Case No: Civil Appeal No. 103 of 1980
Judge: Badrul Haider Chowdhury,
Court: Appellate Division ,,
Advocate: Mr. T. H. Khan,Mr. Asrarul Hossain,,
Citation: 34 DLR (AD) (1982) 247
Case Year: 1982
Appellant: Dacca Municipal Corporation
Respondent: Sonali Bank
Subject: Fiscal Law,
Delivery Date: 1981-12-3
Kemaluddin Hossain CJ
Fazle Munim J
Ruhul Islam J
Badrul Haider Chowdhury J
Shahabuddin Ahmed J
Dacca Municipal Corporation
Sonali Bank and Ors.
December 3, 1981.
Model Tax Schedule, 1961
Tax on buildings by Municipal Corporation
Except in the Model Tax Schedule which is given by the Government for its guidance , no other authority is traceable which has authorized the imposition of taxes on building by the Municipal Corporation. ….. (10)
Urban Immovable Property Tax Act (XI of 1957)
Tax on building
The Urban Immovable Property Act expressly levied tax on holding and the opinion is that there could be no two taxes on the same property for the same purpose. Realising this difficulty the legislature by the Finance Act of 1980 amended the Urban Immovable Property Act. …. (10)
Case Referred To-
American Life Insurance Co. vs. Dacca Pourashava (1979) 31 DLR (AD) 273.
T. H. Khan, Senior Advocate, Instructed by B C. Panday, Advocate-on-Record—For the Appellant.
Asrarul Hossain, Senior Advocate, instructed by Syed Sakhawat Ali, Advocate-on-Record.— For the Respondent No. 1
Civil Appeal No. 103 of 1980
(From the judgment and order dated 31-5 -79 passed by the High Court Division in Writ Petition No. 135 of 1980.)
I have had the advantage of going through the judgments proposed to be delivered by my learned brother Badrul Haider Chowdhury, and Shahabuddin Ahmed, JJ. and I concur with the decision of Shahabuddin Ahmed, J.
Fazle Munim J.
I have had tit privilege of going through the judgment delivered by my learned brothers, Badrul Haider Chowdhury end Sahabuddin Ahmed, JJ. I concur with the judgment of Badrul Haider Chowdhury, J.
Ruhul Islam J.
I have gone through the judgment proposed to be delivered by my learned brothers Badrul Haider Chowdhury and Shahabuddin Ahmed, JJ: I concur with the decision of my learned brother Shahabuddin Ahmed J.
Badrul Haider Chowdhury. J.
I have had the advantage of going through the judgment passed by my learned brother Shahabuddin Ahmed, J, but I am unable to concur and take a different view which is detailed below.
5. Sonali Bank, respondent filed the writ petition challenging the assessment of municipal taxes for the years 1968-69 and 69-70 and prayed for direction on the Dacca Municipal Corporation to comply with the provisions of the Model Tax Schedule, under section 35 of the Municipal Administration Ordinance, 1960. It is admitted by both the parties that the Government had directed by notification that the levy of Municipal Tax and Urban Immoveable Tax should not exceed overall ceiling of 17% on annual value of the buildings and lands. Controversy arose whether this 17% excludes or includes the rates on account of conservancy and lightings. It is contended by the Dacca Municipal Corporation that the ceiling has been fixed at 17% excluding conservancy has lighting rates which are at 2% and 3% respectively. Il is contended by the Corporation that the building tax referred to In the Model Tax Schedule refers to tax on the lands and buildings but do no include the other rates such as conservancy charges and the light charges and, therefore. It is contended separate levy by way of municipal taxes on the annual value of the buildings and lands, the lighting rate and conservancy could be made. The High Court Division repelled the contention by holding that the two taxes, namely, the Urban Immovable tax and the Building tax should not in any case exceed 17%. Reliance was placed on the previous judgment of the Dacca High Court in Writ Petition No. 33 of 1969 and Writ Petition Nos 378 end 402 of 1969. The High Court Division noticed that a leave petition was preferred by the Khulna Municipality which, however, was not proceeded with and was disunited. The High Court Division relied on the decision of this Court in the case of American Life Insurance Co. Vs. Dacca Pourashava, reported in (1979) 31 D.L.R. (A.D ) 276. The majority view is that the rates charged for services for providing street lighting and conservancy cannot be levied separately from what is charged by way of tax on the annual value on the building and lands. Keeping this decision in view the High Court Division directed the appellant to assets the municipal tax so as to bring them into conformity with the relevant maximum ceiling prescribed by the Model Tax Schedule.
6. This decision is challenged by special leave, Leave was granted to consider whether the amendment of the definition of the tax and rate with retrospective effect from April 1960 has any relevancy and whether the decision in the majority view in American Life Insurance Company's case requires reconsideration.
