P L D 1983 Lahore 458 (PLP)

This Constitutional Petition assails the action of the respondents whereby they seek to levy hotel tax on the petitioner, an hotel being run in the name and style of "Motel Inns Garden, Islamabad" under the provisions of section 12 of the West Pakistan Finance Act, 1965 read with section 6 of the Punjab Finance Ordinance, 1978.

2. The tax in question on the hotels was for the first time levied under section 12 of the West Pakistan Finance Act, 1965. In 1978, the Governor of the Punjab promulgated an Ordinance i.e. the Punjab Finance Ordinance, 1978 in order to levy and enhance the rates of certain taxes and duties in the Province of the Punjab. By virtue of section 6 of this Ordinance for section 12 of the West Pakistan Finance Act, 1965, a new section was substituted.

3. It appears that originally Excise and Taxation Officer, Rawalpindi (not a party to the present Constitution Petition) issued a notice to the petitioner asking him to submit a month-wise return in form H. T. I. for the period from 1-1-1978 to 31-12-1978. The-petitioner challenged the authority of the Excise and Taxation Officer, Rawalpindi to issue any such notice to the petitioner as in regard to the petitioner, the said Excise and Taxation Officer had no jurisdiction. In the meanwhile, other hotels in Islamabad questioned the jurisdiction of the Punjab Province to levy hotel-tax under section 6 of the Punjab Finance Ordinance, 1978 in respect of hotels located in Islamabad capital territory. The question was considered by this Court in Hoshwani Hotels Ltd., Karachi v. The Government of the Punjab and others (P L D 1981 Lab. 211) and through a reported judgment, it was held that section 6 of the Punjab Finance Ordinance, 1978 was not applicable to hotels located in Islamabad capital territory and, therefore, the Punjab Province had no jurisdiction to levy the tax in question on hotels situate in Islamabad.

4. Subsequently, however, the Excise and Taxation officer, Islamabad, i.e. respondent No. 2, raised a demand for tax against the petitioner under section 6 of the Punjab Finance Ordinance, 1978. The petitioner questioned the authority of respondent No. 2 to demand tax under \section 6 of the Punjab Finance Ordinance, 1978. Ultimately, respondent No. 2 created demand against the petitioner on account of hotel tax for the period from 1-1-1978 to 31-12-1978. The petitioner preferred an appeal before respondent No. I viz. the Director, Excise and Taxation Islamabad who by his order dated 17118-7-1982 rejected the appeal holding that although the provisions of the Punjab Finance Ordinance, 1978 were not attracted in respect of hotels situate in Islamabad, but section 12 of the West Pakistan Finance Act, 1965 still held the field and tax could be recovered under the said provisions. Hence the petitioner, through the present Constitutional petition, questions the authority of the respondents to levy and collect tax acting either under the West Pakistan Finance Act, 1965 or the Punjab Finance Ordinance, 1978.

5. So far as the Punjab Finance Ordinance, 1978 is concerned, it obviously does not apply to the Islamabad Capital Territory. It extends only to the Province of the Punjab and the amendment brought about by section 6 of this Ordinance in the West Pakistan Finance Act, 1965 is, therefore, applicable to the territories forming part of the Province of the Punjab Islamabad Capital Territory is admittedly not a part of the Province of Punjab and, therefore, the Punjab Finance Ordinance, 1978 or section 6 thereof have no application to Islamabad Capital Territory. This position has already been admitted by respondent No. 1 in his impugned order dated 17/18-7-1982, The learned Assistant Advocate-General representing the respondents also conceded that Punjab Finance Ordinance, 1978 is not applicable to Islamabad Capital Territory and therefore, cannot be pressed into service against the petitioner.

6. Thus the question which falls for determination is as to whether section 12 of the West Pakistan Finance Act, 1965 is applicable to Islamabad Capital Territory or not. At the time of the enactment of the West Pakistan Finance Act (Act 1 of 1965), the 1962 Constitution of the Republic of Pakistan held the field. According to Article 1(1), the Republic of Pakistan consisted of the Province of East Pakistan and the province of West Pakistan. The Islamabad Capital Territory thus had no distinct entity under the 1962 Constitution and such territory formed part of the Province of the West Pakistan. The Provincial Legislature of the Province of West Pakistan could, therefore, validly legislate in regard to this territory. Under Article 131 of 1962 Constitution, the Central Legislature had the exclusive power to make laws for-the whole or any part of Pakistan with respect to any matter enumerated in the Third Schedule, while under Article 132, a Provincial Legs. lature had the power to make law for the Province, or any part of the Province, with respect to any matter other than a matter enumerated in the Third Schedule. Levy of tax on hotels does not figure in the Third Schedule to the 1962 Constitution and, therefore, the Provincial Legislature of the Province of West Pakistan could competently legislate about this subject for the whole of the Province of West Pakistan or any part thereof. It is expressly provided in subsection (3) of section 1 of the West Pakistan Finance Act, 1965 that it extended to the whole of West Pakistan. It, therefore, clearly means that in 1965 when Islamabad Capital Territory formed part of the Province of West Pakistan, the West Pakistan Finance Act, 1965 extended to this territory as well.

