the Karachi Port fell within the boundaries of the "harbour" outside the Karachi Municipal Corporation limits. An additional plea taken by the respondents was that they had been given exemption from payment of excise duty for exporting the consignments to foreign countries.

4. The main defence of the appellant in this case was that the goods are unloaded from the railway wagons when they are brought adjacent to the ship on the wharf and from there reloaded into the ship harboured in the stream, therefore, terminal tax was leviable even on such goods which are meant for export. In other words the justification for levy of the tax, according to the appellant was that the place of unloading and reloading of goods was the terminal point which is within the municipal limits. The respondents in this appeal are manufacturers of cement in their factories situated at Hyderabad and Daudkhel. At the relevant time they received the order for the supply of cement to the then East Pakistan which was packed in bags and transported to the wharf at Karachi Port in wagons or trucks and the bags were discharged into the ship in the same manner as in the abovementioned cases. As in those cases the respondents also challenged the levy of terminal tax on similar grounds in a constitutional petition. The appellant resisted the petition also on similar grounds as abovementioned.

5. On behalf of the respondents their learned counsel mainly assailed the levy of terminal tax by the appellant on the following contentions:‑‑ (i) That the goods meant for export were in transit and had no terminus within the Karachi Municipal Corporation limits. (ii) That there is no unloading and reloading in the sense in which this Court expounded in the case of Pakistan Textile Mills Owners' Association v. Administrator of Karachi and others (P L 1) 1963 S C 137) described the process. (iii) In any case the goods of the respondents were exempted from the levy of terminal tax in terms of the Note attached to rule 2 of the Rules relating to terminal tax. (iv) That the term "harbour" also includes the wharves, which were outside the Karachi Municipal Corporation limits, arid therefore, in tray case the terminal point to which the goons were destined was outside those limits with the result that the imposition of the terminal tax was not attracted. The learned Judges of the Division Bench disposed of all the four constitutional petitions by common judgment, dated 16th November, 1971. Relying on the aforesaid Note appended to rule 2 of the Rules relating to terminal tax (hereinafter referred to as 'the Rules'), the learned Judges held that in view of the admitted position that the goods according to the process of transportation and discharge adopted by the respondents, were really unloaded in stream for transshipment by sea direct arid therefore were exempted from terminal tax. In this connection the reasons that prevailed with the learned Judges may be stated in their own words from the judgment:‑‑ "Doubtless that unloading and reloading would provide a terminus for the levy of terminal tax on the goods imported within the terminal tax limits as provided by rule 2 of the Rules relating to terminal tax, but the note appended to this rule, which is reproduced at page 245 of the report in the above cited case, exempts goods liable to terminal tax which are unloaded in stream for transhipment by sea direct. We may point out that there is no controversy with regard to the unloading of the goods in the ships which are admittedly in the stream, nor their import within the terminal tax limits can be denied. The learned counsel was unable to point out anything against the applicability of this note and all that he contended was that discharge of the goods, which technically amounted to unloading from the wagons and reloading into the ships, provided a terminus for the levy of terminal tax. He made no attempt to show that the goods could not be so exempted from the payment of terminal tax because of the presence of any other reason. The reliance therefore on a bare contention of unloading and reloading is hardly of any consequence when the case rests on exemption. The learned counsel for the petitioner has relied on the observations of their Lordships of the Supreme Court in the above cited case to impress that the goods are not liable to terminal tax and for the view that we have taken above we conclude that the case is covered by the above observations." The observations relied upon by the learned Judges were from the case of Pakistan Tobacco Limited v . Karachi Municipal Corporation (PLD 1967 S C 241). The perusal of the judgment shows that the decision turned solely on the basis of exemption provided for by the above said Note. The other ground pressed by the respondents before the Division Bench that the wharves were a part of the harbour the boundaries of which fell outside the Municipal Corporation limits was rejected, although evidence was recorded by the Court on this point, on the ground that the said evidence was insufficient to reach a conclusive finding either way. In this view of the matter the constitutional petitions filed by the respondents were allowed with costs.

