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Writ petition No. 1544 of 1969, decided on 8th June, 1976.

---- Plain words of law‑‑To be given effect to.

‑‑‑S. 5‑‑West Pakistan Urban Immovable Property Tax Rules, 1959, R.6‑‑Assessment of annual value‑‑Property to be assessed at value at which it could reasonably be expected to be let out‑‑If for some reason beyond control of owner, property could not be let out at other rate than rate earlier fixed, provisions of section 5 of Act X of 1958, held, would have no applic4tion and pre‑existing assessment would continue‑ Rationale of provision envisaged that an owner should not deprive assessing authority of higher assessment it he could reasonably let a property at a higher rate‑‑It would not lean that even if owner wc.:3 unable to let out property at higher rate, authority would still have power to burden him with extra liability‑‑Such an interpretation would knock out word "reasonably" from statute.

‑‑‑Art 98‑‑Public authorities exercise of power by‑‑Not only public: authorities have to act reasonably and not arbitrarily in all circumstances but certainly they cannot act otherwise when they are required specifically and explicitly by statute to exercise public power on reasonable expectation of given events

‑‑Ss. 5 & 23‑‑West Pakistan Urban Immovable Property Tax Rules, 1959, R.6‑‑Annual value‑‑Relevant provisions of law providing for making an enquiry about annual rent 'earned'‑‑Shop in question earning a rent of Rs.12 per month‑‑Assessment had to be proceeded on that basis‑‑Contention that annual rent 'earned' is followed by 'or' which provides for what could reasonably be earned and shop in question could like other shops in locality be rented out at higher rate of rent or recourse could be had to rule 6(f), held, not quite tenable Not only when there are two alternatives, one avouring subject is to be given preference in fiscal matters but also other alternative in context comes into play when annual rent is not 'earned', then it is provided that same may be assessed at rate of rent which could reasonably have been earned if land or building were let out‑All time emphasis is on reasonableness‑‑It cannot be lost sight of in exercise of public power.

‑‑‑ Rules have to conform to and be subordinate to statute and cannot overreach or override statute.

‑‑‑S. 5‑‑West Pakistan Urban Immovable Property Tax Rules, 1959, R.6‑‑West Pakistan Urban Rent Restriction Ordinance (VI of 1959), S.13‑‑Annual rental value‑‑Enhancement of rent‑‑Proceedings in respect of enhancement of rent of property in question sub judice before Supreme Court and petitioner landlord not certain about his success and property could not reasonably be expected to be let out at higher rent on account of said proceedings‑‑Order of respondent authorities subjecting property to higher rent while determining annual rental value, held, without lawful authority and of no legal effect.

Mian Muhammad Akhtar for Respondents.

Date of hearing: 8th June, 1976.

By means of this Constitutional petition, the petitioner challenges the orders of the Excise and Taxation Authorities by which annual rental value of the shop owned by the petitioner has been enhanced from Rs.144 to Rs.900 for the assessment year 1966‑67.

2. Facts leading to this petition are that the petitioner owns Shop No. B‑8‑25‑5/1 situated in Ghanta Ghar Bazar, Gujranwala. It . was rented out to one Imam Din at the rate of Rs.12 per month vide rent deed executed on 1st June, 1959. The petitioner filed an application for ejectment of the tenant under section 13 of the West Pakistan Urban Rent Restriction Ordinance, 1959 on 16th May, 1963 on the grounds of personal use and for reconstruction. In accordance with section 13(6) of the Ordinance, during the pendency of the proceedings, the learned Rent Controller directed the tenant to deposit rent at the rate of Rs.12 per month. Finally, he ordered ejectment of the tenant by his order, dated 9th April, 1965. On tenant's appeal, the learned District Judge set aside the order, vide his own order, dated 23rd July, 1965. The petitioner challenged this order by means of a second appeal against Order, bearing No. 474/65. It was accepted by this Court on 1st March, 1972. The tenant filed Civil Petition for Special Leave to Appeal No. 105/72 in the learned Supreme Court of Pakistan. The learned Supreme Court granted leave and the appeal is said to be now pending before their Lordships of the Supreme Court.