7. The first controversy is as to the Interpretation of the Model Tax Schedule. The Government has framed Model Tax Schedule for guidance of the Municipal Committee in exercise of powers under section 35 of the Municipal Administration Ordinance, 1960 and they shell be guided by them in levying a tax, rate, toll or fee-The general instruction runs as follows:
(1) The Municipal Administration Ordinance, 1960 empower but does cot enjoin the levy, by the Municipal Committees, of all or any of the taxes, rates, tolls of fees mentioned So the Third Schedule. lt is for the individual Municipal Committee in decide for itself which of it’s different taxes, rates, tolls or fees may be levied by it. Such levy shall in all cases be subject to prior sanction of the sanctioning authority and the provisions of the Municipal Administration Ordinance and the rules.
(2) The taxes, lolls, rates or fees, or alterations thereof shall come into force on such dates as the sanctioning authority shall specify under sub-section (2) of section 34 of the Municipal Administration Ordinance.
(3) Tax on the annual value of buildings and lands subject to the rules made in this behalf, the tax maybe levied at a rate not exceeding twelve end half per cent of the annual value of buildings and Lads: and the amount less than a rupee may be round off to a rupee:
Provided that where the Urban Immovable Property Tax is in force the two taxes together, viz, the Property Tax and the Building Tax shall not exceed twelve and a half per cent, of the annual value.
This Schedule was revised by another notification dated to 16-11-68 which read thus:—
Provided that where the Urban Immovable Properly Tax is lo force, the two taxes together, viz., the Property Tax and she Building Tax shall not exceed;-
(a) twelve and a half per cent when the annual value does not exceed Rs. 5,600/-
(b) fourteen and a half per cent when the annual value does not exceed Rs, 10.600/- and
(c) seventeen per cent when annual value exceeds Rs. 10.600/"
9. For the fuller appreciation of the controversy, it seems to me that some of the details is called for which speaking with utmost respect did not attract the consideration in the previous judgments, Bengal Municipal Act 1932 was repealed by the Municipal Administration Ordinance 1960, Bengal Municipal Act, 1932 was promulgated by the Governor General. That Act made applicable to all Municipal Committees in Bengal except Calcutta for which Calcutta Municipal Act of 1923 was promulgated, Chapter V dealt with municipal taxation and section 123 empowers the Commissioners to impose tax, rates, tolls and fees Sections 123 is in the following terms :-
(a) a rate on holdings situated within the municipality assessed on their annual value:
(b) a water-rate on the annual value of holdings:
(c) a lighting rate on the annual value of holding;
(d) a conservancy, latrine and drainage rate thereafter known as the conservancy rates on the annual value of holdings;
(e) a tax on carriages and on horses and other animals mentioned in Schedule III;
(f) a tax on the trades, professions end callings specified in Schedule IV at such rates at may be fixed by the Commissioners within the maximum rates fixed in the said Schedule ;
(g) a fee on the registration of carts;
(h) tolls on ferries and on bridges;
(i) a fee on vessels moored within the limits of the municipality at ghats or landing places constructed and maintained by the Commissioner; and
(j) any other tax which the Commissioners are empowered to Impose under any law for the time being in force.
(2) The Commissioner may from time to time, as a meeting convened as afore said, and in accordance with a scale of fees to be approved by the local Government, charge a fee la respect of the issue and renewal of any licence which may be granted by them under this Act and in respect of which no fee or tax is leviable under sub-section (1).
It will be at once noticed that in clause (a) a rate on holding is imposed whereas in clauses (e) and (f) taxes are imposed. Section 124 provides the rats on holding shall not be imposed at a rate exceeding 15% in the Municipality included in Schedule V and other Municipalities not exceeding 10% on the annual value of the holding. Power was given to impose water rate and lighting rate in certain circumstances by section 125 and conservancy charge could be imposed under certain circumstances at provided by section 126. The section 128 provides the method far annual value of the holdings Sub-section (1) of (s. 128) reads as ''Annual value of a holding shall be deemed to be the gross annual rental at which rate too holding may reasonably be expected to let. Sub-section (2) provides that in any case annual rental cannot be ascertained, the annual value of such holding ''shall be deemed" to be an amount which may be equal to but may not exceed seven and half per centum on the value of the holding or buildings on such holding at the time of such assessment plus a reasonable ground rent for the land comprised in the building. It thus appears that annual value of a holding is calculated at a certain rate on annual cost of the building together with ground rent subject to the condition that the percentage shall not exceed seven and half per cent. 'Holding' has been defined in clause (21) which is as follows:
"Holding" means land held under one title of agreement and surrounded by one set of boundaries:
Provided that where two or more adjoining holdings form part and parcel of the site or premises of a dwelling house, manufactory, warehouse or place of trade or business, such holding shall be deemed to be one holding for the purposes of this Act.
Explanation.—Holdings separated by a street or other meats of communication shall be deemed to be adjoining within the meaning of this proviso.
Land is separately defined in clause (27). Building is defined in clause (2) of section 3. The Bengal Municipal Act, it appears, did not authorise any tax on buildings. It authorised rate on holding and it contemplated imposition of taxes on carriages, horses and other animals and tax on trades, profession, etc. specified in Schedule 4 vide clauses (e) and (f) of section 123.
