P L D 1990 Karachi 402 (PLP)

WAJIHUDDIN AHMED, J.‑‑‑Export Tax, in any form it takes, according to the petitioners in these petitions, cannot be levied, assessed or collected by any authority in Pakistan, except the Federal Government. Reliance is placed in this behalf on Article 70 and the Fourth Schedule to the Constitution, incorporating, inter alia, the Federal Legislative List and, in particular, on entries Nos. 43 and 49 in Part I of such List, pertaining respectively, to the "Duties of Customs, including export duties" and "Taxes on the sales and purchases of goods imported, exported, produced, manufactured or consumed".

2. It is maintained that the word "Export" is one of very wide connotations and includes not merely exports from Pakistan but also exports from a District, a Division or a Province. The word "Export", as a verb, literally means "to carry (things or persons) out of a place, to take away, carry off, to carry or send out of a country, as goods in commerce"; and, as a noun, it means "the act of exporting; that which is exported; the commodity which 'is or may be sent from one country A to another". In Black's Law Dictionary (Fourth Edition) as well as in Ballentine's Law Dictionary (Third Edition), in the context of significance and connotations of the word "Export", emphasis is on carrying or sending articles of trade or commerce abroad or out of a country or to convey the same by sea and the expression "Export Tax" denotes "a tax on goods going out and which actually leave the country". Thus, while the popular meaning of "Export" involves carrying or sending out something from a country, the secondary or more comprehensive meanings of that word may have as broad connotations as is argued at the Bar. In Stockton Railway v. Barret 11 CI. & F 590, these broader meanings were applied to the word "shipped for exportation". However, whether a particular word is used in its generic sense or its common or popular meanings are intended to be employed would, normally, depend on reference to the statutory context or I B contexts in which such word figures.

3. Taking up, now, the question of competence of raising taxes on exports, it is to be observed that Article 70 of the Constitution envisages an exclusive Federal Legislative List, as well as a Concurrent Legislative List, also occurring in the Fourth Schedule to the Constitution, with the latter of which we are not concerned here, except that whatever is the residue, beyond those lists, falls within the exclusive legislative powers of the provinces in Pakistan. Correspondingly, the Federal Legislative List implies that whatever is to be found in such list lies within the exclusive legislative competence of Parliament. This brings us to entries 43 and 49 in the Federal Legislative List. In so far as entry No. 43, aforesaid, is concerned it expressly pertains to duties of Customs and is elaborated to include export duties. Since such expression of export duties appears in the context of duties of Customs and thus in juxtaposition with import duties, the necessary implication is that export duties contemplated by such entry are duties on export from the country rather than within the country itself. This is more so, as the Customs limits or barriers are necessarily envisaged on a country?wide basis. Taking up entry No. 49, under reference, such entry, inter alia, contemplates "Taxes on sales and purchases on goods imported, exported‑‑‑‑ ". The germane qualifying clause, accordingly, is "taxes on sales and purchases" and it has a nexus with goods imported and exported etc. Here, too, the word "export" is used side by side of the word "import" and the two are categorised together, leading to similar implications, as above. At any event, what is involved in this entry is a tax such as is covered by the Sales Tax Act, 1951. It follows, therefore, that taxes on sales and purchases of .goods, exported as distinguished from those imported and, in fact, much like the same, fall within the caclu",v‑u purview of the Federal legislature and the Federal Government.

4. Plainly, the Federal legislature cannot contemplate export of good; within or between the territories comprised in the Federation itself. The referred duties and taxes in entries 43 and 49, above, thus, must pertain to or, may be, incidental upon imports into or exports from Pakistan. Accordingly, we have no hesitation in holding, and to this Mr. K.M. Nadeem AA.‑G. concedes, that in so far as Customs duties on exports are concerned, or, for the matter of that, taxes on sales (sales taxes etc.) on goods imported and exported go, such levying power vests in the Federation alone and cannot be impinged upon by any Provincial or Local authority or Government.,