3. While the aforesaid proceedings for ejectment of the tenant were going on, the Excise and Taxation authorities raised the monthly rental value from Rs.12 per month to Rs.75 per month i.e. enhanced annual rental value from Rs.144 to Rs.900 for purposes of property tax for the assessment year 1966‑67 as stated above. The petitioner challenged the same by means of an appeal before the Director, Excise and Taxation, Lahore who accepted the same, vide his order, dated 3rd April, 1968 and directed the Excise and Taxation Officer concerned to determine de novo gross annual value after usual hearing and fact‑finding. On receipt of the aforesaid, the assessing authority observed that main contention of the owner was that the occupant pays Rs.12 per month as rent and accordingly the Gross Annual Rental value should be fixed at Rs.144. The unit is occupied by the old tenant. There are doubts as to the rent being paid actually as none of the parties is prepared to throw any light on this aspect of the case. It is situated in Bazar Kumharan (Ghanta Ghar). The average monthly rent prevailing in this Bazar for a shop of 11 Marlas are in the range between Rs.60 and Rs.80 per month. Accordingly, keeping in view the conditions, area and the situation, the assessment of Rs.900 is not excessive." This is vide order, dated 2nd August, 1968. The petitioner filed a revision petition before the Commissioner who remitted the same on 9th December, 1968 to the Director, Excise and Taxation for decision as an appeal. The latter Officer took down the contentions of the petitioner that the shop was an old one in a backward locality and dilapidated condition, that the tenant was occupying the shop since long and paying monthly rent at Rs.12 per month and that there was litigation going on between the owner and the tenant for vacation of the shop and also fixation of rent. The officer observed that "necessary legal enquiry in this case has been made. Imam Din has also been heard. This is an average type shop in a locality which commands a mediocre commercial importance. Taking into consideration the above facts I feel that the annual value already determined in the case i.e. Rs.900 is quite reasonable and moderate. The appeal is rejected". This is vide order, dated 11th January, 1969. The petitioner filed a revision petition before the Commissioner who observed that "the petitioner argued that he was receiving Rs.12 p.m. as rent of the shop and could not manage to pay in excess of it to the Excise and Taxation Department. This argument does not help the petitioner as the assessment of property tax is determined on the value of the property. The shop is situated in a commercial area where the rents are quite light. In view of the circumstances prevailing in this case the petition has no force and is, therefore, rejected. This is vide order, dated 12th May, 1959. The petitioner challenges the aforesaid orders by means of this Constitutional petition.

4. The petitioner who appears in person has submitted that under section 5 of the West Pakistan Urban Immovable Property Tax Act, 1958 it is provided that the annual value of any land or building shall be ascertained by estimating the gross annual rents at which such land o: building might reasonably be expected to be let from year to year. According to the petitioner, since the shop in question has been in possession of a tenant and the petitioner's efforts to get him ejected have not yet borne fruits because the tenant has obtained an order of stay against his eviction from the learned Supreme Court of Pakistan where his appeal is pending, therefore, there is no question that the shop might reasonably be expected to be let at any other monthly rent than the rate of Rs.12 per month at which is already let. He has also referred to section 9 of the aforesaid Act to urge that it was necessary for the authorities to make amendments in the valuation list to bring it in accordance with the existing circumstances and, in the present case, the existing circumstances were that the petitioner was receiving rent at the rate of Rs.12 rent per month end the same should have been put in the relevant register.

5. The learned counsel appearing for the Taxing Authorities has contended that, no doubt, the ascertainment of annual rent has to be made under section 5 of the aforesaid Act but the annual rent of the building has to be estimated at the rate to which the land or building might reasonably be expected to be let from year to year. In the present case, the shop in question of the petitioner can reasonably be expected to be let at Rs.75 per month. The learned counsel has, further, submitted that in pursuance of section 23 of the aforesaid Act, Government of West Pakistan has promulgated West Pakistan Urban Immovable Property Tax Rules and vide Rule 6(e) it is provided that the authorities may make an enquiry about the gross annual rent earned or which could reasonably be earned from the property during the financial year immediately preceding current financial year and under Rule 6(f) it is provided that the authority may determine from other data as available, the gross annual rent at which any property in the rating area may reasonably be expected to be let from year to year if in its opinion the average gross annual rent of such property ascertained under clause (e) be not fair or reasonable when compared with such rent of any other property in that locality. The learned counsel contends that the plain words of the Statute or the Rules have to be given effect to and, according to him, since the shop can reasonably be let out at the higher rate of Rs.75 per month than the rate of Rs.12 per month on which it is let out, the authorities have rightly acted. He has also contended that the petitioner can apply to the Rent Controller under section 9 of the West Pakistan Urban Rent Restriction Ordinance, 1959 for fixation of enhanced rent on the ground that assessment has been raised and the tenant should be directed to pay the enhanced rent. He has placed reliance on Muhammad Hussain Patel v. Ghaffer Wali Muhammad and others P L D 1972 Kar. 421.

6. There is no doubt that the learned counsel for the respondents is quite right that the plain words of the law have to be given affect to. Therefore, the relevant provisions may be reproduced below:‑‑

West Pakistan Urban Immovable Property Tax Act, 1958.

"S. 5 Ascertainment of annual value.‑‑The annual value of any land or building shall be ascertained by estimating the gross annual rent at which such land or building together with its appurtenances and any furniture that may be let for use or enjoyment with such building might reasonably be expected to be let from year to year (Further provision is not necessary).