10. In 1935 the Constitution Act was promulgated and by item 42 of List II the Provincial Government was authorised to legislate on lands and buildings, windows and hearths. Thereafter the 1956 Constitution of Islamic Republic of Pakistan was promulgated. Item 75 of the Provincial List mentioned tax on lands and buildings. Be it noted in words ''hearths and windows" in that item was omitted by 1956 Constitution. Be that as it may express power was conferred on the Provincial Government to impose taxes on lands and buildings. In 1957 Urban Immovable Property Act XI of 1957 was promulgated and the preamble stated "Where as it is necessary to make an addition to the revenues of East Pakistan and for that purpose to impose tax on lands and building " Section 3 provided that a tax "on lands and buildings constituting holdings" be charged at the rates specified in Schedule to the Act. Section 4 provided for annual value of the holding. Section 11 provided that tax to be paid by the owner of the holding. The member in charge, while placing the Bill before the Home stated:
Section 4 as it was originally enacted provided the determination of the annual value of a holding under the provisions of Bengal Municipal Act, 1932 or Assam Municipal Act, 1933 as the case may be. This section was amended by East Pakistan Ordinance No. XIII of 1966 whereupon in place of Bengal Municipal Act the expression Municipal Administration Ordinance, 1960 was inserted. Originally section 7 provided that the Municipality required to collect Urban Immovable Property Tex will be entitled a rebate as its cost of collection, and Rule 19 provided the rebate for costs of collection of the tax at 2% of the amount of tax so collected. Section 10 was omitted by East Pakistan Ordinance No. XXIV of 1961. Section 12 was originally enacted as follows:
(2) If the collection or payment of such amount is not made within the period so fixed, the Provincial Government may notwithstanding any law relating to the funds vesting in such municipality or any other law for the time being in force, direct any bank in which any moneys of the municipality are deposited or the person in charge of the Government treasury or of any other place of security in which the moneys of the municipality are deposited, to pay such sum from such moneys as may be standing to the credit of the municipality In such bank or as may be in the hands of such person or as may from time to time be received from or on behalf of the municipality by way of deposit by such bank or person; and such bank on person shall be bound to obey order.
(3) Every payment made pursuant to an order under sub-section (2) shall be a sufficient discharge to such bank or person from all liability to the municipality in respect of any sum so paid by it or him out of toe moneys of the municipality 10 deposited with loch bank or person."
Section 12 was alto omitted by East Pakistan Ordinance No. XXIV of 1961.
11. The upshot of the discussion is that Urban Immovable Properly Tax Act, 1957 was promulgated obviously in pursuance of power conferred by legislative list in item 42. Municipal Committee was to collect tax on behalf of the Provincial Government and cost of collection was given to the Municipality as rebate but the entire burden was upon the Municipality and the responsibility for its collection which appears clearly from section 12 So far there is only one tax on lands and buildings and that is the Urban Immovable Property Tax. The Municipal Act authorised the imposition of rate on holding but did not confer any power for imposition of tax on buildings. Constitutional Act in 1935 vested this power on the Provincial Government and so was in 1956 Constitution. Then came in 1958 the proclamation of Martial Law and the Constitution was abrogated but was retained by the Martial Law authorities for running the administration so far as practicable vide (Post Proclamation Order 1 of 1958 Laws Continuance Order). Municipal Administration Ordinance, 1960 was promulgated by the President on 11.460 Chapter II in part III deals with Municipal Taxation. Section 33 provides f r taxation "in all or any of the taxes, rates, tolls and fees mentioned in the Third Schedule." Item 1 in Third Schedules is tax on the annual value of the buildings and land. In that schedule a host of taxes have been mentioned in Items 1 to 12. Section 35 provides for Model Tax Schedule which could be a guide in levying a tax, rate, toll while the Government was given the power to frame Model Tax Schedule for guidance.
Section 36 provided the power for directions which reads as under:
(a) to levy any tax, rate, toll or fee which the Municipal Committee is competent to levy under section 33; or
(b) to increase or reduce any such lax, rate, toll or fee, or the assessment thereof, to such extent as may be specified ; or (b) to suspend, abolish or exempt any person or class of persons or property or class of property from the levy of any such tax, rate, toll or fee,
(2) If a direction issued under sub-section (1) is not compiled with within the specified time, If any, the Government may make an order giving effect to the direction."
12. The Government may, when the direction is not complied with, make an order giving affect to the direction. Now to revert to the constitutional position. In 1962 a constitution was promulgated and the novel feature of the Constitution was that the central list was given and all other matters were left with the Province. Next the emergence of Bangladesh and the Constitution of the People's Republic of Bangladesh was promulgated and it contained no legislative lift because it envisaged a Constitution of unitary type. Therefore, apart from the Item 75 in 1956 Constitution for passing a law on land and building there was no other law and In 1972 Constitution this question did not arise because there was no legislative list. In the circumstances, there is only one authority in the country. i.e. the Government of Bangladesh, So, the Government could only levy tax unless such power of taxation is delegated to any other authority. The Municipal Administration Ordinance apart from mentioning In Item 1 of Third Schedule does not say a word about lax on building Rule 22 of the Taxation Rules 1960 reads at follows :
(i) Tax on building and lands;
(ii) Lightning rate;
(iii) Fire rates;
(iv) Conservancy rate; and
(v) Rate for the provision of water work or supply of water.
