P L D 1961 (W (PLP)

WAHIDUDDIN AHMAD, J.‑The Municipal Corporation of the City of Karachi, Opponent No. 3, by Notification No. F. 2/4/50‑LSG, dated June 4, 1957, has substituted the Revised Schedule of Terminal Tax as contained in the said Notification in place of Terminal Tax Schedule `A' of Terminal Tax Rules Chapter V, Schedule VIII of the Municipal Book, 1957. The Pakistan Textile Mill owners' Association, petitioner No. 1, an Association for the promotion and protection of the Textile trade in Pakistan, represents textile mill owners of Pakistan. Petitioners Nos. 2 and 3, companies registered under the Companies Act, are carrying on business within the Municipal limits of Karachi Municipal Corporation and manufacture textile products at their mills situated at Landhi and Sind Industrial Trading Estate, Manghopir respectively. They allege that for the manufacture of textile products raw materials and other items of industrial consumption are brought., from foreign countries to the said mills and finished products manufactured in them are distributed all over Pakistan as well as exported out of Pakistan. The raw materials and other items required by the mills for the manufacturing process and the finished products of the mills meant for distribution have to pass through the Terminal Tax limits of the Karachi Municipal Corporation. Opponent No. 3 who have been levying a terminal tax on all the articles of the description mentioned in the original Schedule' A ' annexed to the Terminal Tax Rules. Their grievance is that opponent No. 3 is not competent to collect terminal tax under the aforesaid Notification b.‑cause it is illegal and ultra vires." The grounds on which the validity of the aforesaid Notification is attacked are as under :‑ (a) The dissolution of the Karachi Municipal Corporation being illegal, the opponents had no authority to levy or demand terminal tax. (b) The opponents had no authority to pass the order con tained in the said Notification. (c) The opponent No. I not being the Provincial Govern ment had no jurisdiction to act under section 283 of the Municipal Act. (d) In any case and at the most 'he Opponent No. 1 was merely a sanctioning authority. The said opponent could not make substitutions in the Schedule ' A ' of Terminal Tax Rules. (e) No tax could be levied by mere executive order or by mere substitution in the Schedule. (f ) There being no proper prior publication, the said Notifica tion is illegal. (g) The said Notification infringes the Fundamental Rights of the petitioners as guaranteed by the Constitution and is opposed to the principle of natural justice. (h) The said Notification is unreasonable, excessive, arbitrary and discriminatory. (i) The mills of the petitioners are situated outside the terminal tax limits and the levy of terminal tax is illegal. Also no terminal tax can be levied on goods in transit. They pray that, for these reasons, a writ of mandamus or certiorari or any other appropriate writ quashing the impugned Notification and restraining the opponents from demanding, levying, imposing or collecting terminal tax on the articles specified in the said Notification be issued to the opponents. This writ petition was filed in the year 1957 at a time when the Constitution of 1956 was still in force in Pakistan and the validity of the impugned notification could be tested on the fundamental rights recognised under it, but since the said Constitution is no longer in force, the grounds based on the fundamental rights are not material and would not be taken into consideration for the decision of this matter. The petition is hotly contested. On merits the opponents urged that the impugned notification revising the terminal tax Schedule is valid and opponent No. 3 is competent to recover terminal tax on that basis. It is pleaded that in. the year 1954 the then Chief Officer of the K. M. C. put up a note to the then existing Corporation stating that in view of the abnormal growth of the population of Karachi and the increased tax, which had obtained for the past 30 years, should be revised and increased, and some more items be added to the existing Schedule of terminal tax. Accordingly, on 14‑2‑1955, a preliminary resolution bearing No. 712 of 14‑2‑1955 was passed ‑ by the then Municipal Corporation. Thereafter, objections were invited from the members of the public by notice, dated 7‑3‑1955. Objections received were considered and disposed of by the Municipal Corporation which on 12th July 1955 passed its final resolution bearing No..

