Kohat Cement Factory Ltd Vs Law Parlimintery Affairs & Human Right Deptt. KP through its Secty. etc

PESITAWAR HIGH COURT. PESIIAT[IAR

-t

(JUDICIAL DEPARTMENT)

\l Writ Petition No. 6005-P/2019 Kohat Cement Factory Limited

Petitioner

V/s Law Parliamentary Affairs & Human Right Department, Khyber Pakhtunkhwa through its Secretary and others.

.. ....Respondents.

For the Petitioner: Mr. M. Yasir Khattak, Advocate.

For the Respondents: Barrister Babar Shahzad lmran,

AAG.

Date of hearing: 26.01.2023

JUDGMENT

SYED ARSHAD ALI. J:- IWs Kohat Cement Factory Limited, which is a limited company having registered offrce at Gulberg-Il, Lahore, Pakistan and has a manufacturing unit at District Kohat, the Province of Khyber Pakhtunkhwa (hereinafter referred to as 'Company'), has approached this Court through the instant petition, praying that:- "It is, therefore, humbly prayed that on acceptance of this Writ Petition, keeping in view the above stated real facts;

a. The Respondents/Revenue authorities may kindly be directed to register the sale deed by imposing agriculture tax.

b. Any other reliefwhich has not been specifically asked for may also Hndly be granted in favour of the Petitioner against the Respondents".

2.It is alleged in the petition that the Company through an instrument executed on 06.12.2017 had purchased 4 land measuring 54 kanals 18 marlas comprised of khasra No. 540 (Shamilat) situated at Moza Togh Babri Banda Tehsil & District Kohat against a total consideration of Rs. 20,000,000/- (Rs. Two crore) at the rate of Rs. 18,2151- per marla.

3.The dispute arose between the Company and the respondents when the said instrument was presented for registration and an objection was raised by the other side that since the property was purchased for the purpose of

commercial activities as being adjacent to the manufacturing unit of the Company, therefore, the benchmark for payment of stamp duty would be the commercial nature of the property as classified through valuation table issued by the Collector in terms of Section 27-A of the Stamp Act, 1899. It is the contention of the Company that since the nature of the property at the time of execution of the agreement was agriculture, therefore, the benchmark for the purpose of ad- valorem valuation of duty would be the agriculture nature and character of the property. In this regard, the opinion of Board of Revenue as well as Ministry of Law, Parliamentary Affairs & Human Rights Department of the Province of Khyber Pakhtunkhwa was solicited by the Deputy Commissioner, Kohat through a letter dated Nil available on record. It was opined by the Board of Revenue through letter dated 02.07.20L8 that since the land is to be transferred in the name of Company, therefore, its commercial use is evident and thus the stamp duty is to be charged on commercial rate as notified.

4.The Stamp Act, 1899 ("Act') deals with the chargeability and determination of stamp duty on instrument, bill of exchange etc. The present issue relates to the payment of stamp duty on the sale of immovable property. Section 27 of the Act envisages that the consideration (if any) and all other facts and circumstances affecting the chargeability of any instrument with drty, or the amount of the duty with which it is chargeable, shall be fully and truly set forth in the instrument; whereas under section 31 of the Act, the Collector ) has authority to determine the stamp duty. However, through 4 Khyber Pak*rtunkhwa Act No.VI of 1992, Section 27'A was inserted in the Stamp Act, 1899, which deals with the matter and is hereby reproduced as under:- "lllhere any instrument chargeable with ad valorem duty under clause (b) of Article 23 or clause (b) of Article 2i or clause (b) of Article jl of Schedule I relates to land only or land with any building or structure thereon, the value of the land shall be calculated according to the valuation table notiJied by the Collector in respect of land situated in the

area or locality concerned ["or as the Provincial Government may, from time to time, by notification in the fficial Gazettee, determine"J.

This section empowers the Collector to notiff a valuation table in respect of land situated in the area or locality concerned classiffing the nature of the property for the purpose of payment of stamp duty. Subsection (3) of Section 27-A further envisages that if the value of the land stated in the instrument to which subsection (1) applies is more than the value fixed according to the valuation table, the value declared in the instrument shall be accepted as value for the purpose of duty. Thus, it is clear from Section 27-A of the Act that valuation table issued by the Collector classiffing the land into various categories i.e. agriculture, residential or commercial envisaging value of the property as per its character would be the minimum benchmark for the purpose of evaluation of ad- valorem stamp duty.

5.In this case, the valuation table for the yatr, 2018-2019 envisaging a benchmark for the purpose of valuation of different classes land has been issued which is available at page-L7 of the file. According to the said valuation table, any land which is commercial in nature, the minimum benchmark for valuation of stamp duty is Rs. 256,9411-; similarly, in the case of a residential building, the amount of stamp duty shall be assessed against Rs. 27,5521- per marla; whereas when the nature of properly is agriculture, the benchmark for evaluation of stamp duty is Rs. l30lll9950l- per marla. Along with the comments, the 4 respondents have placed the criteria regarding the classification of the property has been provided. The same is reproduced as under:-

DEFINATION AND CRITERU

The whole District is categorized in three sectors as under:-

I. COMMERCUL

2. RESIDENTUL

3. AGNCULTURE

COMMERCIAL: All main roads and linkroad having commercial business activities like Shops, Hotels, Schools/Colleges, Plazas, Shopping Centers, Petrol/CNG Filling Stations, Commercial Ofices, Ho spital, Clinic s /Lab or atori e s.

o Urban: Properties falls within the Municipal Corporation Limits, the parameter is as under. One hundredfeet (100ft) from both sides of road will be considered as Cornmercial and beyond 100ft it would be considered as Residential (Abadi).

o Rural: Two hundred feet (200fr) from both sides of road will be considered as Commercial and beyond 200rt, ft would be considered as Residential (Abadi).

