AVARI HOTELS LIMITED through Controller VS DEPARTMENT OF EXCISE AND TAXATION GOVERNMENT OF THE PUNJAB, through Secretary, 2009 PTD-LAHORE-HIGH-COURT-LAHORE 1868 (2009)

(a) Interpretation of statutes---

---Interpretation given in one statute of a particular connotation is not to be used or made applicable for other law unless it has been so adopted in the said law.

(b) Interpretation of statutes---

---Where a particular word is not interpreted by a statute the ordinary dictionary meanings are applicable---Courts have never considered it safe to import the meaning from the other statutes while dealing with some issue under another statute.

(c) Interpretation of statutes---

----Courts while interpreting the provision of a statute are required to remain within the intention of law-makers and remaining within the literal meanings.

(d) West Pakistan Urban Immovable Property Tax Act (V of 1958)---

----S. 3---Constitution of Pakistan (1973), Arts.148, 149 & 199---Constitutional petition---Scope of Arts.148, 149 of the Constitution---Property tax, levy of---Contention of the petitioner was that Government of Pakistan through its Circular No.1-129/99-INV-IV, dated 2-8-1999 had declared "tourism" as an "industry" with all such facilities/ concessions which were and are available to the industries; hotel to be as a necessary ingredient of the same, was an "industrial unit" for all practical purposes---Provinces, by virtue of the provision of Art.149 of the Constitution, were bound to make their policies in harmony with the directions of the Federal Government---Petitioner further contended that "hotel" be treated as an "industry" for the purposes of determining the levy of property tax---Validity---Articles 148/149 of the Constitution applied on the laws which were in Federal List and in the Concurrent List as a domain of the Federation---Property tax, being a provincial law and not in, conflict with the Federal law, there was no doubt that the legislation, especially when it deals with the foreign investors, should be attractive and rather luring and provincial as well as local laws should also be, harmonious to the Federal Laws---Question, in the present case, being the application of the provisions of West Pakistan Urban Immovable Property Tax Act, 1958 to the hotel, the principle that the law should be applied in its literal meanings was applicable with full force and there was no question of treating a "hotel" to be an "industry" for the purposes of the determination of property tax for the reason that the same had been so treated by the Federal Government through its Circular---Hotel declared as industry by the Federal Government if was not being given the said treatment under the West Pakistan Urban Immovable Property Tax Act, 1958, it was the provisions of the said Act which shall prevail---Property Tax having been created as a result of the charge under West Pakistan Urban Immovable Property Tax Act, 1958, no exception could be made---High Court, however, granted an interim respite to the petitioner and directed that no coercive measures for recovery of the arrears of property tax shall be adopted for fifteen days---Article 149 of the Constitution was to ensure the due compliance of the enforcement of Federal laws and in fact it was not an authority to regulate the Provincial law.

Messrs' Tures Hotel, Islamabad and others v. Capital Development Authority and others 2006 SCMR 1738; Commissioner of Income Tax Companies-II, Karachi v. Messrs Muhammad Usman Hajrabai Trust Imperial Courts, Karachi 2003 PTD 577; Arabian Sea Enterprises Ltd. v. Government of Sindh through Chief Secretary, Karachi and 3 others 2007 CLC 1215; Mst. Farah Zahra v. Board of Governors of the Area Study Centre for Africa and North and South America, Quaid-i-Azam University, Islamabad through Chairman, Vice-Chancellor and another 2005 PLC (C.S.) 216; Commissioner of Income Tax Zone 8, Lahore v. Muhammad Shahbaz Khan 1996 PTD 1138; Cape Brandy Syndicate v. Inland Revenue Commissioner 1921 K.B. 69; Farooq Ahmed Siddiqi v. The Province of Sindh PLD 1996 Kar. 267; Mohtarma Benazir Bhutto v. President of Pakistan PLD 1998 SC 388; Iftikhar' Hussain Shah v. Pakistan through Secretary, Ministry of Defence, Rawalpindi 1991 SCMR 2193; Sanofi Aventis Pakistan Limited and others v. Province of Sindh through Secretary Excise and Taxation Department, Karachi and 2 others PLD 2009 Kar. 69 and Zawar Petroleum v. O.G.D.C. and others 2003 YLR 1450 ref.

