P L D 1976 Karachi 424 (PLP)

DORAB PATEL, J.--Section 15 of the West Pakistan Finance Act, 1963 (hereinafter called the said section), introduced a new tax described as the primary education surcharge. This was for the financial year 1963-64 and was levied on and collected from all persons "who used the amenities and enter tainment provided by any residential hotel." Further, a residential hotel was defined as a hotel "as is equipped with a liquor bar and possesses not less than twenty-five rooms for lodging." In due course, hotels, in Karachi received notices from the Director of Excise and Taxation, Karachi, to pay the primary education surcharge due from them. And having paid this tax, the six petitioners before us, who are all hoteliers, filed constitutional petitions to challenge the legality of the tax imposed by the said section, and the common prayer in all these petitions is that the respondents should be restrained from recovering the tax. The respondents naturally contested these petitions, and the learned Assistant Advocate-General appeared on behalf of the Provincial Government, whilst Mr. Wajihuddin Ahmed appeared on behalf of the Director of Excise and Taxation. The petitioners on the other hand, were represented by their learned counsel, but arguments on their behalf were advanced by Mr. A. K. Brohi. As arguments were advanced on behalf of the petitioners only by Mr. A. K. Brohi, I may explain here that, although Mr. A. K. Brohi was engaged only by the petitioners in Petition No. 388/1964, the petitions were adjourned on many occasions by the learned counsel of the other petitioners on the ground that Mr. A. K. Brohi was out of Karachi and would argue on behalf of all of them. I have to refer to this aspect of the case, because the learned counsel for the petitioners in Petitions 384/64 and 386/64 were not present at the time of argu ments.

2. Mr. A. K. Brohi advanced several submissions on behalf of the petitioners, which were endorsed by the other learned counsel, but the main submissions were that the said section was ultra vires of the powers of the Provincial Legislature under the 1962 Constitution, and that, for the period during which Fundamental Rights were in force, the said section could not be enforced, because it was inconsistent with Fundamental Right 15, according to which, all citizens were equal before law and entitled to equal protection of law. Mr. Wajihuddin Ahmed and the learned Assistant Advocate-General disputed these contentions, and, with regard to the first submission, they relied on the bar contained in Article 133 of the 1962 Constitution. But, in view of clause (3) of Article 133, this bar would not extend to a challenge to any provincial legislation on the ground that it was inconsistent with Fundamental Rights; therefore I will examine first Mr. A. K. Brohi's second principal submission.

3. However, before I turn to this submission, I may point out that the primary education surcharge was continued for the next financial year by the Provincial Finance Act, 1964. But in 1965, section 12 of the West Pakistan Finance Act, 1965. made material changes in this tax, and thereafter this tax, as modified in 1965, continued until the Sind Finance Act, 1974. Strangely enough, although the tax continues and has been paid, none of the petitioners amended their petitions to challenge the legality of the tax imposed under Finance Acts subsequent to the West Pakistan Finance Act of 1963 ; therefore I would have been reluctant even to refer to the Finance Act of 1965. However, as I will presently show, it is directly relevant to the arguments advanced by Mr. A. K. Brohi on the effect of Fundamental Right 15 of the 1962 Constitution. And as the question before us is only of this Consti tution, I will refer in this judgment to the 1962 Constitution as the Constitution.

4. I observed earlier that the said section was applicable to hotels with a minimum of twenty-five rooms and a liquor bar; therefore Mr. A. K. Brohi submitted that this provision amounted to discrimination against hotels with twenty-five rooms or more, to discrimination against hotels equipped with liquor bars and finally to discrimination against all persons who used such hotels, and, according to learned counsel, this discrimination infringed Fundamental Right

15. But as learned counsel very fairly conceded that the right to equal protection of law would not prevent the Legislature from making a reasonable classification of hotels, the real point for determination is, whether the definition of a residential hotel in the said section amounts to an unreasonable classification, and as the question is of a classification of hotel for the purpose of taxation, I would observe that it is too late in the day to challenge the concept of progressive taxation, by which I mean a system of taxation in which the rate of tax is higher for amenities consumed by the rich than for amenities consumed by the poor. This was also not disputed by Mr. A. K. Brohi. But the classification of hotels in the said section is, in my humble opinion, in accordance with the concept of progressive taxation.