Rule 23 provides the manner of determining of annual value of buildings and lands. Rule 26 provides for form C and clause (f) reads as follows:
"the amount of tax or rate payable for the year (each lax or rate to be shown separately)."
13. Next, rule 40. This rule clearly provided that the Municipal Committee shall determine the percentage on the annual value of the lands and buildings which it subject to auction by the Government It Is claimed by the Municipal Corporation that the Government has authorised 7% of the annual value as tax on building Except as in the Model Tax Schedule which Is given by the Government for its guidance, no other authority is traceable which has authorised the Imposition of taxes on building by the Municipal Corporation, Even the Model Tax Schedule as amended in 1968 stipulates In negative language ''fax may be levied at rate not exceeding seventeen percent of the annual value of the building and land “ and expressly provided to dispel any doubt "where the Urban Immovable Property Tax Is in force, the two taxes together, viz, the property tax and the building tax shall not exceed— (c) seventeen percent when annual value exceeds Rs. 10.600/—." In other words, 17% was the limit—call the imposition by any name. Under the Bengal Municipal Act the holding rate could not exceed 71/2% with the promulgation of Municipal Administration Ordinance 1960, nomenclature was changed and it was termed as 'Building tax though no direct legislation was made for levying tax on building, The Urban Immovable Property expressly levied the tax on holding and «he opinion is that there could be no two taxes on the same property for the same purpose. Reading this difficulty the legislature by the Finance Act of 1980 amended the Urban Immovable Property Act.
Section 4 was substituted by a new section which reads as under;
That petition was changed by the Finance Act in 1980 quoted above. Then the slab system was abolished and flat rate was introduced by the Finance Act 1980 which is as follows:
2. In other cases.
(a) Not being self occupied 5% of the holdings annual value”
14. The issue is now clinched here. Whatever is the annual value of the holding the urban tax is 5% of the annual value. The Model Tax Schedule remained unchanged and therefore, the two taxes could not exceed 17%. If the Urban Tax which is now 5% is deducted the Municipality is left with 12%. That 12% is split up at 7 % for holding rate; 3% lighting rate and 2% for conservancy total 12%. The intendment of the enactments remained constancy the same namely; the two taxes together must exceed 17%.
15. The Model Tax Schedule was framed for guiding the Municipal Committee in levying tax, rate, toll or fee. A Municipal Committee may levy in the prescribed manner, all or any of the taxes, rates, toll or fees mentioned in the Third Schedule. It has not been made obligatory to levy lax or rate in all the 26 items mentioned in the Third Schedule. It is enabling power for levying taxes on all or any of the items with the previous sanction of the Government (section 33). To our repeated query, Mr. T. H Khan appearing for the Dacca Municipality could not point out the provision of law which had taxed expressly on the annual value of the buildings. The majority view in American Life insurance Company's case was:
16. In section 45 it appears that the Controlling Authority' had sanctioned 3% on the annual value of buildings as lighting and 2% as conservancy rate. These two items are covered by section 44 and 84.
Section 44 provides for the removal and disposal of refuse. The definite section 3(9) deals with “conservancy'' which means the removal and disposal of refuse. Section 3(35) defines "refuse" which includes rubbish, offal, night soil, carcasses of animals, deposits of sewage, waste and any offensive matter. Section 44 reads as follows:
17. Section 84 provides for street lighting. 'These two items namely, conservancy and street lighting, are provided by the Municipal Committee and, therefore, in pursuance of the ordinance, the Controlling authority has allowed the Municipality to levy rates for these services. The total of the two rates is 5%. The levy of these two items are sanctioned by law. The only question is about the building tax as has been already shown. The Ordinance does not authorise building tax expressly. There is no authority for levying such tax and majority opinion in the American Life Insurance Company’s case supports this views. The Municipality can, however, levy the holding rate which is sanctioned by Bengal Municipal Act as 7%. Section 4 of the Municipal Administration, Ordinance I960 repeals the Bengal Municipality Act 1932 but provided by sub-section (2) which says:
18. Thus by deeming clause the taxes imposed or assessed on the holding under MM Bengal Municipality Act were saved and recoverable. They are concluded by the doctrine of transaction past and closed, therefore, the Municipal Committee can only claim 7% as holding rate, 3% lighting rate, 2% conservancy rate; totaling 12% and the rest is for the Urban Immovable Property Tax and the law provides that the two together must not exceed 17%. In the Municipal Administration Ordinance though the expression 'tax’ In definitive section Included toll, rate, fee, but in the Ordinance Itself the legislature has maintained a distinction of each of them, for instance, 'fee’ it mentioned in sections 57,59,66,68,72, etc. 'Tax’ is contemplated when the cost incurred by the Municipal Committee for demolition to be deemed to be tax levied. (See notions 77.79). Section 37 provides for liability "to levy any tax, fee, rate” Section 38 provides for collection of "all taxes, rates, tolls and fees" levied under the Ordinance. Therefore, legislative scheme shows the distinctive treatment of these expressions used. That is why in the definitive section the generic term 'tax' has been used. The amendment in the definition was only made for the purpose of removing confusion in certain quarter. With respect, the majority view appears to have fallen into error while considering this aspect by observing:
Then it concluded:
19. To my mind the correct position appears to be that the Municipality can levy the conservancy rate, lighting rate which totals 5% and tax on building are not made expressly nor could it make so due to lack of constitutional power. It can levy rate on holding which is permissible under the Bengal Municipal Act to 7%. Therefore, the total is the 12% entitlement of the municipality and where the Urban Immovable Property Tax Act is in force, the two taxes must not exceed 17%. This intendment of the legislature appears to be pragmatic because in a society when even the government staff could not be provided with accommodation, the over-all policy cannot be to thwart any Incentive for private house building by imposition of a levy in the name of tax which is not warranted by law. To sum up, the writ petition by Dacca Municipal Corporation is not maintainable and imposition of any rate beyond permissible limit would be unconstitutional and illegal. All rates and taxes combined together cannot exceed 17% where urban property tax is in force. That is the cornerstone of the Governmental policy inasmuch as scarcity of housing has not only created a social problem but has been a breeding centre for tension and disorder. The confusions that have been created in the past has now been cleared by the Finance Act of 1980 which has introduced a 5% tax on flat rate and since Finance Act is passed every year the rate is also variable but the total must sot exceed 17%
20. In the previous judgment another important feature of the statutory structure was not considered. This point will be relevant for the purpose to see whether any direction given by the Government could be disobeyed by the Municipality and whether the Municipality could ask for writ under the Constitutional jurisdiction disobeying such direction and requiring the Court for declaration that the direction of the Government was passed without lawful authority and is of no legal effect.
21. In the case of American Life Insurance Co. vs. Dacca Pourashava this point was fully considered by my learned brother K.M. Subhan, J. with whom F.K.M.A. Munim, J, concurred. Their Lordships came to the conclusion that the Municipal Committee could not maintain a writ petition and the High Court erred in law in setting aside the order of the Controlling Authority.
The Municipal Committee Taxation Rules 1960 provide the manner of levying taxes. Rule 8(4) runs thus:
22. The Municipal Committee (Appeal Rules) 1960 provided an appeal in other matters and Rule 6 provides the manner of disposal of appeal and rule 8 provides that certified copy of the appellate order shall be forwarded both to the Municipal Committee and the appellant concerned. Rule 9 provides the order of the Appellate Authority shall be final and no second appeal shall lie. Rule 2 defines Appellate Authority which means the Controlling Authority of the Municipal Committee concerned or so Authority to whom such powers have been specially delegated. Rule 3 stipulates "except as otherwise provided for In the Ordinance or any other Rules or any bye-laws framed thereunder, the Municipal Committee Appeal Rules Just quoted will be applicable. Whereas in the matters of taxation specific rules have been framed i.e Municipal Committee Taxation Rules. Where there is special law. the general law will not obviously be attracted and since in the American Life Insurance Co's case it was a petition against valuation and assessment; rule 8 (4) clinches the issue by saying that any person aggrieved by aa order of the Municipal Committee may appeal to the Controlling Authority and the decision of the Controlling Authority on such appeal shall be final. This Rule is in harmony with section 36 of the Ordinance itself. To entertain a writ petition in the Constitutional jurisdiction for making an order to do which is not permissible to do or to declare an order to have been passed without lawful authority which has been specially empowered by the law so to be done is to wreck that very statutory fabric that has been created by the Municipal Administration Ordinance, 1960. To put it in simple words, when the Ordinance says that the Municipal Committee must obey the direction of the Government and that direction is given by the Controlling Authority as contemplated by the Basic Democracies Order any attempt for nullifying the decision of the Controlling Authority which has not been specifically given by law tantamounts to disregard the vary provisions of law and would amount to usurpation by way of writ jurisdiction. The law says the decision of the Controlling Authority shall be final. The law says further that the Government may give directions for levying of tax, etc or to increase or reduce of tax. But if the writ jurisdiction is exercised at the instance of the Municipal Corporation that jurisdiction is upset and the Controlling Authority's power is shaken which was not contemplated by the schema of the Constitution and the Municipal Administration Ordinance and the Rules framed thereunder With respect, I fully agree with the view in American Life Insurance Co Vs. Dacca Pourashava 31 DLR (AD) 276 where it was observed:
No writ petition is maintainable at the instance of a Municipality against any decision of the Controlling Authority. Any other view will lead to absurd position namely; the Controlling Authority's direction can be challenged by a municipality by invoking the writ jurisdiction and thereby dismantling the statutory structure.
In the result, I would dismiss the appeal.
Shahabuddin Ahmed J.