(e) Interpretation of statutes---

---Taxing statute---Court in case of a taxing statute had to look merely at what was clearly said; there was no room for any intendment; there was no equity about a tax; there was no presumption as to a tax; nothing was to be read in, nothing was to be implied and one could only look fairly at the language used.

Cape Brandy Syndicate v. Inland Revenue Commissioner 1921 K.B. 69 quoted.

(f) Constitution of Pakistan (1973)---

----Arts. 148 & 149--- West Pakistan Urban Immovable Property Tax Act (V of 1958), S.3---Levy of tax by Provincial Government---Scope of application of Arts.148 & 149 of the Constitution---Charge and recovery of property tax is in the exclusive domain of Provincial legislature as the Constitution has provided full authority to all the Provinces to charge the same and to make laws and rules for the said charge and recovery---Provisions of Arts.148 & 149 of the Constitution have no bearing on unbridled rights of the Province for charging the property tax---Principles.

Iftikhar Hussain Shah v. Pakistan through Secretary, Ministry of Defence, Rawalpindi 1991 SCMR 2193; Sanofi Aventis Pakistan Limited and others v. Province of Sindh through Secretary Excise and Taxation Department, Karachi and 2 others PLD 2009 Kar. 69 ref.

Aitzaz Ahsan and Faisal Hassan Naqvi for Petitioner.

Ch. Rizwan Mushtaq, A.A.-G., Rana Amir Ahmed Khan, A.A.-G., M. Nawaz Waseer, Standing Counsel; Akram Ashraf Gondal, Director Excise, Lahore Region "A", Syed Riaz Hussain, Incharge, Legal Cell, Excise Department, Lahore for Respondents.

Date of hearing: 10th April, 2009.

JUDGMENT

KHAWAJA FAROOQ SAEED, J.--- This judgment will dispose of Writ Petition No.11094 of 2003 and Writ "Petition No.14349 of 2003 as the common questions of law are involved in both the writ petitions.

2. The Writ Petition No.11.094 of 2003 has been filed by the petitioner challenging the order, dated 18-6-2001 decided by the Excise and Taxation Officer:

3. The petitioner, Avari Hotel Limited, is the owner of Five Star Delux hotel situated on Shahrah-e-Quaid-e-Azam, Lahore. It has statedly been established to attract foreign and domestic tourism. In addition to the rooms for its clients, other offices and rooms have also been constructed and are given on lease.

4. The facts narrated by the petitioner are that the Government of Pakistan through its Circular No.1-129/99/INV-IV dated 2-8-1999 through Ministry of Industries and Production declared tourism as an industry with all such facilities/concessions which were and are available to the industries. The said circular was subsequently followed by the Board of Investment through its policy publicized and enforced in the following manner:---

--Tourism shall continue to be treated as an industry, contributing more aggressively towards socio-economic growth.

--A paradigm shift from promoting seasonal tourism to year rounds tourism.

--A qualitative improvement/development in environment, human resources, tourist services and the tourist product.

--Federal and Provincial Governments to bring all legislation in consonance with demands of the tourist industry.

--Stimulate private sector involvement in tourism through provision of industry support constructs.

--On the recommendations of the Ministry of Tourism, land for hotels, motels, recreation parks, fun lands, athletic clubs, cultural centres etc., to be provided on non-commercial rates and on long lease basis by the development authorities at the Federal and Provincial levels.

5. Various other Federal Ministries including Central (Federal) Board of Revenue has declared tourism project as "Priority Industry" through S.R.O. No.439(I)/2001, dated 18-6-2001. The petitioner later has been brought under charge under the Urban Immovable Property Tax Act, 1958, on the basis of the "annual value" of the relevant properties within its scope. The charge has been created on the holding of the property, but, however, for the purpose of ascertainment of the "annual value" of the property in terms of Property Tax Act vide Notification No.SO-Tax-E-T-3-38/99/PI, dated 13-10-2001, issued a schedule of the properties. The schedule has been divided into different categories for calculation of Property Tax. These categories include general residential properties, general commercial properties as well as residual category termed as "other than General Residual and Commercial properties".

