1995 PLP 1762 (SCMR)

SALEEM AKHTAR, J.‑‑‑These two petitions arise from a common judgment and shall be disposed of by this order. By resolution dated 19‑8‑1982 respondent had initiated taxation proposal for imposition of Octroi on electricity under Rule 3 of the Sindh Councils (Imposition of Taxes) Rules, 1979. A public notice was issued in daily "Dawn" and "Jang" dated 2‑12‑1982 under Rule 4 inviting objections from the public to be heard by the Finance Committee of the Council on 21‑12‑1982. Thereafter no steps seem t have been taken. In January 1991, respondent No.1 took up the said report and without any notice to the Karachi Electricity Supply Corporation Limited (petitioner in C.P. No.205‑K of 1994) or the public by its Resolution dated 30‑5‑1991 adopted the aforesaid taxation proposal which had sought to levy octroi on the import of electricity for consumption, use and sale in the Karachi Metropolitan Area. The Mayor Karachi issued Notification dated 1‑6‑1991 exercising powers under section 60(1) of the Sindh Local Government Ordinance, 1979 and accorded his sanction to the addition of word "electricity" in Item 2(O) under Class III of Octroi Schedule B', thereby imposing octroi with effect from 11‑7‑1982 at the rate of 00.02 paisas per Kilo Watt. After notification was published in the Sindh Gazette on 20‑6‑1991 respondent No.1 by notice dated 10‑7‑1991 made a demand on the petitioner to pay Rs.92,22,67,500 to respondent No. 1 for Octroi for the period 11‑7‑1982 to 30-6-1992.

2. The petitioner filed Constitution Petition No.1187 of 1991 challenging the validity of the levy of octroi on electricity, inter alia, contending that electricity is not goods amenable to levy of octroi, the taxation proposal of 1982 could not be revived in 1991 and that the preconditions imposed under the provisions of law and rules for levy of octroi have not been complied with.. By the impugned judgment the learned Judges of the Division Bench held that electricity was a "goods" leviable to octroi duty, the rules were complied with in 1982 but as no action had been taken thereafter it was abandoned and on that basis octroi could not be levied in the year 1991 and further that by notification octroi duty could not be levied with retrospective effect. The petition was therefore allowed and the impugned notification was held to be without lawful authority and of no legal effect.

3. The Karachi Electric Supply Corporation (K.E.S.C.) seems to be aggrieved by the impugned judgment to the extent it affects their interest. K.E.S.C. the petitioner in C.P. No.205‑K of 1994 is aggrieved by the observation that electricity is a good and can be subjected to octroi. The Karachi Metropolitan Corporation (K.M.C.) the petitioners in Petition No.235‑K of 1994 are aggrieved by the observation that the exercise carried out in 1982 was not available for levy of octroi in 1991 which was held to have been abandoned.

4. Mr. A.R. Akhtar the learned counsel for K.E.S.C. contended that considering the nature of electricity the mechanism for its production, generation and distribution takes it completely out of definition of goods and no octroi can be levied on it.

5. Mr. Muhammad Ali Sayeed the learned counsel for K.M.C. contended that under section 60(4) of the Sindh Local Government Ordinance, 1979 the Council can specify the date on which such tax, rate, toll or fees shall come into force and therefore the octroi duty can retrospectively be imposed from the date when process and formalities were initiated. Leave is granted in both the petitions. The hearing will be fixed after summer vacation. M.B.A./K-278/S Leave granted.