In this appeal by special leave appellant, Dacca Municipal Corporation, has challenged an order of the High Court Division dated May 31, 1979 made in its writ jurisdiction, directing the appellant to revise ills assessments of Municipal Tax upon Respondent No 1, the Sonali Bank, formerly the National Bank of Pakistan, In respect of the premises in question for the years 1968- 69 and 1969-70 so as to conform the assessment to the "Model Tax Schedule,' and to refund the tax if any, paid in excess. Contention of the appellant is that the assessment have been made quite in conformity with the Model Tax Schedule in that the aggregate of two taxes, Buildings tax and the Property tax, has not exceeded the ceiling of 17 percent of the annual value of the lands and buildings.
24. Facts of the case are that the respondent has been assessed to Municipal Tax by the appellant under the Municipal Administration Ordinance, 960 in accordance with the rules, procedures end guidelines provided In the Municipal Committee (Taxation) Rules, 1960 and the Model Tax Schedule, 1961 made respectively under section 121 and section 35 of the Municipal Administration Ordinance, briefly the Ordinance. Buildings tax has been levied at 7% of the annual value of the building and lands Lighting rate has been levied at 2% and conservancy rate has been levied at 3% of the annual value of the lands and buildings. The total of the buildings tax and the two rates levied by the appellant has come to 2% of the annual value of the lands and buildings. As Urban Immovable Properly Tax Act, 1957 is in force in this municipal area, the tax under that Act which has been referred to as "property tax" in the Model Tax Schedule, has been imposed by the Taxation Department of the Government at the rate of 10% of the annual value of the land and building The total amount of taxes and rates as levied upon the assessee by the Municipal Committee and the Government has come to 22 percent of the annual value. The Model Tax Schedule says that the building tax may be levied at a rate not exceeding 17 percent of the annual value, provided that, where the Property tax is in force, the two taxes together viz property tax and the building tax; shall not exceed 17 percent of the annual value. In the impugned assessment these two taxes have not exceeded 17% of the annual value. Contention of the assessee is that in this case the ceiling of 17 percent has been exceeded in that the "rates" for lighting and conservancy are to be included In the buildings tax'. For, according to the definition of ‘tax’ given in section (1) (42) of the Municipal Administration Ordinance ‘tax’ includes 'rates" as well. But the appellant asserts with utmost vehemence that expression “tax includes' rates has been used in the Ordinance in a general sense just to indicate that rate is one kind of tax and that for all purposes "building tax" is one thing and rates for lighting, conservancy, etc. are different things, and that the rates are not included in the building tax within the meaning and scope of the Model Tax Schedule,. As such, the ceiling of 17% of the annual value is strictly limited to the two taxes, namely the ‘building’ tax, and the 'property' tax, Building tax, the appellant contends, further excludes the lighting rates and the conservancy rates. It is, therefore, clear that that if rates, such as lighting rates and conservancy rates, are excluded from 'building tax' then the assessments it) question are perfectly lawful being within the four corners of the Model Tax Schedule ; but, if these rates are included in the 'buildings tax,' then the assessments will be violative of the Model Tax Schedule. It is, therefore, to be seen whether 'tax' on buildings includes rates for lighting and conservancy.
25. It may be mentioned here that a similar question, whether building tax includes rate, came up for consideration before this Division in the case of American Life Insurance Company Vs. Dacca Paurashava, in 31 DLR (AD) 276, and by a split decision of two to one it was held that the 'building tax' included the lighting rate and the conservancy rate and that the ceiling of 17 percent fixed in the Model Tax Schedule cannot be exceeded by separately imposing these rates. The said case arose from an order of the High Court Division dated May 18, 1973 in Writ Petition No. 159 of 1971. The High Court Division in that case interpreted the same provision of law including the Model Tax Schedule and held that 'building tax' did not include lighting rate and conservancy rate and that these rates stood excluded from the ceiling of 17 percent. A little before the judgment in the said Writ Petition was announced the President’s Order No.36 of 1973 came into force on April 6, 1973 and it was given effect from April 11, 1960. This Presidential Order amended the definition of tax given in the Municipal Administration Ordinance with effect from April 11, 1960 deleting the word 'rate' from the definition of ‘tax' and separately defining 'rate in the said Ordinance with retrospective effect from April 11, 1960. According to the amended definition, "tax" does not include "rate". In the instant case leave has been granted to consider, amongst other things, whether the High Court Division determined the contention of the assessee, that the assessment could not exceed the ceiling of 17% of the annual value of the land and, building when valuation exceeds Tk.10,000/-; on correct interpretation of the amended definition of "tax'; and whether this question has already been answered by this Division in Civil Appeal No 97 of 1977—American Life Insurance Company Vs. Dacca Municipality.