152. On the 2nd December 1935, the Chief Officer, Karachi Municipal Corporation, approached the Chief Commissioner, Karachi for sanctioning the said resolution under section 283 of the Karachi Municipal Act, 1933, so as to enable the‑ Corporation to levy terminal tax as per revised Schedule. Thereupon the Chief Commissioner, in exercise of the powers conferred upon him under the afore said provision of law, sanctioned the revised rates and the new items of terminal tax as suggested by the Municipal Cor poration in the aforesaid resolution, and this fact was published in Notification No. F. 2/4/50‑LSG in the Gazette of Pakistan dated 14th June 1957. The opponents contend that the Chief Commis sioner of Karachi was the Provincial Government of Karachi and validly accorded the above‑mentioned sanction. They further contend that the legality or otherwise of the dissolution order of 14th December 1956 dissolving the Municipal Corporation has no bearing on the merits of the case. In the alternative, it is contended that the K. M. C. was validly dissolved and Oppo nent No. 1 was competent to sanction and approve the final resolution of the Corporation and the Chief Assessor and Collector of the K. M. C. duly appointed under section 43 of the Karachi Municipal Act rightly implemented the said Notification and the terminal tax levied on all taxable goods entering within the Municipal limits of Karachi is validly levied. Mr. Sharifuddin, the learned counsel for the petitioners, has attacked the impugned Notification on three‑fold grounds firstly, that the dissolution of the Karachi Municipal Corpora tion being illegal, the tax could not be levied at the instance of the Municipal Commissioner ; secondly, that the sanction accorded by the Chief Commissioner is bad as he was not the Provincial Government for Karachi, a centrally administered area ; and, thirdly, that the K. M. C. is not competent to levy terminal tax on goods in transit within its Municipal limits. The learned counsel has not pressed before us grounds Nos. 1 and 2 in view of the decision of the Supreme Court in Chief Commissioner, Karachi v. Jamil Ahmed (P L D 1961 S C 145). In this decision, their Lordships held that the dissolution of the K. M. C. in the year 1956 at the instance of the Chief Commissioner of Karachi was perfectly valid and have further held that the Chief Commissioner of Karachi wag the Provincial Government for the City of Karachi. The learned counsel reserved his right to re‑agitate these grounds before their Lordships of the Supreme Court, if necessary. Therefore, the sole question for determination in this matter is whether Opponent No. 3 is competent to levy terminal tax on goods in transit within its Municipal limits. Mr. Sharifuddin contended that the raw material imported by the millowners for the mills in Landhi and Manghopir situated on the outskirts of the Municipal limits of Opponent No. 3 are imported from Pakistan, and as they are not consumed and massed goods within the Municipal limits in question and its limits, the opponent No. 3 are not levy any terminal tax on goods in transit. He that the finished goods, which are exported Karachi also .pass through Municipal limits in transit, no terminal tax can be levied on them. The learned counsel, in support of his contention, referred us to a decision of the Indian Supreme Court in Empress Mills v. The Municipal Committee, Wardha (A I R 1958 S C 341). It will be proper to mention at this stage that the terminal tax levied by K. M. C. is charged under section 96 of the Karachi Municipal Act for the last thirty years. This provision of law reads as under :‑ " 96. (1) For the purposes of this Act the Corporation shall impose taxes on property. (2) In addition to the taxes mentioned in subsection (1), the Corporation may, for the purposes of this Act, impose any of the following taxes, namely :‑ (a) a tax at rates not exceeding those specified in Schedule II on all vehicles and animals used for riding, draught or burden kept for habitual use within the City ; (b) A terminal tax at rates prescribed by the Corporation with the approval of the Provincial Government on goods imported into or exported from the terminal tax limits ; (c) a tax on dogs kept within the City ; (d) any other tax which the Provincial Legislature has power under the Government of India‑Act, 1935, to impose in the Province (3) Nothing in this section shall authorise the imposition of any tax which the Provincial Legislature has no power to impose in the Province under the Government of India Act, 1935 