6. Still further the residential category has been sub-divided into a number of different categories. The industrial unit of a particular industry is charged to industrial rates while the hotels are taxed under a separate hotel formula. As per the said formula not only total area of land occupied by the hotel is taken into account but also the average rental cost of each room of the hotel is added.

7. The petitioner 'has received, certain notices from the Property Tax Department which were challenged before the competent authority, however, being aggrieved and dissatisfied from the respond, a writ petition was filed before this Court on 26-5-2003 which was registered as Writ Petition No.6931 of 2003. The said writ petition was disposed of on 1-7-2003 with the directions to the Excise and Taxation Officer to decide the case of the petitioner and to restrain from recovering the tax imposed for the period of 30 days.

8. The said E.T.O. vide his order, dated 14-7-2003 concluded that:--

"(a) hotels and tourism are not synonymous;

(b) that the levy of property tax is in the interest of the Province of the Punjab;

(c) that even if hotels are considered as an industry, the petitioner has not been discriminated against through the adoption of a specific method of assessment; and

(d) that the scheme and methods of the assessment as notified by the Government of Sindh through Notification No. S.O. (TAXES) E&T/3/310/97/Pt-II are different from those adopted by the Punjab Government and hence any relief made available by the Sindh High Court to hotels in that Province would not be ' applicable to hotels in the Punjab."

9. It is now these observations which are challenged by the petitioner on the basis of inter alia following arguments:---

(i) that the Federal Government through its various organs/limbs have declared tourism to be as an industry and hotel to be as a necessary ingredient of the same,, hence, the same are industrial unit for all practical purposes;

(ii) that the Ministry of Tourism has provided land for hotels, motels, recreation parks, fun lands, athletic clubs, cultural centre etc., on non-commercial rates and on long lease basis;

(iii) that the tourism is a now universal phenomena and every hotel is an industry. Furthermore, tourism is universally known as tourist industry;

(iv) that the provinces by virtue of the provision of Article 149 of the Constitution of the Islamic Republic of Pakistan are bound to make their policies in harmony with the directions of the Federal Government.

10. In support of the above claim, learned counsel has relied upon the various circulars and policy decision 'of the Federal Government already mentioned earlier. The arguments remained that it is now universally recognized that for the growth of economy in a country tourism plays a vital role. It is for the said reason that now each and every State of world is making such arrangements in their countries to cater for accelerated investment in which the role of the hotel industry cannot be ruled out.

11. In all forms of tourism, the hotel industry is a -necessary and rather primary requirement. Thus, if the Federal Government comes out with a policy and declares it as an industry with all the benefits attached to the same, the Provincial legislation if does not come at par with the same, would amount to disregard of the said policy direction and damaging for the reputation of the country.

12. Even otherwise, it does not create a good impression to the foreign investors. Once a foreign investor is made to believe that the establishment of hotel in Pakistan is entitled to all the benefits of a hotel industry, as are -in the certain other countries of the world, later creating a charge on them by surprise through Provincial legislation by calling it as a commercial organization does not give a pleasant picture of the policies of the country.

13. Learned counsel is fair in his arguments. It is commented that he being aware of the judgments of this Court as well as of the Honourable Court of Pakistan in terms of re: Messrs Tures Hotel, Islamabad and others v. Capital Development Authority and others 2006 SCMR 1738 would not take much time. However, he insisted that Article 149 being in the nature of a binding requirement should not have been ignored by the Punjab Government. By re-emphasizing on the language of the said Article 149 it was repeated that the Provincial Government is bound by the language thereof, and since presently there is an apparent contradiction between the policies and the language of the law in respect of Property Tax, he would like to register his arguments that disregard of the Federal policies and consequent laws should not be permitted by the Courts.

14. Mr. Rizwan Mushtaq, Additional Advocate-General started his case by reading the relevant provisions. He after exhaustive discussion of sections 3, 3-A, 5 and 5-A commented that there is no separate charge in respect of industry, commercial or residential units. The law has provided for only two classifications (i) residential units (ii) commercial unit. It is while determining the "Annual Letting Value" that the commercial units have been further classified. There is a separate method for calculation of the Property Tax in respect of factory, a shop, plaza or other multistoreyed building. Hence, it is only the method for determination of the "Annual Letting Value" which is separate in respect of various commercial properties, but all of them as per Property Tax remained commercial properties. There is nothing in law like industrial unit as a classified unit but there is definitely separate method for each unit namely hotel, shop, multistoreyed building, plaza etc.