5. I am aware that a hotel with more than twenty-five rooms can also be a hotel patronised by the very poor, but is it generally so? In any case, it was for the Legislature to draw a line between classes of hotels. It has drawn such a line, and, as the petitioners challenge it, it was for them to show that the classification, thus made, of hotels with twenty-five rooms and hotels with fewer rooms was arbitrary. But they have not produced a shred of evidence in support of their allegation. Then, as to the question of a liquor bar, obviously it is a luxury ; therefore it is not surprising that the petitioners have not been able to produce evidence to challenge the distinction thus drawn between hotels with liquor bars and hotels without liquor bars. Nor am I impressed by the submission that 'the facilities of hotel are used by non residents. They are used by non-residents, but by and large the hotels made liable for the tax under the said section would, in my humble opinion, be hotels patronised by those who are not poor.

6. I observed earlier that Mr. A. K. Brohi, in support of his submission relied on the provisions of section 12 of the West Pakistan Finance Act, 1965 ; so I would explain here that, as this Act was passed after the respondents had been served with notice of these petitions, learned counsel's submission was that section 12 had been enacted in order to meet the objections raised by the petitioners on the ground that the said section infringed Fundamental Right

15. As Mr. A. K. Brohi further stated that he could not possibly challenge the classification of hotels under this section 12; I would explain here that tax under the said section was at a rate of 13J per cent. on the consumption of all amenities in the residential hotels, as defined in the said section. On the other hand, by section 12 of the West Pakistan Finance Act of 1965, the tax was confined to a tax on the residential accommodation only, and, Mr. A. K. Brohi relied on this difference in support of his first main sub mission about the vires of the said section. However, reverting to the question of Fundamental Rights, as, according to Mr. A. K. Brohi, the classification of hotels in section 12 of the 1965 Act was a reasonable classification, I would explain here that, according to this section, hotels were divided into several categories. There were first class hotels, second class hotels, hotels at hill stations and third class hotels, though not described as such. The tax on first class hotels was limited to rupee one per day per lodging unit, whilst the tax on second class hotels was limited to fifty Paisas per day per lodging unit. But no tax could be levied on hotels, in which the charge for a lodging unit did not exceed rupees seven. This was obviously because such hotels catered for the poor and the needy. Finally, section 12 also stated that assessments of hotels at hill stations would be at half the rate "applicable to its class of hotels".

7. I agree with Mr. A. K. Brohi's submission to the extent only that the classification of hotels in this section 12 is much more elaborate than in the said section, and total relief has been given to hotels whose daily lodging charges did not exceed rupees seven per day, but it was not Mr. A. K. Brohi's case that such hotels had liquor bars. And it was the classification of first class and second class hotels, on which Mr. A. K. Brohi relied ; so I would explain here that first class hotels were defined as "all hotels which are licensed to sell liquor . . . . . . . .and which possess not less than twenty-five lodging units." Second class hotels were defined as "all hotels other than first class hotels licensed to sell liquor" and also all hotels not licenced to sell liquor, which had not less than twenty-five lodging units. Thus, hotels, which have been classified as first class hotels in the 1965 Finance Act, were the hotels described as residential hotels in the said section. On the other hand, unlike the said section, the tax at a lower rate was extended in 1965 to the smaller hotels with liquor bars and to all hotels without liquor bars, which were of the same minimum size as residential hotels in the said section. This means that the Legislature has consistently been of the view that a hotel' with a minimum of twenty-five rooms would be able to bear a heavier fiscal burden than a hotel with less than twenty-five rooms. Similarly, it has consistently taken the view teat the possession of a liquor bar by a hotel was a lucrative source of income for that hotel, which justified a higher tax on such a hotel than on a hotel without a liquor bar. In my humble opinion, there is nothing unreasonable in this view. It is true that small hotels with a liquor bar were not liable to tax under the said section, whereas they became liable to tax under section 12 of the 9965 West Pakistan Finance Act. But hotels apply for licenses for liquor bars, because the running of a liquor bar is very profitable and, in my humble opinion, the extension of the tax to small hotels with liquor bars only amounted to a withdrawal of the privilege, which had been allowed to such hotels under the said section. I am, therefore, not able to accept Mr. A. K. Brohi's submission that the definition of a residential hotel in the said section amounted to an unreasonable classification, which was hit by Fundamental Right 15.