Provided that, if the Corporation was immediately before the commencement of Part III of the said Act lawfully levying any such tax under this section as then in force, it may continue to levy that tax until provision to the contrary is made by the Central Legislature." The historical background of this legislation is that by virtue of item 8 of Schedule II of the Scheduled Tax Rules framed under section 80‑A (3) of the Government of India Act, 1915, as amended in 1919, terminal tax was allowed to be levied by the Municipal Committees in the Indian Sub‑Continent with the sanction of the Provincial Government. Item 8 was as follows :‑ "Terminal tax on goods imported into or exported from, a local area, save where such tax is first imposed in a local area in which the octroi was not levied on or before the 6th July 1917." In the Government of India Act, 1935, this item was replaced by two items, one dealing with terminal tax and the other with the right of' the local area to impose tax on entry of goods into a local area. In the Central List I of Schedule VII, item No. 58 dealt with the Terminal taxes in the following terms :‑‑ " Terminal taxes on goods or purchases carried by railway or air ; taxes on railway fares and freights." On the other hand, in the Provincial List, item No. 49 was intro duced, which was as under " Cesses on the entry of goods into a local area for consump tion, use or sale therein." But under section 143 (2) of Government of India Act an exception was made in the case of those taxes, duties, cesses or fees which, immediate before the commencement of Part III of the said Act were being lawfully levied by any Provincial Government, Municipality or other local authority or body for the purposes of the Province, Municipality, District or other local area under a law in force on the first day of January 1935, until provision to the contrary was made by the Federal Legislature. Thus the K. M. C. continued to charge the terminal tax even after the coming into force of the Government of India Act, 1935. This position was also main tained even after the Pakistan Constitution of 1956 came into force. Under the defunct Constitution, Terminal Tax was specifically provided in the same shape under item No. 26 of the Federal List, whereas the cesses on the entry of goods into a local area for consumption, use or sale therein with some additions was inserted in item No. 78 of the Provincial List. But in view of the provisions of Art. 224 of the 1956 Constitution, the Karachi Municipal Act, 1933 with all its incidents continued to remain in operation in Karachi and the Opponent No. 3 continued to charge the Terminal tax under section 96 of the Karachi Municipal Act. Before proceeding further, it may also be mentioned that as far as petitioners Nos. 2 and 3 are concerned, the undisputed position is that they are carrying on their ordinary business within the Municipal limits of K. M. C., although the mills in which the textile goods are manufactured, in the case of petitioner No. 2 is situated in Landhi, and in the case of petitioner No. 3 is situated in Manghopir, which are on the outskirts of the limits of the K. M. C. It will also be observed that Karachi is a port town and any goods which are imported in West Pakistan are to land and pass through Karachi. The further admitted position is that the business premises of both petitioners Nos. 2 and 3 are situated within the Municipal limits of Karachi and whatever business is carried on with the foreign countries etc., is done through these offices. Mr. Sharifuddin, the learned counsel for the petitioners, in support of his case has placed strong reliance on the decision of the Supreme Court of India in Empress Mills v. Municipal Committee, Wardha. In that case the appellant's spinning and" weaving mills at Yeotmal used to transport their cotton bales from Yeotmal to Nagpur by road and vehicles carrying them passed through the limits of Wardha Municipality. The goods were neither unloaded nor reloaded at Wardha but were merely carried across through the Municipal area. Admittedly, the goods being in transit, the vehicles carrying them did no more than use the P. W. D. road which traverses the Municipal limits of Wardha. The Municipal Committee of Wardha purporting to act under section 66 (1) (o) of the C. P. & Berar Municipalities Act (Act II of 1922) and rule 1 of the rules made thereunder, collected a certain amount as terminal tax on these goods on the ground that they were exported by the appellants from the limits of the Municipality of Wardha. The