5. The foregoing conclusion, by necessary exclusion, does not apply to anything that goes by the name of export tax on the inter‑provincial movement of I goods. Here, as we have found in the case of Mirpur Khas Sugar Mills and others (Constitution Petitions Nos. 523‑D of 1985 and 113‑D of 1985) the bar is to be found under Article 151(3) of the Constitution of Pakistan, which precludes provincial legislative or executive prohibitions or restrictions on entry into or export from a province of goods of any class or description, or imposition of discriminatory taxation in respect of goods produced or manufactured in one province or area as regards goods produced or manufactured in another province or area and it matters little whether the discrimination is in favour of one or the other. Article 151 of the Constitution, generally, is directed to ensure freedom of trade, commerce and intercourse throughout Pakistan and the only exceptions to the rule are contained in Article 151(2), envisaging a limited scope of deviation for Parliament and in Article 151(4), providing a still more limited scope of retraction for an Act of a Provincial Assembly. None of these are attracted in these cases. Apparently cognisant of such Constitutional embargo, the Government of Sindh, in exercise of powers conferred by rule 23 of the District Councils Export Tax Rules, 1976, exempted from liability to export tax, goods exported outside the province for use or consumption anywhere within Pakistan. Such Notification was published in the Sindh Government Gazette (Extraordinary), dated July 20, 1981, and came into effect immediately. On the basis of what we have elaborated below, this exemption would also be attracted in relation to "Rawangi Mehsool", which has attributes similar to export tax spoken of in the Notification of 1981. Here, too, though not on the arguments of the petitioners, we have to record favourable findings, by holding that an export tax, of the kind questioned in these proceedings, on inter‑provincial movement of goods cannot be levied or F enforced, being in contravention of Article 151 of the Constitution of Pakistan.

6. This brings up the controversial aspect of these petitions and that pertains to taxes on intra‑provincial export of goods. In order to appreciate this challenge, it would be appropriate, now, to record the salient facts, as incorporated in the‑petitions, being disposed of through this common order. The several petitioners in these petitions namely, M/s. Mazhar Industries Ltd., Premier Tobacco Industries Ltd., Saphire Textile Mills, Atlas Cables Ltd., Shahyar Textile Mills Ltd., Central Cotton Mills Ltd., Delite Industries, Fazal Brothers Ltd., Lackson Tobacco Co. Ltd., and Sandoz (Pak.) Ltd., carry on the business of manufacture of goods of various kinds. They are aggrieved by the levy, assessment and collection of export taxi or "Rawangi Mehsool" by the District Council Dadu and have joined, with the said council, the Government of Sindh and the contractor, leased out the contract for collection of such tax, as correspondents. Government of Pakistan is, apparently, sued as a pro forma respondent. In so far as export tax or "Rawangi Mahsool" on goods, meant for despatch abroad or to other provinces and areas in Pakistan are concerned, we have already recorded findings that such cannot be imposed, assessed or collected I by or under the authority of a province, subject as above. In relation to export taxes on intra‑provincial movement of goods, it is pointed out in these petitions that since such taxes contravened the requirement of the Sindh Local Government Ordinance, 1979 (herein referred to as "the Ordinance") and the Sindh Councils (Imposition of Taxes) Rules, 1979, the same were brought under challenge in the case of Kotri Association of Trade and Industry v. Government of Sindh 1982 C L C 1252, a case to which one of us namely, Saleem Akhtar, J., was a party, and were struck down. It is then said that the levy so struck down was sought to be validated by promulgation of the Sind Councils (Validation of Tax) Ordinance, VIII of 1982, and the vires of the said Ordinance are stated to be under challenge in subsequent Constitutional petitions. Here, it needs to be mentioned that one such Constitutional petition, being No. D‑660 of 1982, came up before us, and therein the effect of The Sindh Local Government (Amendment) Ordinance, VII of 1982 as well that of the Sindh Local Councils (Validation of Tax) Ordinance, VIII of 1982, was considered and both these legislations were found to have been lawfully legislated and promulgated. Taking H stock of this situation, M/s. Khalid Anwar and Rasheed Akhund, for the petitioners, have attempted to assail the export tax or "Rawangi Mahsool" on intra‑provincial movement of goods on other grounds, which are dealt with below.