26. The simple question before us is whether "tax" includes the lighting rate and conservancy rates. Determination of this question necessitates a careful examination of the Municipal Taxation System spelt out in different laws, such as the Municipal Administration Ordinance, 1960, East Pakistan Municipal Committee (Taxation) Rules, 1960 and the Model Tax Schedule, 1961. Reference to the Urban Immovable Property Tax Act, 1957 is also necessary in this connection. The source of authority of the Municipal Committee to levy taxes, rates, tolls and fees is the Municipal Administration Ordinance Section 3(1) (42) of this Ordinance (before amendment) says that the 'tax includes any toll, rate, fee, or other imports leviable under this Ordinance". It should be noted that '"tax" has not been defined under section 3 (1) (42) but this section simply says that tax includes rates, tolls and fees. What is has been left to be understood in its ordinary meaning which is that tax is an impost leviable by or under the authority of the State. Section 33 of the said Ordinance empowers the Municipal Committee to levy, with previous Sanction of government, all or any of the taxes, rates, tolls and fees as mentioned in the Third Schedule of the Ordinance. In the Third Schedule there are twelve kinds of taxes described in item Nos 1-12 and thirteen kinds of rates and fees described in Item No. 13-25. Item No 1 relates to "taxes on the annual value of buildings and land". Item No t3 relates to lighting rate and fire rate'. Item No. 14 relates to "conservancy rate'. Item No. 15 relates to "Rate for the execution of any works of public utility". Item No. 16 relates to "Rate for the provision of water works of the supply of water".
27. The Municipal Committee (Taxation) Rules made for carrying out the purposes of the Ordinance lays down a detailed procedure which a Municipal Committee shall follow in imposing all or any of the taxes and rates given in the Third Schedule of the Ordinance. Chapter III of these Rule deals with "tax on the annual value of the buildings and lands, lighting rate, fire rate, conservancy rate and rate for the provision of water works or the supply of water". Rule 2 of Chapter III indicates the tax and the rates leviable by the Municipal Committee on the annual value of the buildings and lands. It is quoted below:
(i) Tax on buildings and lands;
(ii) Lighting rate;
(iii) Fire rate;
(iv) Conservancy rate; and
(v) Rate for the provision of waterworks or the supply of water".
28. Again, section 35 of the Ordinance empowers the Government to frame a "Model Tax Schedule" which the Municipal Committee shall follow as a guideline "in levying tax, rate, toll or fee". In pursuance of this section the Government by a Notification in the Gazette dated July 4, 1961 framed the Model Tax Schedule. It begins with a clarification that a municipal committee will decide whether "all" or ''any" of the taxes, rates, tolls or fees mentioned in the Third Schedule will be levied. Rule 1, as it stands after amendment, provides for 'tax' on annual value of buildings and lands. It reads thus:
Provided that where the Urban Immovable Property Tax is in force, the two taxes together, viz, the Property Tax and the Buildings Tax shall not exceed seventeen percent of the annual value:
Rules 13 and 14 of the Model Tax Schedule provide respectively for lighting rate and conservancy rate. These Rules are quoted below:
29. The (East Pakistan) Urban Immovable Property Tax Act, 1957 is an independent legislation made to augment the revenue of the Government. It empowers the government to levy what is called "Property Tax" on any building or land within a municipal area or in any area outside municipality if so notified for the purpose. The basis of this levy is the same annual value of the land and building as assessed by a Municipal Committee for the purpose of levying municipal taxes and rates under the Municipal Committee (Taxation) Rules, 1960 already referred to. The maximum rate of the property tax on "a building and land" constituting a holding is 10 percent of the annual value of the land and building when b.2 value exceeds Taka 10.000/- as in this case. The Property Tax is levied by the government according to this rate as fixed by section 3 of this Act independent of the rate at which the municipal taxes and rates are levied by the Municipal Committee under the Ordinance and the Taxation Rules. The Model Tax Schedule is binding upon the municipal committee; and so far as the government are concerned, they are guided by the ceiling °f '0% prescribed in the Urban Immovable Property Tax Act. So the ceiling of 17% fixed in the Model Tax Schedule is a ceiling to be followed compulsorily by the Municipal Committee. Seventeen percent being the ceiling of the two taxes, and one of the taxes, namely Property tax alone taking away 10% the remaining 7% goes to the Building tax. Now the question is whether this 7% will include the lighting rate and conservancy rate. If the fire rate and the rate of water-supply are added (when these services are rendered) then the share of the 'building tax' under rule 22 (1) as quoted above may be reduced to zero. Be that as it may, we are concerned here, with the interpretation of the law, facing the question whether 'building tax' includes or excludes these fates.
30. Mr. Asrarul Husain, learned Counsel for the assessee argues that building tax includes these rates as "Rates'" are also taxes and solely relies upon the definition of tax given in section 3(1) (42) of the Ordinance in support of his argument. He is certainly aware of the fact that althrough the Rules and the Model Tax Schedule 'tax' and 'rate' have been separately dealt with under different parts and chapters specifically showing for what purposes they are levied. Buildings lax is levied whenever a person owns or occupies a holding in a municipal area irrespective of the question whether the municipal authorities provide any service for him, whereas rates are levied only when particular services are rendered and they are levied just to recover the cost of these services rendered,
Rules 42 and 43 of the Taxation Rules lay down the purposes of these rates along with some restrictions as to their imposition. These Rules are quoted below:
(a) that the rate shall be imposed only on building within an area for the supply of water to which, or for the lighting of which, as the case may be a scheme involving the laying of pipes, wires, cables, erection of lamp-post or other similar apparatus, has been sanctioned by the Controlling Authority; and
(b) that the rate shall not be leviable until a supply of water has been provided in the area to be supplied, or until the lamps in the area to be lighted have been lighted as the case may be.