appellants thereupon claimed a refund of this sum. On refusal they took the matter in appeal to the Deputy Commissioner of Wardha, which was sent for disposal to the S. D. O:, who referred the following two questions under section 83 (2) of the Act to the Nagpur High Court, for its opinion. (1) Whether goods passing the limits of Wardha Municipality by road despatched from Yeotmal to their destination at Nagpur without being unloaded or reloaded at Wardha are liable for an export terminal tax ? (2) Whether the respondent Municipal Committee is not liable to refund the export terminal tax collected on such goods? A Full Bench of the Nagpur High Court in Empress Mills v. Wardha Municipality (A I R 1950 Nag. 169), came to the conclusion that the words `import' and `export' have no special meaning. They bear the ordinary dictionary meaning which is bringing into and taking out, and therefore the Municipality was perfectly justified in charging terminal tax on the goods in transit. This decision was challenged before the Supreme Court of India and they hold that import is not merely the bringing into but comprises something more i.e., incorporating and mixing up of the goods imported with the mass of the property in the local area. Similarly the word `export' has reference to taking out of goods which had become part and parcel of the mass of the property of the local area and will not apply to goods in transit, i.e., brought into the area for the pur pose of being transported out of it. They further held that even assuming that the words `imported into' or 'exported from' could be restricted only to their derivative meaning and thus construed to mean only `brought into or taken out or away from', this general meaning is qualified by the use of the prefix `terminal' used adjectively with the word `tax'. `Terminus' means the point, to which motion or action ends, goal, end, finishing point ; some. times that from which, it starts ; starting point ; and end ; ex tremity ; the point at which something comes to an end. If `terminal' besides the above meaning has an additional meaning also and that meaning signifies the termini or the jurisdictional limits of the Municipal area even then the construction to be placed on the term should be the one that favours the tax payer, in accordance with the principle of construction of taxing statutes, which must be strictly construed and in case of doubt must be construed against the taxing authorities and doubt resolved in favour of the taxpayer. They, therefore, came to the conclusion that keeping in view the terms, language and the legislative history of section 66 (1) the terms of the section cannot be enlarged by mere construction so as to include within its operation goods which are in transit and are being transported across the jurisdictional limits of the Municipality. On this view they set aside the view of the Nagpur High Court and held that the terminal tax is not leviable on goods which are in transit and carried across the limits of the Municipality. This decision was pressed before us, but the facts of the case before the Supreme Court of India are clearly dis tinguishable from the facts of the present case. It is, therefore, un necessary for us to consider the implication of the words 'import' and 'export' given in the above‑mentioned decision. It may, however, be pointed out that the interpretation given to the words 'import' and 'export' by the learned Judges of the Supreme Court of India is not is accordance with the preponderance of authority of the different Courts of the Indian Sub‑Continent of pre‑partition days. In re Rahim Rnanji (I L R 22 Bom. 843), Narottamdas Harjivpnds & Co. v. Bulsar Town Municipality (A I R 1941 Bom. 11), Maganlal Bhagwandas v. Ahmedabad Municipality (A I R 1945 Bom. 251). Bhagwandas Harikisandas v. Yeotmal Munict pality (A I R 1945 Nag. 197); Messrs Kashiram Jhabarmal v. Municipal Committee,, Nagpur (A I R 1946 Nag. 190), Emperor, v. Har Dutt (A I R 1936 All. 743), Nek Mohammad v. Emperor (A I R 1936 All. 83) and Hardwarimal Narnath Das v. Municipal Board, Dehradun (A I R 1939 All 736) the interpretation of words 'import' and 'export' used in the various Municipal Acts was based only on its literal meaning and was not as broad as given in the above‑mentioned decision. The question is not free from difficulty, and for the present we would not like to express any opinion one way or the other. It is not disputed before us that the business offices of the petitioner's mill are situated within the Municipal limits of opponent No.