8. I now turn to Mr. A. K. Brohi's submission that the said section was ultra vires of the powers of the Provincial Legislature under Articles 132 of the Constitution. Learned counsel rightly pointed out that, in view of Article 132, the Provincial Legislature could not make laws with respect to any matter "enumerated in the Third Schedule" and similarly, he submitted the Central Legislature had "exclusive power to make laws with respect to any matter enumerated in the Third Schedule." Now, item 43 (f) of the Third Schedule read : "Taxes on sales and purchases". The word "sales" has mot been defined anywhere in the Constitution. But, according to Mr. A. K. Brohi, the tax on the amenities and entertainment provided by hotels, which was imposed by the said section, was a tax on the sales; therefore, according to learned counsel, the tax could only have been levied by the Central Legislature and was ultra sires of the powers of the Provincial Legislature. In view of this submission, it becomes necessary to examine in some detail the nature of the tax imposed by the said section. Accordingly, T would quote it, and it read; "

15. Primary Education Surcharge.-(1) For the Financial year 1963-64, a tax, called the Primary Education Surcharge. shall be levied on and collected from all persons who use the amenities and entertainment provided by any residential hotel. Explanation.

For the purposes of this section residential hotel shall mean a hotel as is equipped with a liquor bar and possesses not less than twenty-five rooms for lodging. (2) (a) The surcharge shall be calculated at 13 per cent. of the amount charged by the management on account of the amenities and entertain ment provided by the hotel. (b) The charge on account of amenities and entertainment shall include the charge on account of sale of liquor consumed in the hotel, and service charges, if any. (c) The charge on account of amenities and entertainment shall be calculated at 75 per cent. of the gross amount charged by the hotel, and remaining 25 per cent. being deemed to be the charge on account, of foodstuffs and manufactured goods sold. (3) The surcharge shall be shown as a separate item in the hotel bill and shall be collected by the owner or the management of the hotel and paid to Government. (4) For the purposes of this section Government may notify a list of such hotels as fulfil the conditions mentioned in the explanation below subsection (1). (5) Government may from time to time by notification add to, delete or modify the entries in the list mentioned in subsection (4).". As the tax is described as a primary education surcharge, Mr. A. K. Brohi stressed the reference to the words "a tax", which come immediately after the opening words' of the section; "for the financial year 1963-64." And Mr. A. K. Brohi also relied on the fact that the tax was to be calculated at a fixed percentage, whilst Mr. Wajihuddin Ahmed and the learned Assistant Advocate-General stressed the fact that the tax was only on "the amenities and entertainment provided by any residential hotel." As the learned counsel for the respondents submitted that the use of the amenities and entertainments provided by a hotel could not amount to a sale, Mr. A. K. Brohi's reply was that we should not go merely by the words in the statute, but that we should try to determine the pith and substance of the tax imposed. Mr. A. K. Brohi's submission is correct, but what is the pith and substance of the tax? Just as the words "use the amenities and entertainment" may not be decisive so also the words "a tax" and the fact that a tax is on an ad valorem basis are not decisive also. And, in my humble opinion, in order to determine the pith and substance of the tax, we have to see what is taxed. In terms the tax falls only on the use of the amenities and entertainment provided by the hotels, which fell under the said section; therefore the question is of the meaning of the words "the amenities and entertainment provided by any residential hotel."

9. The amenities and entertainment provided by any hotel would comprise the residential facilities, the services rendered by its staff and the provision of meals and drinks; so the real question or the pith and substance of the matter, to use Mr. A. K. Brohi s expression, is whether the use of these service by the customer of a hotel could amount to a purchase by him.

10. There was no controversy about the use of the residential facilities provided by hotels. It is no one's case that a customer of a hotel, who was permitted to occupy a room in it, becomes the owner of that room. Nor can the meaning of the word "sale" be extended, or, rather distorted to include the customer's licence to occupy a room in a hotel, which is always described by expressions, such as hire, or, licence. And here both Mr. Wajihuddin Ahmad and Mr. Usman Ghani Rashid submitted that we should not construe item 43 (f ) of the Third Schedule in such a manner as to make the concept of provincial autonomy meaningless. There is force in this sub mission, but I need not go into it, because, if we equate the customer's right to occupy a room in a hotel with a sale, as submitted by Mr. A. K. Brohi, we would be giving a new meaning to the word "sale". Again as we have to give the widest possible interpretation to words in a constitutional document, let me give the meaning of the word "sale" in the dictionaries. The Concise Oxford dictionary defines a sale as "exchange of a commodity for money of other valuable consideration, arrangement by which retailer takes quantity of goods with right of returning all that he fails to sell" Webster's New World Dictionary defines sale as "the exchange of property of any kind, or of some services, for an agreed sum of money or other valuable consideration." Mr. A. K. Brohi, therefore, very properly did not attempt to argue that the right, which the customer of a hotel bad to occupy a room on payment, amounted to a sale, but he referred us to the Central Finance Ordinance of 1970, which I will presently consider.