7. In the first place, for the reasons partly recorded above, we are of the view that neither Article 70 read with the Fourth Schedule to the Constitution nor Article 151 ibid. comes in the way of export taxes on intra‑provincial movement of goods and that such taxes, to that extent, cannot be assailed on the basis of, those I provisions. This view is also supportable on the observations of the Division Bench in the matter of Kotri Association of Trade, above. In such case our learned brother Nasir Aslam Zahid, J., who spoke for the Court, opined as under:‑‑ "Article 151(1) read with the other three sub‑Articles of Article 151 leads to the conclusion that Article 151(1) does not restrict a provincial J legislature to impose restrictions or taxes on movement of goods within the province." In the case of Mirpur Khas Sugar Mills ibid., respectfully following the above dictum we had observed as under:‑‑ "In relation to taxes on goods, such view is based on good reason, since the meanings of what is free in Article 151(1) have, apparently, been extended to include a restriction by way of entry or exit, on even by way K of discriminatry taxation, which perhaps, may not have been the case but I for the prohibition in Article 151(3) of the Constitution." In this background, the corresponding contention, based on lack of competence, emerging from the alleged non‑compliance of the provisions of the Sindh Local Government Ordinance, 1979 and the Rules may, therefore, be straightaway considered. It has been argued that section 60 of such Ordinance provides for a levy of taxes "in the prescribed manner". Section 3 clause (49) defines "prescribed to mean as "prescribed by rules". In a similar way, section 64 of the Ordinance contemplates collection of taxes also "in the prescribed manner" and the last expression has the same meanings as in section 3 clause (49) ibid. Section 103 of the Ordinance, on the other hand, provides for rules to be framed for the purposes of the Ordinance, whereas section 120 thereof, envisaging repeal and savings, under clause (a) of subsection (2) saves, inter alia, rules or bye‑laws made, persons appointed or authorised and jurisdiction or powers conferred, "if not inconsistent with the provisions of this Ordinance". At the time of promulgation of the Ordinance of 1979 there subsisted, what are known as the People's District Councils Export Rules, 1976, P L D 1977 Sindh Statutes 55 framed under the Sindh People's Local Government Ordinance, 1972. According to the learned counsel such rules were inconsistent with the provisions of the Ordinance even on the date of its promulgation. Further, these became more so, as through an amendment, brought about in 1981, "Export Tax", as such, was abolished, allegedly, on grounds of repugnancy to the Constitutional provisions but the substitute came to be described as "Rawangi Mahsool", restricting the power of levy, then onwards, to the District Councils alone and taking away, relevant powers from the other Councils, though the new levy was to be apportioned between District and Local Councils. It is also contended that such "Rawangi Mahsool" is denominated as "Toll", which is not the same thing as a tax and that on the basis of dicta of the Supreme Court in the case of Burma Oil Company v. Trustees of The Port of Chittagong P L D 1961 SC 452 such a levy, viz. toll has a nexus with some benefit, service or facility in return whereas a tax is a burden simpliciter irrespective of any quid pro quo. As a corollary, it is urged, that, in the first place, the referred Rules of 1976 were inconsistent with the Ordinance of 1979 and, therefore, inapplicable in the same manner as opined by the Supreme Court of Pakistan in Ibrahim Khan v. Mirpur Khas Sugar Mills Ltd., 1980 S C M R 263 and, for another, after the amendment of 1981, there are no rules whatever on the subject. It is pointed out that since sections 60 and 64 of the Ordinance, taken together, contemplate the levy as well as the mode and manner of collection only "in the prescribed manner", namely, in accordance with Rules framed either under the Ordinance or such as are consistent with the Ordinance, and there being no such Rules duly framed under or consistent with the Ordinance no levy of "Rawangi Mahsool" can be made nor its collection can, lawfully, be effected. It is also urged that the. rule in relation to fiscal measures being That there must be strict compliance with the statutory dispensation, if that be not so, neither the levy nor the collection is lawful. In support is cited the Indian Supreme Court case of Atiabari Tea Co. Ltd. v. The State of Assam rep‑,rted in A I R 190;1 SC 552, where even with regard to machinery provisions in a fiscal statute the same rule, as generally applicable to charging measures, was applied. 8. 'We have taken note of the above contentions as the same were not raised in the earlier adjudication in Re Kotri Association of Trade and Industry, referred above. As seen, at the time when the Sindh Local Government Ordinance of 1979 was enacted the People's District Councils Export Rules, 1976, held the field. We have examined these Rules and even though some adjustments could, appropriately, have been made with the current dispensation under the present Ordinance none have been so made. However, those adjustments, presumably, can be read mutatis mutandis in the Rules on the basis of the Savings envisaged in section 120(2)(a) of the Ordinance, which saves, amongst other things, appointments or authorisations made and jurisdiction or powers conferred. Such saving should cover the field and the subject. In addition, the concept of inconsistency in the existing Rules, as contemplated in section 120 of the Ordinance, is one involving a material inconsistency and not merely one of words and phraseology. It must be a positive repugnancy to the provisions in the Ordinance or one where the two cannot be reconciled to stand together. Short of that there can be no inconsistency. If that were not so, no existing Rules under a previous statute, which has since been repealed on the promulgation of a new legislation on the same or similar subject, could ever be consistent. Such an approach would lead to redundancy of the Savings clause, which interpretative outcome, on recognised principles, should be avoided. Not only that even the corresponding provisions in section 23 of the General Clauses Act of 1956, (which statute applies in the present context, and the cited provision which corresponds to section 24 of the General Clauses Act, 1897), would, also, be rendered nugatory on such an approach being adopted. Thus, learned counsel have been unable to show any material inconsistency in the Rules of 1976 vis‑e‑vis the Ordinance. We cannot, therefore, read any inconsistency, as such, in the Rules of 1976 as the same were in vogue on the date the Ordinance was introduced.