5. Being aggrieved by the aforesaid judgment the appellant filed) separate petitions which were heard together and leave was granted by this Court in order to examine the contention that the exemption provided in the said Note is applicable only to cases where unloading takes place in stream for transhipment, and the High Court has, therefore, wrongly interpreted the Note. Another contention to be examined was whether the High Court had erred in not following the law laid down by this Court in the case of Pakistan Textile Mills Owners' Association v. Administrator of Karachi and others (P L D1 19113 S C 137).

6. Before coming to the contentions advanced by the learned counsel for the parties it seems expedient to state briefly the legislative history pertaining to the imposition and levy of terminal tax within limits of Karachi Municipal Corporation. The authority to levy the terminal tax was conferred by section 96(2)(b) of the City of Karachi Municipal Act, 1933, which came into force on 1st November, 1933. Section 282 read with section 286, clauses (14) and (15) empowered the Karachi Municipal Corporation, constituted under the said Act, to frame and promulgate rules for the levy of terminal tax. In exercise of the said power the rules relating to terminal tax were issued which are contained in Chapter V of the Karachi Municipal Corporation Rules. The Act of 1933, was repealed and replaced by the Municipal Administration Ordinance, 1960, with effect from 16th April, 1960. It appears that the Karachi, Municipal Corporation under a misconception of the legal position continued to levy terminal tax under the Ordinance of 1960, in spite of the repeal of the Act of 1933, by the said Ordinance. However, in Pakistan Tobacco Co. Ltd. v. Karachi Municipal Corporation (P L D 1967 S C 241), this Court examined the validity of the tax and held that as the Ordinance of 1960, did not contemplate the imposition of such a tax the saving provisions contained in section 4(2) thereof did not keep alive and in force the Terminal Tax Rules. It may be stated that in the said case rule 5‑B which was inserted in Terminal Tax Rules on 9th March, 1957, was called in question and the relevant years in which the terminal tax was imposed were the calendar years of 1962 and 1963. Apparently in order to rectify and authorise the levy and collection of terminal tax, rendered illegal by virtue of the judgment of this Court, the Karachi Municipal Corporation Terminal Tax (Validation) Ordinance, 1967, was promulgated and was approved by the Provincial Assembly of West Pakistan, whereby it was provided that notwithstanding the repeal of the Act of 1933, or anything contained in the Act of 1960, or in the decision of any Court, Terminal Tax already levied, charged, collected or realized for the period from 16th April, 1960, till 13th April, 1967, in accordance with the provisions of the repealed Act and the Rules framed thereunder shall be deemed to have been validly done so. The Ordinance also authorized recovery of the tax in case it had not been paid or realized before the coming into force of the Ordinance. We have been informed that with effect from 14th April, 1967, the Karachi Municipal Corporation switched over to the levy and collection of octroi duty. The levy of the tax disputed in the present appeals falls within the relevant period covered by the validating Ordinance and perhaps in consideration of this fact the respondents did not challenge the competence of the appellant to levy the tax in their constitutional petitions, on the ground that the power to impose the tax lapsed with the repeal of the AM of 1933.

7. From the pleadings of the parties as set out in the foregoing part of this .judgment,, the case of the respondents in substance was that the goods were brought by trucks or railway wagons which were parked or brought to the railway siding on the wharf along side the ship and the goods were directly transferred to the ships. As according to the respondents the wharf is located outside the territorial limits of the Karachi Municipal Corporation, the unloading of goods was effected at a terminal point which was not within the said limits. On the other hand the contention of the appellant was that the wharf where the wagons or trucks are unloaded lies within the Karachi Municipal Corporation limits and consequently the bringing of the goods at such terminal point constitutes import of the same within the meaning of the term as defined in the Rules. Rule 1(a) defines "import" to mean bringing in of goods into the terminal tax limits from outside these limits and according to clause (c) "terminal tax" means "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." Rule 2, lays down that the terminal tax limits shall be the area shown in Schedule X of the Act of 1933, as may be in force from time to time. The Note on which the decision of the High Court turns is appended to rule 2 and is in the following terms: "Note.‑‑Any goods liable to terminal tax unloaded in stream for transhipment by sea direct or for consumption in the stream, are not liable to terminal tax, but it shall be the duty of the importer to forthwith produce Customs and or Port Trust transhipment entries at the Municipal Sea Dues Office." The description of the goods which are leviable with terminal tax is provided by rule 5 which is the charging rule and reads thus: "Subject to the exemptions and provisions hereinafter expressly specified, the terminal tax shall be payable on all goods of the description mentioned in Schedule 'A' hereto annexed and at the rates specified therei4i when such goods are imported within terminal tax limits."