RESIDENTUL:

o Urban: It is beyond 100fi from both sides of main/link roads having an area measuring two Kanals in urban limits.

c Rural: It is beyond 200fi from both sides of main/link roads having an area rneasuring four (4) Kanals in rural limits.

AGRICULTURE: The agriculture land is considered if area of land is more than two (2) Kanals in urban limits and rnore thanfour (4) Kanals in rural limits.

6.According to the admitted facts since the purchased property is situated in the rural area and is at a distance of more than 200 ft from the road side, therefore, nature and character of the property is agriculture. The respondents do not deny the location, character and nature of the property, but it is the case of the respondents that despite the fact, the character of the property is agriculture but since its future use would be for the purpose of commercial activities (industrial purposes), therefore, the benchmark as provided in the valuation table for commercial property would be applicable and accordingly, the stamp duties would be a charged on the basis of said benchmark. Admittedly, the Act , deals with the imposition of duties which is equivalent to a taxing statute and it is settled by now that where a provision in a taxing statute can be reasonably interpreted in two ways, the interpretation which is favourable to assessee has to be accepted albeit if two views relating to the interpretation of the taxing statute are possible, the one favourable to assessee has to be accepted. CIT u.s, Nasa Hills Tea Co. Ltd (AIR 1973 SC

2524) and Haider Industrigs throush Manaeins Partner and others vs, Federation of Pakistan throysh Secretarv. Law Divisiory at Islamabad and othgrs (2016 PTD 2004).

7.It is also well settled principle of interpreting and taxing statute that in a taxing statute, as in any other statute, we see no reason to depart from the general rules that the words used in a statute must first be given their ordinary and natural meaning. It is only when such an ordinary meaning does not make sense then the resort can be made to discovering other appropriate meanings. There is no room to discover the intention of legislature. Pokistan Textile Mill owners' Association. Karachi and , 02 others vs. Administrator of Karachi and 02 others (PLD 1963 SC 1371 aqd M/is Islamobad Electric Supolv Company Limited vs, De-utv Commissioner Inland Revenue Audit-II, LTTJ, Islamabad and others 0016 PTD 268il.

8.While applying the aforesaid principle, we are clear in our mind that the relevant date for determination of chargeable duty would be the date of registration of instrument and character of the property as on the time of sale would determine the stamp duty and its subsequent use either for commercial or other activities cannot be considered as a benchmark for determination of ad-valorem stamp duty. The Hon'ble Lahore High Court in the case of Imtiaz Rafi Butt (PLD 1996 Lahore 663) in paru-7 & 8 of the judgment relating to valuation of stamp duty in terms of Section 27-A of the Act has observed:- "7. The valuation of urban landfor the purposes ) of stamp duty is to be made on the basis of the character of the property at the time of registration of the sale-deed and not on its subsequent use. Nature of the property in question at the time of registration of sale-deed was residential as borne out from the certificate of the Excise and Taxation Department and the stamp duty was also charged accordingly and it would not be open to the Collector to say that when the matter was brought to his notice the character of the property had been changed from residential to commercial. Utimate use of the property subject matter of sale will not determine value of the stamp duty but its character

at the time of registration of the sale-deed would be \, relevant. It cannot be said that all properties situate at Jail Road, Lahore are commercial because still there are many residential houses on that road and it would be unjustified to charge stamp duty at commercial rates if any sale purchase or transaction takes place in their respect.

8.The valuation table issued under section 27- A of the Stamp Act generally makes a distinction between the valuation of commercial and residential properties and the stamp duty is payable at the rates 'notified for residential or commercial properties. The relevant date for the deterrnination of the chargeable duty would be the date of registration of the instruments. Character of the property at that time would determine the stamp duty and not any subsequent use that may be made of the said property. Since afier the registration of the sale-deed in question, the nature of the property is reportedto have undergone a change, anyfurther transaction in respect of it may be subiect to valuation provided for commercial properties for the purpose of stamp duty.

9.In view of the above, we have reached at a conclusion that the benchmark for valuation of stamp duty in terms of section 27-A of the Act would be the nature and character of the property at the time of registration of the instrument and not its potential use. Thus, this petition is admitted & allowed and accordingly we direct the respondents to re-evaluate the stamp duty on the impugned transaction according to the nature and character of the property as it was/would be on the date of execution of the instrument and not its future potential use. However, if the sale price of the property is more than the value as provided in the valuation table, then, the petitioner shall pay the stamp duty as per the price mentioned in the deed.

/frr

ANNOUNCED. \^

26.01.2023 iildn.

Judqe

Naw.b sh.h CS (DB) Ju3tlce Abdul Shrkoor & Jut0c! Sycd Atth'd All