3. The orders for the import of the goods from foreign countries is placed through these offices. The goods which are imported in Karachi are landed at Karachi and are v, cleared from the Customs authorities at Karachi. Thus the grievance of the petitioners in this case is not of the same nature C which was before the learned Judges of the Supreme Court of g India. Here, not only the goods imported are cleared by the millowners through the Customs authorities within the Municipal limits, but they are also unloaded and reloaded within the Municipal limits for the purposes of consuming them both within the Municipal limits and in the neighbourhood of the City of Karachi. Therefore, even if the view of the Supreme Court of India is accepted that the term 'terminal tax' properly construed must have reference to some activity within the Municipal area, namely, the entry for the purpose of remaining within that area or commencement of journey from that area, the ease of the petitioners is covered by that decision and the contention that no terminal tax is leviable does not appear to be well‑founded. We will first take up the case of the goods imported in Karachi. There are only two ways in which goods are imported in this City. The goods from foreign countries are imported by sea or air and the raw material from up country, i.e., from other parts of West Pakistan is imported through Railway. In all the cases the goods are unloaded within the Municipal limits of Karachi. They are stored either with the Port Trust authorities or with the Railway authorities for clearance within the Municipal limits of Karachi. These goods are imported by and for the benefit of the companies whose business activities are primarily within the Municipal limits of Karachi any merely because they are later on stored and used by the petitioners company in the neighbourhood of K. M. C. limits, it cannot be said that their destination is out side the limits of Karachi or they are not mixed with the mass of property in Karachi 'or in its neighbourhood. Similarly, as far as the goods exported from Karachi are concerned, most of the activities connected with it are performed within the Municipal limits of Karachi. In order to export the goods both to the foreign countries and other parts of Pakistan, the finished products are brought and unloaded and reloaded within the Municipal limits of K. M. C. and in this case also the export is for the benefit of business concerns which carry on business within the City of Karachi. In fact any orders which are placed for the import or export of these goods is done through business offices which are situated within the Municipal limits of opponent No.

3. In such circumstances it is difficult to hold that these activities are not in respect of goods which have mixed up with the mass of property in the local area. It seems to us that the storing of goods in Railway sheds and Port Trust sheds etc. coupled with loading or unloading will bring them within the term of "terminal", a point at which source thing comes to an end or from which it starts. On the facts of this case we are not inclined to hold that such goods are only in transit and are carried only across the limits of opponent No.

3. There are two instructive cases on this point of the English Courts. The first case is of Muller v. Baldwin ((1874) 9 Q B D 457). In that case Norwegian steam‑vessel called the "Hakar Adolstein" sailed from the port of Newcastle‑on‑Tyne with 530 tons of coal, alleged to be bunker coal, or coal for ship's use on board. The authorities of the port demanded from the master of the Steam‑vessel dues for the Tyne Improvement Commissioners, but he refused to pay up on the ground that the coal was intended solely for ship's use, but later on paid it under protest. The matter was taken to Court and the question raised was whether coals taken out of the port of Newcastle in a foreign steamer for the purpose of con sumption on board in the course of a foreign voyage, are liable to the coal dues. Lush, J. in that connection observed at page 461 as under :‑ "There is nothing in the language of the Act to show that the word "exported" was used in any other than its ordinary sense, namely, `carried out of the port'; and considering how easily and how extensively the privilege of storing for use may be abused and what quantities may be abused, and what quantities may be carried away under the name of bunker coals, we think that, if it had been intended to exempt from duty coals taken on board for fuel, some limitation as to quantity would have been imposed. Nothing would have been easier than to insert a proviso to that effect. We cannot, however, speculate upon the intentions of the legislature which are neither expressed in terms nor conveyed by implication ; our duty is to interpret the words of a statute according to their plain and grammatical meaning when, as in this case, they are not controlled by anything to be found in the context. Construing the words of the Act upon this principle, we feel bound to hold that coals carried away