43. Restrictions on the imposition of the conservancy rate—The imposition of the conservancy rate shall be subject to the restrictions that the rate shall not be leviable in any area until the Municipal Committee makes provision for the cleaning of private, latrines, urinals and cesspools and public streets within such area."
31. Again, whenever the question of levy of taxes or rates appears in the Ordinance and the Taxation Rules, it is stated that the Municipal Committee may levy "all or any" of the taxes or rates. If tax and rate are one and the same thing, power of levying 'taxes' would necessarily include the power to levy rates, but separate provisions for levying taxes and rates indicate that taxes and rates are different kinds of imposts. If tax included rates it would not have been necessary lo prescribe separate methods of levying rates or attaching conditions for the levy of rates, such as, no rate for a service can be levied unless the service is actually rendered.
32. Mr. T. H. Khan, learned counsel for the appellant, refers to the separate provisions of levying taxes and rates in the statutes and has argued that though taxes and rates are imposts, yet they are in fact different 'kinds of imposts. He has argued that a rate is a tax in the same sense as a fee, rate, toll or cess is a tax and that excepting this generic nomenclature, tax, toll, rate, fee and cess are altogether different things and that the imposition of one does not mean and include the imposition of another. Examination of the Model Tax Schedule vis-a-vis the Taxation Rules clearly shows that in rule (1) of the Model Tax Schedule only "two taxes" have been referred to, whereas in rules 13 and 14 of the Model Tax Schedule lighting rate and conservancy rate have been referred to. Rule (1) of the Model Tax Schedule describes buildings tax, and it relates to and corresponds with Item No. 1 of Third Schedule (of the Ordinance) which also speaks of tax on buildings and lands; rules 13, 14, 15, 16 of the Model Tax Schedule are found relating to and corresponding with Item Nos. 13, 14, 15 and 16 of the Third Schedule which respectively relate to lighting rate, conservancy rate, rates for any work of public utility and for water supply. Again, rule (I) of the Model Tax Schedule prescribes a ceiling of two taxes together, viz; ''Property Tax and the Buildings Tax", this ceiling does not include any other tax, not to speak of including any rate. Provisions for rates have been separately made elsewhere in the said Schedule as already indicated above and ceiling for 'rates' have also been separately prescribed in rules 13, 14, 15, 16 such as for lighting rate, conservancy rate and rates for work of public utility or for water supply, Ceiling for lighting rate is three percent, for conservancy rate seven percent and rates for water supply, seven percent and on. If seventeen percent ceiling fixed in rule (1) was intended to cover the service rates separate ceiling for these service rates would not have been necessary. Rule (1) of Model Tax Schedule clearly, specifically and unambiguously refers to two taxes, ''Property Tax and Buildings Tax" leaving no room for doubt whether these two taxes include anything else, such as rates.
33. The whole argument of Mr. Asrarul Hossain that Buildings Tax includes the lighting and conservancy rates is based on the definition of "tax" as given in the Ordinance, I have already pointed out that tax has not been defined but only an inclusive definition has been given in section 3(1)(42) of the Ordinance which says that "tax includes rates, tolls, fees". "Definition" of any term of a statute may be taken into consideration to interpret the statute when its language is ambiguous to find out the legislative intent. In this statute the language is clear enough to show what is tax and what is rate.
34. Definition of tax in section 3(1) (42) of the Municipal Administration Ordinance has been amended by the President's Order No. 36 of 1973 with effect from April 11, 1960 which is the date when the Ordinance had come into force. This Amendment has deleted the word 'rate from the original definition and separately defined 'rate' as "rate means imposts specified in items Nos. 13 to 16 of the Third Schedule." Simple meaning of the amendment is that tax does not include rate and consequently Building Tax as referred to in the Model Tax Schedule (rule) does not include, lighting rate, conservancy rate or any other rate which are specified in item Nos, 13-16 of the Third Schedule. It is contended that retrospective operation of this amended definition has resulted in imposition of tax with retrospective effect which is not permissible in law. This contention is misconceived, for the amendment did not result in the levying of any tax or rates with retrospective effect. The an end-ment has come in just to dispel the doubt, if any, as to whether Building Tax excludes service rates imposed in connection with the use and occupation of a building clearly showing that tax and rates are different imposts. It has not introduced anything new in the statute but has simply clarified the point. This aspect of the matter is not found to have received consideration in the majority judgment in the case of American Life Insurance Company. The High Court Division has failed to determine the assessee's contention on correct interpretation of the amended definition of 'tax.' Contention of the assessee-appellant is, therefore, accepted and it is held that the impugned assessments were quite in conformity with the Model Tax Schedule.
In the result, the appeal is allowed. The impugned order of the High Court Division is set aside and the Writ Petition No. 135 of 1980 is dismissed, No order as to costs.
Order of the Court
By the majority decision the appeal is allowed. The impugned order of the High Court Division is set aside and Writ Petition No. 135 of 1980 is dismissed.
There will be no order as to costs.