15. Learned A.A.-G. remarked that for all practical purposes the present method adopted by the Property Tax Department for calculation of the hotel tax is more in favour of the petitioner than his claim that he should be treated as an industrial unit equal to factory. The formula which he has placed before this Court speaks of a vacancy allowance of 90% and additional rebate of 2% (Approx) in respect of open area like lifts etc. and the other statutory rebate.

16. It was remarked that he has already mentioned the formula in his comments at para.15. However, the treatment in respect of the shops and offices being a full-fledge commercial unit is equal to shops/plazas etc. On the whole; he repeated that the Article 149 has not been disregarded. The Government by providing a reasonable calculation and rebate has tremendously reduced the tax.

17. Learned A.A.-G. added that the right of charging the property tax is within the domain of Provincial Government which it has exercised constitutionally and this has already been approved by various Courts of this country including Honourable Supreme Court. The main judgment has already been referred by the learned counsel for the petitioner. However, his reliance remains on the judgments reported as re: Commissioner of Income Tax Companies-II, Karachi v. Messrs Muhammad Usman Hajrabai Trust Imperial Courts, Karachi 2003 PTD 577B, re: Arabian Sea Enterprises Ltd. v. Government of Sindh through Chief Secretary, Karachi and 3 others 2007 CLC 1215, re: Messrs Tures Hotel Islamabad and others v. Capital Development Authority and others 2006 SCMR 1738.

18. The judgments referred above are in support of the following arguments:--

(i) That the definition given in a statute is not applicable on the other statute unless adopted through Legislature by incorpo ration or reference therein. Commissioner of Income Tax Companies-II, Karachi v. Messrs Muhammad Usman Hajrabai Trust Imperial Courts, Karachi (supra).

(ii) That the direction in terms of policy decision by the Federal Government was only to provide such concession to tourism including hotel etc., but it cannot be said that it also changes the status of the property from commercial to industrial for the purposes of assessment of the property tax. Arabian Sea Enterprises Ltd. v. Government of Sindh through Chief Secretary, Karachi and 3 others (supra).

(iii) The orders or notification of Federal Government under other laws declaring business of hotel as industry would not affect the factory, building or use of the plot as defined under the Regulation 3 of Islamabad Land Disposal Regulation. Messrs Tures Hotel, Islamabad and others v. Capital Development Authority and others (supra).

19. An accumulative reading of all the three judgments as above gives the impression that the directions given by the Federal Government as a policy decision or assigning one nomenclature to a particular asset by one law would not necessarily bind the other to treat the same with the same status and meaning while dealing with the other statute. Each statute is introduced with a specific and particular purpose. It is framed to apply for the purpose and reasons of its introduction.

20. The law of interpretation with that regard is very clear and leaves no doubt that an interpretation given in one statute of a particular connotation is not to be used or made applicable for other laws unless it has been so adopted in the said laws.

21. Furthermore, the principle that where a particular word is not interpreted by a statute the ordinary dictionary meanings are applicable, is the widely applied principle of interpretation. The Courts have never considered it safe to import the meaning from the other statutes while dealing with some issues under another statute. There is, therefore, obviously no question of treating a hotel to be an industry for the purpose of the determination of property tax for the reason that the same has been so treated by the Federal Government through its circular referred above.

22. A particular formula approved by the Legislature takes the shape of a mandatory charge. It cannot be awarded a different treatment than what the law has proposed for it. In this regard one gets further support from the famous and the most adopted principle of interpretation of remaining within the literal meanings of a statute. The Courts while interpreting the provision of a statute are required to remain within the intention of law makers and remaining within the literal meanings is the golden principle in this regard. In support of above reliance can be placed on re: Mst. Farah Zahra v. Board of Governors of the Area Study Centre for Africa and North and South America, Quaid-i-Azam University, Islamabad through Chairman, Vice-Chancellor and another 2005 PLC (C.S.) 216 and re: Commissioner of Income Tax Zone 8, Lahore v. Muhammad Shahbaz Khan 1996 PTD 1138.