8. In the passage quoted from the judgment of the High Court it would appear that the Court came to the conclusion that the goods were not liable to terminal tax because the circumstances of the four cases under consideration bring them within the ambit of the exemption as contained in the aforesaid Note, although the learned Judges gave a finding that these was unloading and reloading of goods which were imported within the terminal tax limits and that constituted a terminus furnishing a valid basis to attract the incidence of the tax. The only ground on which the learned Judges thought the exemption under the Vote applied was that the goods were admittedly unloaded "in the ships which are admittedly in the stream." So far as the decision of the High Court goes, therefore, the only question for consideration is whether the goods of the respondents, which were otherwise liable to terminal tax, were exempted under the terms of the Note. Both sides have advanced arguments giving their own respective interpretation to the language of the Note. According to the learned counsel for the appellant the Note deals with the goods brought by a ship and while the ship is in stream, the goods are unloaded for onward journey by reloading the same on another shipor for goods brought for consumption in the stream. He has pointed out that the exemption extended by the Note could be availed on condition that the importer produced customs and/or Port Trust transhipment entries at the Municipal Sea Dues Office. The condition not having been fulfilled in the present cases, no recourse could be made to or claim put up for exemption as contemplated by the Note. In this argument the emphasis was laid upon the expression "transhipment by sea direct" and in the context of the language of the Note it was submitted that the transhipment contemplated was from one ship to the other while both ships were in stream and not from the wharf to the ship. The argument has appealed to us and appears to correctly construe the language of the Note in question. On a plain reading of the Note it appears that it deals with the goods which are "unloaded in stream" which would exclude unloading on the wharf and the purpose of the act of unloading, should be transhipment by sea direct, which obviously means that the whole operation would exclude intervention of land or harbour in the process of transhipment. The key word is the word "direct" which makes this sense the only rational meaning in the context of the language employed. Therefore, if the pre‑requisite is unloading of goods in stream and the transhipment is to be by sea direct, it is easy to see that the transhipment contemplated by the Note is from one ship while in the water to the other ship for conveyance by sea to some other destination. If the meaning canvassed by the respondents, that the Note contemplates transhipment from a land vehicle to the ship, by whatever means, then it is difficult to visualize how any goods which are meant for export from the Karachi Port would ever be outside the exemption. If that would have been the intention the rule making authority would have simply said that goods brought from a point outside Karachi Municipal Corporation limits but passing through the same, for the purposes of export and loaded on ship would be exempted from tax. The rationale of the exemption as interpreted above is a usual basis for grant of exemption of transhipped goods from port rates or other duties. An illustrative case of such exemption in somewhat similar circumstances in regard to port rates can be found in Port of London Authority v . British Oil and Cake Mills, Limited (1915) A.C. 993.

9. The later part of the provisions of the Note providing for condition to produce customs or Port Trust transhipment entries also clearly, contemplate the transhipment of goods brought by a vessel from ports beyond the seas to the Karachi Harbour for purposes of transhipment (not for import) and reloaded in another vessel for its onward journey to a port beyond the seas. Although the ordinary dictionary meaning of the word "transhipment" is to transfer from one ship or conveyance to another, Black's Law Dictionary (4th Edition) defines transhipment as "in Maritime Law the act of taking the cargo out of one ship and loading it in another ship" . This meaning is the appropriate meaning in the context of the provisions under construction, since they deal with the transfer of cargo to a ship. We are, therefore, of the opinion that the conclusion arrived at by the High Court granting the benefit of exemption from payment of tax in respect of the goods of the respondents is not sustainable. The scheme of rule 2 itself shows that the Note exempts from tax what is otherwise within the ambit of taxability under the charging rule. Having regard to the true construction of the language employed in the Note; as discussed above, the question of exempting the goods from the levy of tax would presuppose that the goods involved in the process of transhipment contemplated by the Note would otherwise be chargeable with the tax under rule