11. The next item in the amenities provided by a hotel is the item of service. Service means not merely the service of bearers, who clean a room, but in hotels in Karachi and Lahore, it would include the services of staff, who can speak to the foreign customer in English, or, in some European language. These are obviously highly paid services. Similarly, with reference to the question of catering, we should not overlook the employment of foreign chefs at fantastic salaries. Now, can the consumption of such services amount to sales by the hotel to the customer? In my humble opinion, the answer must be in the negative, except in slave owning societies. The very concept of a sale is that property in the thing sold is transferred to the buyer, and when the customer of a hotel consumes so to say, the services of the hotel staff, no right of ownership over the human beings, who are serving him, passes to that customer even for the period of the service rendered.

12. I would also refer here to some other considerations which are not irrelevant to the construction of the meaning of the words "purchase" and "sale". Long before the said section was enacted, a sales tax had been in force, and the Central Legislature had enacted the Pakistan General Sales Tax Act in 1948. The tax was on the sale of goods, and the definitions in clauses (6) and (10) both of the words "goods" and "sale" in section 2 are interesting. They read; (6) "goods" means all kinds of movable property other than actionable claims, money, stocks, shares and securities and includes all materials, commodities and articles including those to be used in the constructions, fitting out, improvement or repair of movable property and also includes all growing crops, grass and things attached to or forming part of the land which are agreed to be served before sale or under the contract of sale ;

(10) "sale" means every transfer of the property in goods by one person to another in, the course of trade or business for cash or for deferred payment or other valuable consideration and includes also a transfer of property in goods involved in the execution of a works contract, but does not include a mortgage, hypothecation, charge or pledge." The first explanation to this clause is also relevant, and it read; "Explanation 1.-A transfer of goods on the hire-purchase or other installment system of payment shall, notwithstanding the fact that the seller retains the title in the goods as security for payment of the price, be deemed to be a sale;" The definition of a sale in this Act corresponds, on the whole, to the ordinary meaning of the word as given in dictionaries, and coming as it does in a Federal Act, it reflects the Federal Legislature's concept of a sale. It is also significant that a transfer of goods by hire-purchase and instalment systems was declared to be a sale by a deeming clause, yet no further departure was made from the ordinary meaning of the word "sale", accordingly as a sale could only mean a transaction by which property in goods was transferred, it could not mean a contract for the hire of labour, whether skilled, or, unskilled.

13. The Pakistan General Sales Tax Act, 1948 was, however, repealed by another Federal Statute, the Sales Tax Act of 1951. The definitions of "goods" and of "sales" in this Act, which is still in force, are to be found in sections 2 (6) and 2 (15) and read; "(6) "goods" means all kinds of movable property other than actionable claims, money, stocks, shares and securities ; (15) "sales", with all its grammatical variations and cognate expres sions, means every transfer of the property in goods from one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration (and includes all such transactions and use of one's own goods as are specified in subsection (6) of section 3);" The definitions are similar to those in the repealed Act, and it is clear from these definitions that a sale would not include the sale of services, or, of a 'sight to occupy immovable property. 14'. I now turn to the Sale of Goods Act, 1930, also a Central Act. Goods are defined in clause (7) of section 2 as under :

"(7) "goods" means every kind of movable property other than actionable claims and money; and includes (electricity, water, gas) stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be served before sale or under the contract of sale ;" A contract for the sale of goods is defined by section 4 as "a contract whereby the seller transfers . . . . the property in the goods to the buyer for a price." Thus, once again, a sale is confined to movable property, and the concept of a sale totally excludes those transactions in which a person' services are engaged, or, in which a person acquires the right to occupy temporarily some portion of immovable property. Further, as the Sale of Goods Act had repealed the relevant provisions of the Contract Act, 1872, it is also necessary to refer briefly to those provisions.