from the port, not on a temporary excursion, as in a tug or pleasure‑boat, which intends to return with more or less of the coals on board, and which may be regarded as always con structively within the port, but taken away for the purpose of being wholly consumed beyond the "limits of the port, are coals `exported' within the meaning of the Act." The next case is Harvey and others v. The Mayor and Corporation of Lyme Regis ((1869) 4 Excheq. Cat. 260). In that case a claim for toll was made under the Harbour Act and the words for construction were "goods landed or shipped within the same coast or harbour". Kelly, C. B. construed these words as under :‑ "The ordinary meaning and purport of the words is perfectly clear, namely, that tolls are to be paid on goods substantially imported ; that is, in fact, carried into the port for the purpose of the town and neighbourhood." In Punjab Flour & General Mills v. Lahore Corporation (A I R 1947 F C 14), the Federal Court of India in a Lahore case in respect of goods imported into the Municipality by Railway observed that terminal taxes in Entry No. 58 of List I of Schedule 7 of the Government of India Act must be (a) terminal, (b) confined to goods and passengers carried by railway or air, which must be chargeable at a rail or air terminus and be referable to services (whether of carriage or otherwise) rendered or to be rendered by some rail or air transport organisation. Even in the Supreme Court of India decision the following observations are very significant: "This supports the contention of the appellant that the terminal tax leviable under clause (o) properly construed must have reference to some activity within the Municipal area; i.e., the entry for the purpose of remaining within that area or commencement of journey from that area." Keeping in view these observations, it is quite plain to us that petitioners' grievance has no foundation. In the first place the rules of opponent No. 3, contained in Chapter V of Rule Book framed under section 286 (14) and (15) of the Karachi Municipal Act, 1933, makes it perfectly clear that opponent No. 3 are not charging any terminal tax on export of goods from their Municipal limits. Secondly, it is charged only on those goods which are brought into the terminal tax limits from outside these limits. The rules further show that principally this tax is charged from those persons in whose name either the railway document or custom import entry is made out, or who takes delivery from custom or railways. No tax is charged on any goods unloaded in stream for transhipment by sea direct or for consumption in the stream. Thus it cannot be doubted that terminal tax is charged on those goods which are imported into the port of Municipal limits for the purposes of the town and neighbourhood for com mercial use. The objection raised appears to be too technical and simply because the goods are ultimately taken to the‑mills for manufacturing process, the commercial activities attached with it cannot be overlooked for deciding the question under consideration. We are satisfied that the goods brought in this manner into the Municipal limits are not in transit only with a view to transport them across the jurisdictional limits of the Municipality. On the other hand, so many important steps and activities are taken and performed within the Municipal limits of the Karachi Municipal Corporation before they are transported to the Mills that they cannot be described as anything else but import of goods within the Municipal limits of the opponent No.

3. In our opinion, any other interpretation of such activities in the port town of Karachi would lead to much abuse and mischievous results. In these circumstances we find no force in the contention raised before us and hold that the terminal tax levied by Opponent No. 3 under the impugned Notification is validly levied. During the course of the arguments, the learned counsel for the petitioners incidentally touched also question of the competency of the Karachi Municipal Corporation to raise or increase the rate of taxation in view of the provisions of section 143 of the Government of India Act. This point is not specifically taken as a ground in the writ petition, and in view of the fact that the Karachi Municipal Act, 1933, has already been repealed, and a new Act, viz. Ordinance No. X of 1960, is now in force, we are not inclined to allow the petitioner to raise it as an additional ground to challenge the impugned Notification. In fact, the question whether in future the Karachi Municipal Corporation will be entitled to levy terminal tax shall have to be decided on the provisions of the Karachi Municipal Ordinance, 1960, and all other subsidiary points raised before us have only academic value. After careful consideration of the whole question, we are satisfied that the opponents were fully justified in levying terminal tax on the basis of the impugned Notification. Accordingly we find no force in the writ petition. In the result, the writ petition is dismissed with costs. K. B. A. Petition dismissed.