23. This leaves the Court to the other argument of the learned counsel Mr. Aitzaz Ahsan that Article 149 of the Constitution of the Islamic Republic of Pakistan binds the Provinces to follow the executive authority of the Federation.

24. This Court would readily agree with the respondent's comments that the Articles 148/149 of the Constitution applies on the laws which are in Federal list and in the concurrent list as a domain of the Federation. However, the property tax is a Provincial law and not in conflict with Federal Law. There cannot be any doubt about the vision that the legislation especially when it deals with the foreign investors should be attractive and rather luring and Provincial as well as local laws should also be harmonious to the Federal laws. However, since the issue before this Court is application of the provisions of the Urban Immovable Property Tax Act, 1958, the principle that the law should be applied in its literal meanings is applicable with full force. This is where the famous verse of Mr. J. Rowilet in Cape Brandy Syndicate v. Inland Revenue Commissioner 1921 K.B. 69, needs reference. He ruled:--

"It simply means that in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."

The hotel declared as industry by the Federal Government if is not being given the said treatment under the property tax law obviously it is the provision of the said Act which shall prevail.

25. Regarding force of the policy under Federal directions, the two judgments referred above in terms of re: Arabian Sea Enterprises Ltd. v. Government of Sindh through Chief Secretary, Karachi and 3 others 2007 CLC 1215 as well as re: Messrs Tures Hotel, Islamabad and others v. Capital Development Authority and others 2006 SCMR 1738 have in fact clinched the issue. The findings therein are very clear and unequivocal. The relevant para. wherefrom shall be reproduced in the subsequent part.

26. At this stage, this Court would only like to add that it is not mandatory for the Provincial Legislature to declare the hotel as an industry in all its legislation in pursuance to the policy decision of the Federal Government. However, if within its jurisdiction certain special privileges and exemptions/rebates are allowed, this would also amount to an appropriate compliance. For example, the treatment given to hotel in respect of its residential rooms is exceptional with special reference to the rebates provided for the calculation. However something more is required to be done in this field.

27. The very fact that the rate is to be adopted on the minimum room rent with 90% vacancy allowance conveys the intention of the Provincial Legislature of giving it a different treatment than the industry itself. However, there are still certain assets like shops owned by hotel where Government of Punjab may need to review its policy regarding determination of Annual Letting Value. The reason being that the said shops in many cases are held by tourist operators and for sale of other items connected with tourism.

28. In any case, since tax has been created as a result of the charge under Urban Immovable Property Tax Act, 1958, no exception can be made. This is where reproduction of the relevant para. from the judgment of Honourable Supreme Court of Pakistan shall be of help:--

"The question with regard to legality of imposition of property tax in Islamabad has already been determined by this Court in case of Mst. Bilquis referred (supra). Several Office Memorandutris or notifications being relied upon by the appellants would show that concerned authorities like WAPDA, Ministry of Oil and Gas or the Ministry of Tourism have included the hotels/motels in the term "industrial" for the application of relevant laws. On the other hand it is also evident that no statutory enactment has been made in the C.D.A. rules whereby hotels/motels situated in the jurisdiction of C.D.A. have been included in the term "industry", "industrial" or "institution", as such appellants cannot claim such relief. The appellants were allotted commercial plots for the construction of hotels. The orders or notifications issued by Federal Govern ment under other laws declaring business of hotel as industry would not affect the nature of building or use of plot as defined in the Regulation No.3 of C.D.A. Irrespective of above, an amendment has also been made in Notification No.24(I)/2001, dated 11-1-2001 through Notification No. 783(I)/2003, dated 9-8-2003 whereby non-residential properties outside commercial areas have been included in the heading "Commercial". Thus, finding of learned High Court that until no statutory enactment declaring hotels/motels and restaurants located in Islamabad Capital is made by competent authority, appellants cannot as a matter of right claim to be charged at that rate, is quite unexceptionable. (Messrs Tures Hotel (supra).

29. The above judgment practically has clinched the issue. However, further reliance is placed on the judgment reported as re: Farooq Ahmed Siddiqi v. The Province of Sindh PLD 1996 Kar. 267.