9. Turning now to the amending Ordinance of 1981 and the new nomenclature of "Rawangi Mahsool", in substitution of "Export Tax", as hitherto in operation, we are of the view that no diametrical change was introduced in the legislation in pursuance of the amendment under reference. All that transpired was that what, previously, was termed as a tax, pure and simple, was given the new name of "Rawangi Mahsool" and was called a toll instead of a tax. Perhaps, the amended provision was more in consonance with the realities of the situation because the nature of the former has a link with the overall facilities and advantages, which a District Council provides within its area, so as to facilitate the production or manufacture of goods within its limits and/or the carriage of the same past those limits. Such facilities may include the provision of Water, Electricity, Roads etc. No substantial change on change of nomenclature, therefore, was brought about by the amendment, and the Rules of 1976, should, continue to apply. If, however, the incidents of due assessment, rights of appeal, Revision etc. were taken away or if vested rights were impinged, without lawful authority, the levy or collection would clearly be hit by the dicta of Superior Courts on the subject. This does not seem to be the case here. At any event, we are bound by the decision in the case of Kotri Association of Trade and Industry and cannot take another view. Another aspect of the matter, supportive of the above hypothesis pertains to the operation of the Sindh Councils (Validation of Tax) Ordinance, VIII of 1982, which followed in the wake of the judgment of this Court in the case of Kotri Association. Such Ordinance, inter alia, has enacted that notwithstanding anything contained in the Sindh Local Government Ordinance, 1979, any tax, rate, toll or fees levied, charged, collected or realised by a Council, on or after the 3rd of June, 1980, shall be deemed to have been validly levied, charged, collected or realised, as the case may be. Thus, Rules or no Rules, a blanket cover to the exercises under sections 60 and 64 of the Ordinance has been accorded and that clinches the issue in these proceedings. In the result, therefore, while Export Tax or "Rawangi Mahsool" on the inter‑provincial movement of goods as also on goods exported from Pakistan is found to be unconstitutional, bad and without lawful authority, Export Tax or "Rawangi Mehsool" on intra‑provincial movement of goods is found to be valid. As no details of payments have been provided in these petitions, we cannot order refunds and would limit ourselves to passing due orders of restraint against the said contravening levies, charges or collections. Costs shall follow the event. S‑591/K ????????????????????????????? Order accordingly.