5. This assumption made the basis of the Note i$ clear indication that the rule making authority knew that the unloading of goods in stream for transhipment by sea direct, would be within the terminal tax limits. Otherwise the provisions of the Note would become wholly redundant and it is well‑established that no part of the statute can be regarded as redundant. Therefore, the Note was purposely appended to rule 2 which defined the terminal tax limits of the Municipal Corporation. The High Court has also held, that but for the exemption the goods brought by the respondents to the wharf for unloading into the ship furnished a terminus within the terminal tax limits. In tile result since the goods are not exempted from the levy of terminal tax, it follows that the tax was validly recovered.

10. On behalf of the respondents it was argued that since the unloading of the goods was done by means of cranes without landing the goods on the wharf, there would be no point of terminus within the Karachi Municipal Corporation limits. This argument is too technical because obviously, whatever process for unloading is involved, the fact remains that the unloading takes place while the trucks or railway wagons are parked on the wharf and not from a vehicle which is afloat in the harbour nor would the mere booking of the goods in the name of the ship make any material difference so far as the taxability of the goods is concerned. Similarly the argument that the journey of the goods does not terminate at any place before reaching the hold of the steamer which is berthed in stream is without substance because there is a terminal point as soon as the trucks or railway wagons stopped at the wharf and the goods are unloaded. The journey of the goods qua the land vehicle does terminate at the point of unloading the same. The reliance on the exposition of law made in Pakistan Textile Mills‑owners' Association's case is, therefore, of no assistance to the respondents. The ratio of the decision is that although mere passage of the goods in transit in a continuous journey through the Karachi Municipal limits may not constitute import of such goods, but if there is unloading and reloading of goods within the Municipal limits, the incidence of tax is fully attracted. The principle was clearly laid down that the tax would be leviable at railway terminus because it is referable to some service rendered by the railway by way of transport and would clearly fall within the category of a terminal tax. In that case the following pertinent and relevant observations were made as under:‑‑ "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'. This disposes of the arguments of the respondents based on their plea that the goods are in a continuous journey and that there is no terminal point within the Municipal limits.

11. The learned counsel for the respondents also urged that wharf where the goods are transferred to the ship is outside the Karachi Municipal limits and therefore a journey terminating there would be outside the taxable limits. In reply to this argument the appellants have produced a map of Karachi showing Karachi City and its surrounding alongwith the respective Karachi Municipal Corporation and Karachi Cantonment Board boundaries. It is urged on the basis of this document that the West Wharf is within the Karachi Municipal Corporation limits. On behalf of the appellant also reliance is made on the deposition of witnesses Hashim and Abdul Sattar Yousaf which according to the learned counsel establishes that only the harbour comprising the area covered by water is excluded from the said limits but the wharf would fall within the limits. However, as held by the High Court this being an intricate question of fact a Court sitting in constitutional jurisdiction should not ordinarily undertake adjudication of a question of fact particularly when it is a disputed question which cannot be resolved with the help of admitted documents. We, therefore, agree with the view taken by the High Court that this question cannot be decided in these proceedings. But as we disagree with the High Court that the exemption was applicable to the case of the respondents and for the reasons already stated the question of exemption could only arise when in the first instance the goods are otherwise liable to tax, we think that this is sufficient to dispose of these cases. A half hearted attempt was made to challenge the vires of the validating Ordinance of 1967 but since the respondents had expressly given up This plea before the High Court we cannot go into that question at this stage.

12. In the result we accept the appeal, set aside the judgment, of the High Court and recall the writs issued thereby. In the circumstances of the case the parties are left to bear their own costs. _ M.I, /K‑42/S Appeals accepted.