30. The judgment now referred has discussed Articles 148/149 of the Constitution. In its final verdict the Sindh High Court held, that the Federal Government can give a direction to the Provincial Government in respect of laws which are listed in Federal and concurrent list. The prohibition order being a Provincial law is not in conflict with the Federal laws. As such, no direction can be given by the Federation to the Province in respect of implementation of law. In the same judgment it has further been held that in any case the circular is a policy decision and policy can be changed by the Government as the circumstances may require.

31. Similarly, the Honourable Supreme Court of Pakistan in Mohtarma Benazir Bhutto v. President of Pakistan PLD 1998 SC 388 noted as under:---

"It is thus, clear that the above mentioned provisions in the Constitution regulate relationship between the Federation and a Province in a situation in which Federal Law is applicable in the Province and a situation has arisen in which it is to be considered as to how the Federal Law is to be made applicable so that it should bring about the desired result and be effective so the proper remedial measures are adopted to contain and control the situation in which the Federal Government has to adopt supervisory role and give directions to the Province in which is being applied the Federal Law."

32. As already discussed above the executive authority under Article 149 is to ensure the due compliance of the enforcement of Federal Laws and in fact it is not an authority to regulate the Provincial Laws.

33. In the case of Iftikhar Hussain Shah v. Pakistan through Secretary, Ministry of Defence, Rawalpindi reported as 1991 SCMR 2193, the learned Court has given following findings:---

"Article 149 empowers the Federal Government to give directions to the Provincial Government so as to protect and advance its own executive authority in discharging its responsibilities under the Constitution and the laws, obliging thereby the Provincial Government to comply with such directions."

The Court also observed as under:---

"The constitutional supremacy and pre-eminance of the Federal Government over the Provincial Government in matters governed by Articles 149, 152 and 173 of the Constitution is not dispute. All the same these provisions of the Constitution have not the effect of creating of their own force locus standi of the Federal Government in proceedings under the Act relating an acquisition of land at the request and for the purposes of the Federal Government. The amplitude of this power does not as canvassed extends to supplanting, substituting or taking over the functioning of the Provincial Government in matters on which power to give directions has been recognized, preserved and where the Provincial Government proceeds to Act on such directions in accordance with and subject to the law of the land. The locus standi of the Federal Government should be looked for not in these constitutional provisions but in the Provisions of the Act."

34. The upshot of the above discussion is obvious. The need of harmony in the Federal and Provincial Laws obviously does not require any debate. It is true that for an attractive business environment tax exemptions and reductions do play a very vital role. It is equally true that the same are not the only factors and obviously the security is a bigger concern than any other consideration, but the role of the favourable tax structure cannot be ignored.

35. For ant ideal situation providing facilities to tourist industry at all levels can be supported, but obviously the laws of the land cannot e interpreted in the manner it is argued as the language otherwise does not so permit.

36. Articles 148 and 149 have been placed to keep harmony in the executive authorities of the Federation and provinces and in fact it does provide some upper hand to the former authorities. However, exercise of such authority cannot be extended on laws which are subject-matter of the Provinces. It is now settled that the item which is neither mentioned in Federal legislative list nor in concurrent, the same is in the exclusive domain of Provincial Parliament. Reliance is placed on re: Sanofi Aventis Pakistan Limited and others v. Province of Sindh through Secretary Excise and Taxation Department, Karachi and 2 others PLD 2009 Kar. 69. The property tax is one of them. The Constitution has provided full authority to all the Provinces to charge the same and to p make laws and rules for the said charge and recovery. The provisions of Articles 148 and 149 have no bearing on its unbridled right of charging the property tax. The arguments of the learned counsel for the petitioner, therefore, are not accepted.

37. However, the request of learned counsel for the petitioner for an interim respite is allowed. No coercive measures for recovery of the arrears of property tax shall be adopted for fifteen days. Reliance of this Court for this direction is placed on re: Zawar Petroleum v. O.G.D.C. and others 2003 YLR 1450 and re: Sanofi Aventis Pakistan Limited and others v. Province of Sindh through Secretary Excise and Taxation Department, Karachi and 2 others PLD 2009 Kar. 69.

38. Dismissed.

M.B.A./A-207/LPetition dismissed.