7. The President of Pakistan dissolved the Province of West Pakistan through President's Order No. 1 of 1970 called as the Province of West Pakistan (Dissolution) Order, 1970. Under Article 4 of this Order, with effect from the appointed day I.e. list July, 1970, the Province of West Pakistan as it existed immediately before that day ceased to exist aid in its place four provinces, namely, (a) Baluchistan, (b) the North-West Frontier Province, (c) the Punjab and (d) Sind and the following Centrally Administered Areas, namely, (a) the Islamabad Capital Territory ; and (b) the Centrally Administered Tribal Areas, were constituted. In this manner, the Islamabad Capital Territory became a distinct entity vis-a-vis the Province of West Pakistan with effect from 1-7-1970.

8. Article 19 of the Province of West Pakistan (Dissolution) Order, 1970 provided that all existing laws shall continue in force, so far as applicable and with the necessary adaptations until altered, repealed or amended by the appropriate Legislature or other competent authority. Clause (3) of Article 19 ibid further provided that any Court, tribunal or authority required or empowered to enforce an existing law shall, notwithstanding that no actual adaptations have been made in such law by an order made under this Article, construe the law with all such adaptations as are necessary to bring it into accord with the provisions of this Order. By virtue of the provisions of Article 19, the West Pakistan Finance Act, 1965 continues in force in regard to Islamabad Capital Territory as also the other territories previously forming part of the Province of West Pakistan:

9. Even under 1973 Constitution, the Islamabad Capital Territory by virtue of Article 1(2)(b) is a distinct entity vis-a-vis the Province of Punjab. However under Article 268 of the 1973 Constitution, all existing laws have been saved and under Article 279 ibid, it has been specifically provided that all taxes and fees levied under any law in force immediately before the commencing day shall continue in force to be levied until they are varied or abolished by Act of the appropriate Legislature.

10. The cumulative effect of the aforementioned Constitutional and Supra-Constitutional provisions would appear to be that the West Pakistan Finance Act, 1965 including section 6 thereof continues to be in force so far as areas forming part of Islamabad Capital Territory are concerned and the Courts, tribunals or authorities required or empowered to enforce this law f shall construe it with all such adaptations as are necessary to bring it into accord with the provisions of the Province of West Pakistan (Dissolution,) Order, 1970. In Islamabad Club v. Punjab Labour Court No. 2 etc. (P L D 1981 S C 81), it has been held that the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 is applicable to Islamabad Capital Territory.

11. It has also been argued on behalf of the petitioner that the respondents have no legal authority to levy the tax in question and .that such an authority vests in the President or in the Administrator by virtue of President's Order 18 of 1980. Article 2 of President's Order 18 of 1980 provides that the executive authority of the Federation in respect of the Islamabad Capital Territory shall be exercised by the President, either directly or, to such extent as he thinks fit, through an Administrator to be appointed by him. By virtue of Notification No. F. 17(2) of 1980-Pub. dated 31-12-1980, the President has been pleased to direct that the Administrator shall have, in respect of the Islamabad Capital Territory, all the powers and duties conferred or imposed on the Provincial Government under any law for the time being in force in the Islamabad Capital Territory. By virtue of Notification No. 4/1/81-AFT, dated- 27-1-1981, the Administrator, Islamabad Capital Territory, in exercise of the powers conferred upon him by the President in pursuance of Article 2 of Islamabad Capital Territory (Administration Order, 1980 (President's Order 18 of 1980) has been pleased to order that the Assistant Commissioner, Islamabad Sub-Division shall exercise all powers of the Director, Excise and Taxation, within the revenue limits of Islamabad Sub-Division under the Hotel Tax Rules framed under the West Pakistan Finance Act, 1965. In view of these notifications, the functionaries who have been arrayed as respondents in the present Constitutional Petition cannot be held to be unauthorised officers.

12. In view of the foregoing conclusions, it is held that the West Pakistan Finance Act, 1965 is applicable to Islamabad Capital Territory and, E therefore, the present Constitutional Petition so far it impugns the levy of hotel tax under the provisions of West Pakistan Finance Act. 1965, ~s dismissed.

13. It is, however, observed that the respondents cannot avail of the provisions of section 6 of the Punjab Finance Ordinance, 1978 as the said Ordinance has no application to Islamabad Capital Territory. The parties are left to bear their own costs. M. Y. H. Writ petition dismissed.