15. Section 76 of the Contract Act reads "In this chapter, the word goods" means and includes every kind of movable property". Section 77 defined a sale as "the exchange of property for a price. It involves the transfer of the ownership of the thing sold from the seller to the buyer". It is clear from these definitions that a sale under both these statutes could not include the hire of a room or of labour, whether skilled or unskilled.

16. Turning now to the Transfer of Property Act, 1882, a sale is defined in section 54 as "a transfer of ownership in immovable property in exchange of a price paid or promised or part paid and part promised", therefore what Mr. A. K. Brohi described as the purchase of the right to occupy a room in a hotel is not and has never been considered to be a sale under our law, and it is not surprising that learned counsel referred very briefly to this aspect of the case. Thus, even this cursory reference to the relevant statutes shows that, for almost a century before the promulgation of the Constitution, the Central Legislature had itself defined a sale in a manner which excluded the type of amenities and entertainment provided by hotels, and, in my humble opinion, the word "sales" in item 43 of the Third Schedule to the Constitution must be given the same meaning. The Legislature is not only presumed to be aware of the law, but it is presumed not to make sweeping departures from the law lightly. Accordingly, if it had intended to give to the word "sales" a meaning different from that which it had itself given to it for almost a hundred years, it would have made express provision in this respect, and, as it has not, I hold that the supply of residential accommodation, together with service, by a hotel does not amount to a sale within the meaning of item 43 (f ) of the Third Schedule to the Constitution.

17. But hotels also provide meals and drinks both to residents and to non residents, and, as submitted by Mr. A. K. Brohi, neither an order for drinks nor an order for meals can be carried out without making, at some earlier stage, the requisite purchases of food and of drinks. Now, from this, Mr. A. K. Brohi wanted us to hold that the supply of meals and drinks by hotels necessarily amounted to sales, so as to render the tax on these items ultra vires, and I will take first the question of meals.

18. There cannot be any doubt that, when a customer orders a meal at a hotel, the hotel has to cook the food, which it has brought in anticipation of such orders therefore, in a limited sense, it can be said that an unknown and unascertainable quantity of food has been sold to the customer. I have deliberately used the words "in a limited sense", because I venture to think that a lay man would be surprised to learn that his order for meal had been equated by men learned in the law with an order for the purchase of food, the more so, as Mr. A. K. Brohi could not suggest any method by which the quantity of food used in the preparation of the meal supplied could be ascertained. Be that as it may, in order that there should be no possibility of the Provincial Legislature encroaching on the Third Schedule of the Constitution, I will assume that an order for a meal amounts to a purchase by the customer of the quantity of foodstuffs required for preparing the meal. At the highest, this would mean that a portion of the bill for the meal would fall within the ambit of item 43 (f) of the Third Schedule of the Constitution. But to meet this contingency, the Provincial Legislature had prescribed in clause (2) (c) of the said section, (to which I will refer as the deeming clause) that the tax under the said Act was to be "calculated at seventy-five per cent. of the gross amount charged by the hotel and remaining twenty-five per cent. being deemed to be the charge on account of food stuff and manufactured goods sold." Mr. Wajihuddin Ahmad placed very great stress on this deeming clause, the submission being that it was a complete answer to Mr. A. K. Brohi's objection, because a deeming clause could never be questioned. It is not necessary for me to examine, whether a deeming clause can never be questioned, but, as the question is of the vires under a Federal Constitution, I would emphasise that the deeming clause of a Provincial Legislation has been used by the Provincial Legislature not in order to remove an item from the Federal List and to bring it within the field of its Legislative competence by a legal fiction, but in order to resolve the dilemma of a transaction which fell both under the Federal list and the field of its own competence. Necessarily the validity of the deeming clause is based on the assumption that a bill for a meal also falls within the ambit of the Provincial Legislature, but of that I have absolutely no doubt, and this was also not disputed by Mr. A. K. Brohi? therefore the only point for determination is, whether the division of income effected by the deeming clause is utterly arbitrary as contended by the petitioners.