West Pakistan Urban Immovable Property Tax Rules, 1959

"Rule 6.‑‑Preparation of draft valuation list.‑‑ (1) In order to prepare a valuation list, the assessing authority shall‑‑

(e) make an enquiry about the gross annual rent earned or which could reasonably be earned in respect of the property during the financial year immediately preceding the current financial year;

(f) determines, from such other date as may be available the gross annual rent at which any property in the rating area may reasonably be expected to be let from year to year, if in its opinion the average gross annual rent of such property ascertained under clause (e) be not fair or reasonable when compared with such rent or any other property in that locality."

7. From the above provisons of section 5, it would be clear that annual value of any building shall be ascertained by estimating the gross annual rent at which such building "might reasonably be expected to be let" from year to year. In the present case, it is obvious that the shop could not be reasonably expected to be let out at any rate higher than the rate at which it stands let out because of the proceedings between the landlord and the tenant pending before the learned Supreme Court of Pakistan in which stay against eviction of the tenant has already, been granted by their Lordships of the Supreme Court of Pakistan. The substance of the provision is that the property shall be assessed at the value at which it can reasonably be expected to be let out. Now if for some reason beyond the control of the owner the property cannot be let out at any other rate than the rate earlier fixed, the provision would have no application and the pre‑existing assessment shall have to continue Rationale of the provision envisages that an owner may not deprive the assessing authority of higher assessment if he could reasonably let out the property at a higher rate. It does not mean that even if the owner is unable to let out the property at a higher rate, the authorities would still have the power to burden him other extra liability. Such an interpretation would knock out the word "reasonably" from the Statute. Not only public authorities have to act reasonably and not arbitrarily in all circumstances but certainly they cannot act otherwise when they are required specifically and explicitly by the Statute to exercise public power on the reasonable expectation of given events. For the purpose of ascertainment of annual value under section 5 of the Act, by virtue of authority under section 23 of the Act. The West Pakistan Immovable Property Tax Rules, 1959 have been framed and from Rule 6(e) as quoted above it would be clear that in order to prepare the valuation list, the assessing authority shall make "an enquiry about the gross annual rent earned or which could reasonably be earned in respect of the property during the financial year immediately preceding the current financial year." The bare reading would show that the clause provides for making of enquiry about the annual rent "earned". In the present case, there could be no mistake about the earning of the rent of the shop which is Rs.i2 L per month. Consequently, the assessment had to proceed on that basis. The contention of the learned counsel for the respondent that the annual rent "earned" is followed by "or" which provides for what could reasonably be earned and as the shop could like other shops in the locality be rented out at higher rate of rent or recourse could be had to Rule 6(f) is not quite tenable. Not only when there are two alternatives, the one favouring the subject is to be given preference in fiscal matters but also the other alternative in the context come into play when the annual rent is not "earned", then it is provided that, the same may be assessed at the rate of the rent which could reasonably have been earned if the land or the building were let out. All the time the emphasis is on the reasonableness. It cannot be lost sight of in exercise of public power. In fact, it cannot be done, even in private. life except at one's own peril. In any case, Rules have to conform to and be subordinate to the Statute and cannot overreach or override the Statute. The contention of the learned counsel for the respondents that the petitioner could apply to the Rent Controller under section 9 of the West Pakistan Urban Rent Restriction Ordinance, 1959 for fixation of enhanced rent on account of the enhanced assessment loses sight of the fact that not only the petitioner cannot be obliged to launch litigation to satisfy the illegal demand of the respondents but also it omits to H take into consideration the fact that the petitioner had already gone tai the Rent Controller and the litigation has reached the learned Supreme Court of Pakistan and the petitioner is by no means certain of his success, the matter being sub judice before their Lordships of the Supreme Court of Pakistan. In view of the substance of the provisions of the Statute and the Rules there under, it is quite clear that an owner of a property is liable to pay the tax out of the annual rent of the property at which it is let out or might reasonably be expected to 1 be let out. If for some reason, the property cannot be reasonably expected to be let out, for example, on account of being washed away by flood or burnt down, it is obvious that the owner would not be liable to pay the annual rental value.

8. For the foregoing reasons, in view of the fact that the property cannot reasonably be expected to be let out at the higher rent on account of proceedings pending before their Lordships of the Supreme Court of Pakistan, the orders of the respondent authorities are declared to have been passed without lawful authority and of no legal effect. The petitioner shall have his costs from the respondents. The petitioner has prepared for refund of the amount received by respondents under the aforesaid orders. He should apply to the authorities for the same who would obviously refund the amount received in consequence of the impugned orders which have been declared to be without lawful authority. Thus, the petition stands disposed of.

M . Y . H Petition accepted

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