1990 PLP 1367 (CLC)

3. The respondents have disputed the case of the petitioners. According to them the hides and skins of the animals which are being exported are collected by the petitioners from the areas falling within the limits of District Council Sukkur, and consequently they are liable to pay export tax. It is also pleaded by the contesting respondent that a factual controversy is involved in all these petitions, which cannot be resolved in constitutional jurisdiction, specially when an efficacious remedy was and is available to the petitioners.

4. The matter of levy of 'export tax' by the District Councils has come up for consideration at number of times in different petitions, some of them may be cited as follows:‑ (i) Messrs Ravi Rayon Ltd. v. Commissioner, Lahore Division, Lahore and 2 others (P L D 1978 Lahore 387). (ii) Kotri Association of Trade and Industry v. Government of Sindh and another (1982 C L C 1252). (iii) Wazir Ali Industries Ltd. and another v. The Secretary to Government of Sindh (Local Government) and 2 others (1985 C L C 1843). (iv) Messrs Khyber Electric Lamps Manufacturing Limited and others v. Chairman, District Council, Peshawar and another (1986 C L C 533). (v) Mirpurkhas Sugar Mills Ltd. v. District Council, Tharparkar and 2 others (1990MLD317).

5. The genesis and validity of the `export tax' has been found in the memorandum of principles governing local taxes circulated by Government of India in 1914, according to which "although the local taxes should be on `imports' only, `exports' as well as `imports' might be taxed in places where its Municipality is a large centre of `export' trade.'

6. Item 27 of Fourth Schedule to the Constitution of Islamic Republic of Pakistan, 1973, relating to Federal Legislative List deals with import and export across customs frontiers in the following words:‑ "Import and export across customs frontiers as defined by the Federal Government, inter‑Provincial trade and commerce, trade and commerce with foreign countries; standard of quality of goods to be exported out of Pakistan." The inter‑district or inter‑provincial transport of goods cannot be equated with the import and export across customs frontiers of the country. Therefore, the imposition of `export tax' being a provincial subject it is within the competence of the Provincial Legislature to impose such tax. The Constitution of Islamic Republic of Pakistan, 1973, has not brought any change in it. The cases reported as Kotri Association of Trade and Industry v. Government of Sindh and another (1982 C L C 1252) and Mirpurkhas Sugar Mills Ltd. v. District Council, Tharparkar and 2 others (1990 M L D 317), are relevant on this point. In the latter citation a Division Bench of this Court observed:‑ "A passing argument was made for the petitioners that even where goods are destined for a location within a province any levy of export tax in relation thereto would contravene Article 151 (1) of the Constitution as the freedom is a countrywide one. Such argument was repelled in Kotri Association of Trade v. Government of Sindh, 1982 C L C 1252, in which one of us, namely, Saleem Akhtar, J. was a party on holding that it was only inter‑Provincial trade, that is trade between provinces, which was guaranteed and not intra‑provincial trade that is trade within a province."

7. The record shows that the petitioners have their place of business falling within the limits of urban area. The terms `urban area and 'rural area' were examined by a Division Bench of this Court in Messrs Baba Corporation (Pvt.) Ltd. v. Province of Sindh through Secretary, Local Bodies and 3 others reported in P L D 1989 Karachi 136, wherein it was observed that the areas within the jurisdiction of Town Committee, Municipal Committee, Municipal Corporation, etc. are urban areas and the Union Council which is constituted only in respect of rural area was not competent to levy octroi in respect of urban areas.

8. Rule 2 (f) of the People's District Council Export Tax Rules, 1976, defines "District Council Limits" as limits of the revenue district excluding the limits of People's Municipalities and Town Committees. Rule 2 (h) of the said rules further defines export as an export from the District Council Limits. The word `export' was examined in Messrs Khyber Electric Lamps Manufacturing Limited and others v. Chairman, District Council, Peshawar and another, reported in 1986 C L C 533 wherein it was held: "It is manifest that the meaning of the word `export' is two‑fold. Firstly, it means taking out the goods abroad and, secondly, taking the goods out of the limits of a province, district or municipality for any destination within the country."

9. On the face of the record the petitioners are exporting hides and skins of animals out of local limits of urban areas, which do not fall within the purview of rule 2 (f) of the Peoples District Council Export Tax Rules, 1976, and the B recovery of export tax from them is illegal and without lawful authority. The case of Wazir Ali Industries Ltd. and another v. The Secretary to Government of Sindh (Local Government) and 2 others (1985 C L C 1843) is a direct authority on this issue, in which the relevant question was answered in the following words: "With the result that for the purpose of imposition of toll on the export of goods, i.e. Rawangi Mahsool the limits of peoples municipalities and town committees are excluded and, therefore, the levy is ultra vires of the power of the respondents district council." The case of Messrs Ravi Rayon Ltd. v. Commissioner, Lahore Division, Lahore, reported in P L D 1978 Lahore 387, upon which much emphasis is laid by learned counsel for respondent No.2, was considered in the above‑cited authority of a Division Bench of our Court and was not found to be relevant.

10. The contention of learned counsel for respondents that hides and skins of animals are collected by the petitioners from rural areas falling within the jurisdiction of respondent No.l appears to be feeble and weak. Under the existing rules a District Council is competent to recover export tax/Rawangi Mahsool when the goods so notified are taken out from rural areas to urban areas. The recovery of export tax, by whatever name called, if allowed in the manner as is being done, would again lead to multiple taxation. The petitioners had no other efficacious remedy and, therefore, they have rightly selected this forum.

11. For all the above reasons the above petitions are allowed and it is declared that the respondents are not entitled to recover export tax, by whatever name called on the petitioners goods, viz. hides and skins of animals originating from their offices situated in urban areas, and they are restrained from recovering the same.

12. Before we part with this judgment, it is necessary to point out that the respondent No.2, has established an octroi post on national highway near Ubauro, leading to Province of Punjab. There are receipts on record to show that `export. tax' was collected at this octroi post also. Besides being ultra vires, this recovery is violative of Article 151 of the Constitution of Islamic Republic of Pakistan, 1973. The imposition of such a tax is destructive to national integration. If any authority is needed reference may be had to cases reported as Mirpurkhas Sugar Mills Ltd v. District Council, Tharparka and 2 others (1990 M L D 317 and a judgment of Indian Supreme Court in Automobiles Transport v. State of Rajasthan (A I R 1962 S C 1406) wherein it was observed that, if the tax is one which is directly and immediately laid on trade or commerce and also on trade and commerce in movement, it would be violating the freedom of trade and commerce.

13. In the result all the petitions are accepted with no order as to costs. The C.M.A. No. 592 of 1989 has become infructuous and is dismissed accordingly. A.A./A‑815/K Petitions accepted.