19. In order to meet this objection of the petitioners, Mr. Wajihuddin Ahmad submitted that a person ordering a meal at a hotel paid not only for the food required in the preparation of the meal ordered by him but also for the atmosphere of the hotel. In my humble opinion, the submission is correct, and I would take judicial notice of the fact that there are great differences in the prices charged by different hotels for meals, whether in Karachi, or, in any other city, or town anywhere. This is for the obvious reason that the price charged for a meal by a hotel is not only for the quantity of food estimated to have been consumed, but also for the place, the service, the cuisine and other circumstances. Thus, for example, one of the petitioners before us (Petition No. 407/1964) claims to be running a cabaret. That is obviously a very expensive item, which must add heavily to the price of a meal. Similarly, bands, music and the maintenance of dancing floors, if any, are other circumstances, which may add to the price of a meal in a first class hotel. Accordingly, the submission, that the division of income effected by the deeming clause is per se arbitrary, cannot be accepted.

20. However, it follows from the view which I am taking that the cost of the quantity of foodstuffs estimated to be consumed in a meal would form a lower proportion of the bill for the meal as one goes up the social scale, so to say, whilst the proportion for the price of the foodstuff consumed would become higher, the cheaper the type of hotel. Obviously, therefore, the division of income under the deeming clause could be arbitrary if the hotels run by the petitioners were of the type which guaranteed a fair supply of flies with the meal ordered. Accordingly, I enquired from Mr. A. K. Brohi whether it was the case of the petitioners that they were running third class hotels, because, if they were, their objection might have merited examination. Mr. A. K.' Brohi emphatically denied the suggestion that the petitioners were running third class hotels. He was emphatic that they were running first class hotels, and that is also what they have been declared to be. But, if I may be permitted to say so, even a hotelier cannot eat his cake and have it; therefore as the petitioners claim to run first class hotels, they cannot possibly challenge the division of income for meals in the deeming clause as arbitrary. The submission is, therefore, rejected, and this apart from the fact that there is absolutely no evidence in support of it.

21. I now turn to the question of drinks, and I would recall here that in order to prevent an encroachment on the Federal Legislative List, the deeming clause clarified that the tax under the section would be only on seventy-five per cent. of the gross amount of the bill. Then, under the second part of the clause came the words "and remaining twenty-five per cent. being deemed to be the charge on account of foodstuffs and manufactured goods sold". Mr. A. K. Brohi pointed out that, as the previous clause in the said section had expressly referred to the sale of liquor, the words "on account of foodstuffs and manufactured goods sold" could not include the sale of liquor. I agree with this submission, but, from this, learned counsel invited us to hold that the notional division of income effected by the deeming clause was applicable only to a bill for a meal, and, as, in consequence, the entire amount of a bill for liquor was taxed, the tax necessarily infringed item 43 (f ) of the Third Schedule of the Constitution; therefore it was ultra virus. I cannot agree with the submission, but I am compelled to observe, with regret, that the deeming clause is not a model of elegant drafting, and I would agree with Mr. A. K. Brohi's criticism in this respect of the said section also; but this means that it should be construed strictly, and any ambiguity in it must be resolved in favour of the subject. But by this test; Mr. A. K. Brohi's submission must, in my opinion, fail. It is true that the second part of the deeming clause about the rebate of twenty-five per cent. related in terms only to foodstuffs and manufactured goods, but the exemption from tax of twenty-five per cent. of the bill was not conferred by this part of the clause, but by the first part of the clause, according to which the tax fell only on seventy-five per cent. "of the gross amount charged". As these words were not subject to any qualification, they extended to all charges "on account of amenities and entertainment" provided by a residential hotel, and therefore the first part of the clause necessarily applied to bills for the orders placed at the bar, of a hotel. It is true that the deeming clause is drafted very clumsily, but it is separated from the first part by the word "and". This is a circumstance. not important by itself, which leads to the inference that the limit fixed by the direction contained in the first part of the clause was not cut down by what followed the word "and". In any case, as the question is of resolving an ambiguity in a clumsily drafted taxing statute, it must be resolved in favour of the subject; accordingly, although the matter is not free from doubt, I am not able to accept Mr. A. K. Brohi's submission.

22. Finally, on the question of the vires of the said section, Mr. A. K. Brohi referred us to the provisions of the Central Finance Ordinance, 1970, by which the Central Excises and Salt Act, 1944, was extended to "excisable services" by the addition of clause (dd) to section 2 of the Central Excise and Salt Act. This clause (dd) reads:- Add) excisable services" means services, facilities and utilities specified in Part II of the First Schedule as being subject to a duty of excise ;" The services rendered by hotels and restaurants were included in Part II, which reads; "(1) All services, facilities, and utilities, including catering, supplies and merchandise provided or rendered by a hotel." Mr. A. K. Brohi submitted that this ten per cent. excise duty was imposed on .the very same items, which had been taxed under the said section. The submission is correct, except for the items of "supplies and merchandise provided" by a hotel. Except for these items, as the services, facilities and utilities of a hotel would necessarily cover the amenities and entertainment provided by hotels; the submission was that the imposition of this excise duty implied that the amenities and entertainment provided by hotels were matters within the ambit of the Third Schedule. But, on this reasoning, it could be argued with equal force that the amenities and entertainment provided by hotels did not fall under this Third Schedule, because the 'Provincial Legislature had taxed them exclusively for seven long years. I am, therefore, not impressed by the submission. Secondly, the fact that the Central Legislature had taxed the amenities and entertainment provided by hotels would help Mr. A. K. Brohi's challenge to the vires of the said section only if the Central Legislature's power to make laws was confined to the matters enumerated in the Third Schedule. But, this assumption, which is the basis of the argument advanced, is contrary to the plain language of Article

131. Learned counsel relied on clause (1) of that Article, but, apart from clause (3), the Central Legislature was expressly empowered under clause (2) to make laws even on any matter not enumerated in the Third Schedule, if such Legislation was required in the national interest as defined in that clause. Now, to say the least, the power, thug conferred, of legislating on matters not enumerated in the Third Schedule was very wide; therefore, on the assumption that this excise duty is valid the mere fact that the supply of amenities and entertainment by hotels has been taxed does not necessarily mean, as submitted by Mr. A K. Brohi, that, in the opinion of the Central Legislature, the supply of amenities and entertainment by hotels amounted to sales within the meaning of item 43 (f ) of the Third Schedule.

23. Mr. A. K. Brohi's challenge to the vires of the said section fails, and I would now examine his other arguments. Learned counsel pointed out that the Provincial Government had been empowered under section 20 of the West Pakistan Finance Act of 1963 to frame rules about the procedure for the collection of the taxes imposed by that Finance Act. Now, the rules about the tax imposed by the said section were framed on the 24th of December 1963, and the notifications declaring the hotels of the petitioners, to be residential hotels were also issued on 24th December 1963; accordingly learned counsel's submission was that, even if the said section was not ultra vires, the tax imposed by it could not be levied before the framing of the rules, and the issue of these notifications.

24. I would examine first the effect of the Provincial Government's, delay in framing the rules. Mr. A. K. Brohi himself very fairly referred us to the judgment of the Supreme Court reported in M. U. A. Khan v. Rana M. Sultan and another (PLD1974SC228). There also, as in the instant case, the statute, which was being construed by their Lordships, empowered the Government to frame rules and the question before their Lordships was, whether an order made under that statute was valid, even though it had been made before the framing of the rules. Anwarul Haq, J., who pronounced the judgment of their Lordships, observed at page 234; "It is universally recognised that as regulatory statutes have to deal with a. variety of situations and subjects, it is not possible for the Legislature itself to make detailed regulations concerning them, and, therefore the Legislature delegates its power to specified or designated authorities to make such detailed regulations, consistent with the statute, for carrying, out the purposes of the parent legislation. The power so conferred, is generally in the nature of an enabling provision, intended to further the object of the statute, and not to obstruct and stultify the same. As a consequence, the failure or omission of the designated authority to frame the necessary rules and regulations, in exercise of` the power conferred on it by the Legislature, cannot be construed as having the effect of rendering the statute nugatory and unworkable. Such an eventuality could arise only if the Legislature indicates an intention to this effect in clear and unmistakable terms." Then, as to the facts of the case, their Lordships held "that effect could be given to the command of the Legislature" even without the framing of the regulations".

25. We are respectfully bound by these observations, which I would apply to the instant case. What is the command of the Legislature? That a tax should be levied by the Provincial Government at a fixed rate, and the statute specified both the person, or, persons initially liable to pay the tax and the manner in which the persons paying the tax could reimburse themselves. In my humble opinion, the mandate of the Legislature was clear and could have been enforced without rules. But, as Mr. A. K. Brohi submitted that we should examine the rules, I would briefly refer to them.

26. The first rule was formal. The second contained definitions. But even in the absence of these definitions, the Courts would have given effect to the mandate of the Legislature and directed the persons specified in the said section to pay the tax due from them. The third rule clarified the manner in which the tax had to be paid. It is true that a form for a challan for depositing the tax was specified, but, as the tax .had to be paid to the Provincial Government, the rule was of a clerical and procedural nature, because it merely prescribed a convenient mode of paying the tax. As the next rule dealt with the manner in which hoteliers were required to keep their books, once again the tax could easily have been levied without this rule, because, in any case, the hoteliers were under an obligation to keep proper records, and rule 4 was only for their benefit and guidance. Rule 5 required them to submit monthly returns about the tax, which was to be paid on "the seventh day of the month succeeding the month to which the return relates". Mr. A. K. Brohi laid great emphasis on this rule, because it also prescribed that the return was to be submitted to the Excise and Taxation Officer, and because it prescribed that the tax was to be deposited' in the Treasury with the form specified, in the rule etc. No doubt, the rule left the hotelier with no option but to make the payment, but how could the absence of the rule have altered his liability for the tax? He would have been liable to pay the tax on receipt of a notice of demand by the Provincial Government, and the only effect of the absence of the rule was that the hotelier had the benefit of not paying the tax until the rules were framed. Rules 6 to 11 empowered the Provincial Government to inspect the books of account of the hoteliers and to impose penalties on them for breach of the conditions prescribed in the rules. I do not see how these rules can lend any support to learned counsel's submission. Taking first the question of penalties, obviously they could not have been imposed in the absence of the rules, and this means that, for almost six months, no penalties could have been imposed on the petitioners. They can neither complain of this, nor can the absence of the power to impose a penalty react on the validity of the tax. Then, as to the power to inspect the books of account of the hoteliers, even if we assume that the Government would not have been competent to inspect these books until the rules were framed, the absence of the power of inspection could not, in any way, affect the validity of the tax imposed. Finally, the other rules conferred on the hoteliers a right of appeal and of revision against decisions by which they were aggrieved. Although these, rules were very necessary for a fair administration of the said tax, it cannot be contended that the tax could not be recovered in the absence of these rules; therefore, I would hold that the mandate of the Legislature could easily have been carried out without the rules; accordingly I am not able to accept the submission advanced.

27. Mr. A. K. Brohi's other objection was to the delay by the Government in issuing the notifications by which the hotels of the petitioners had been declared to be residential hotels within the meaning of the said section. Undoubtedly, there was a delay, as submitted, but the relevant clause read; "For the purpose of this section, Government may notify a list of such hotels as fulfil the conditions mentioned in the explanation . . . . . " The conditions mentioned in the explanation are clear beyond doubt. Therefore, I agree with Mr. Wajihuddin Ahmad that the word "may" in the clause quoted means "may", not "shall", and nothing turns on the delay in, issuing the notifications under this clause.

28. Finally, as I pointed out, the hoteliers were entitled to recover the tax imposed by the said section from their customers, and the respondents have alleged in all the petitions that the petitioners had recovered the tax from their customers. On the other band, none of the petitioners have even, asserted that they had not recovered the tax from their customers, except the petitioners in Petition No. 384/1964. However, although the petitioners in this petition claim not to have recovered the tax from their customers, this plea is difficult to believe, and the burden of proving it was heavily on them, the more so, as the plea was expressly denied by the respondents in, their counter-affidavits. But, as the petitioners have neither filed any affidavit in re-joinder nor produced any evidence in support of their plea, it fails, and, as to the other petitioners, they are precluded even from conten ding that the tax has not been recovered by them from their customers. In these circumstances, the learned Assistant Advocate-General contended that the petitioners had no locus standi to file the petitions, whilst Mr. Wajihuddin Ahmad submitted that they were not entitled to monetary relief in any event. Mr. Wajihuddin Ahmad's submission is correct. But, as the tax necessarily affected the earnings of the hoteliers, I cannot agree with the further submission that the petitions are not maintainable. However, this does not help the petitioners, because, in any event, in the circumstances discussed, they are not entitled to any monetary relief. The petitions are without merit and are dismissed. But, as the said section is very ambiguous, I would leave the parties to bear their own costs. M. A. RASHID, J.-I agree. S. A. H. Petitions dismissed.