ORDER SHEET

IN THE HIGH COURT OF SINDH,

CIRCUIT COURT, HYDERABAD.

 

C.P.No.D- 755  of 2009

                                                C.P No.D- 756 of 2009

                                                C.P No.D- 900 of 2009

 

                                                                                                           

DATE         ORDER WITH SIGNATURE OF JUDGE

 

 

17.12.2009

 

M/s Gulab Khan Kaimkhani, Khowaja Ayatullah, Advocates for the Petitioners in C.P No.D-755 & 756 of 2009.

 

                        Petitioner present in person in C.P. No.D-900 of 2009.

 

Mr. Allah Bachayo Soomro, Additional A.G. along with Syed Manzoor Hussain Shah, Project Director, Works and Services Department. 

 

Mr. Amjad Ali Sahito, Advocate files Vakalatnama on behalf of Contractor, which is taken on record. Contractor is also present.

                                                =

            Through this order we intend to dispose of the aforesaid Petitions as the issue raised in all these Petitions is common.

            The Petitioner in C.P No.D-755 of 2009 has pleaded that he is resident of Mirpurkhas. The petitioner claims that he is General Secretary of District Bar Association Mirpurkhas. It is claimed that petitioner off and on travels from Mirpurkhas to Hyderabad in the normal course of his professional assignment. On 1.11.2009, when the Petitioner was going from Mirpurkhas to Hyderabad in his car, and he when reached at a distance of few Kilometers near Hyderabad, he noticed a large number of heavy vehicles/cars parked on both sides of the road. On inquiry, he came to know that toll tax is being collected. The petitioner has paid Rs.20/- towards the toll tax against a receipt which original receipt has been annexed with the Petition as Annexure ”A” mentions  toll plaza tax of Rs.20/- for Mirpurkhas-Hyderabad Road.

            The grievance of the Petitioner in all the aforesaid Petitions is that Hyderabad/Mirpurkhas Road is an old single constructed road and the Provincial Government or any of the Respondents cannot collect Toll Tax. It has been further contended that such road lacks other required necessities and therefore, imposition of Toll Tax for the use of such road is unwarranted in law.

            Notices were issued to the Respondents as well as to the Additional A.G. The comments were filed by the Project Director and the Counsel of Contractor.

            We have gone through the comments and have heard the learned Counsel as well as the Project Director and the Counsel of the Contractor. It has been pleaded in the comments by the Government that “Hyderabad/Mirpurkhas road is being dualized through Public Private Project wherein private investors will finance the project and Manage Operation & Maintenance of the road during concession period. The costs are recovered through revenue generated from the road”. It is further pleaded in the comments that “in order to ascertain financial viability of the Project and to strengthen builders confidence regarding potential of the revenue, Works and Services Department floated a Summary for Chief Minister, Sindh and sought approval for the imposition of the Toll Tax with rate given in the schedule”. By open auction the tenders for collection of Toll Tax were invited  and M/s Israr and brothers were awarded contract for the period of eight (8) months and ten (10) days commencing from 01.11.2009 to 10.07.2010 and since then the Government is collecting the Toll Tax through the Contractor. The Contractor has been impleaded as one of the Respondents, who has also filed the comments, through his Counsel.

            It has been contended by the Counsel for the Petitioner that the Government cannot impose Toll Tax without rendering services. According to the learned Counsel for the Petitioner the authority to impose the Toll Tax is subject to rendering services and according to him, in the present case, the project has yet to start and till such time this project of road is completed and dual road is made functional, the Government cannot charge Toll Tax in anticipation.

            On the other hand the learned Additional Advocate General Sindh has placed before us the Ordinance No.1 of 2009 titled as “The SINDH PUBLIC PRIVATE PARTNERSHIP ORDINANCE 2009 and contends that Section 29 of the Ordinance which reads as follows authorizes the Government to charge user fee:-

“29.      User fee:- (1) The Government may impose and revise, through a notification in the official gazette, single or multiple user fees for different uses of the Public-Private Partnership projects by different classes of the users.

           

(2) The Government may exempt, through notification in the official gazette, certain classes of users from payment of the user fees.

           

(3) The Government may entrust the Public-Private Partnership Company with collection of user fees.

           

(4) The Government may provide a mechanism for user fee revision for a project in the Public-Private Partnership Agreement or in Rules issued by the Government with sector responsibility. If the Government unilaterally orders an adjustment in the user fee which adversely affects the revenues of the Public-Private Partnership Company and its ability to repay its loans and earn a reasonable return on its investment, then the Government shall compensate the Public-Private partnership Company either through a direct payment for last revenues or any other mechanism for fairly adjusting the revenues. The method or methods to be applied shall be set forth in the Public-Private Partnership Agreement.”        

            The User Fee is defined under Section 2 (ff) of the Ordinance No.1 of 2009, which is reproduced as under:-

“User fee” means a levy, unitary charge, annuity, shadow toll or fee whether paid by the Government or the Public, which may be charged by a Public-Private Partnership Company under a Public Private Partnership Agreement”.

            The issue at this point of time, is not the authority of the Government to impose the Toll Tax or User Fee or competence to enter into an agreement under the ordinance No.1 of 2009. The Petitioners’ concern is that in absence of the services of road, provided by the Government, whether it can charge from the public, the user fee or the Toll Tax. The definition of ‘user fee’ under the Ordinance is not happily worded and we in absence of the definition provided in the ordinance have to refer to its ordinary legal dictionary meaning.

            Under the Blacks’ Law Dictionary, the ‘Fee’ is defined “ A fee is the price one pays as remuneration for services”.  User Fee is defined in the Blacks’ Law Dictionary means “People pay User Fee for the use of many public services and facilities”.

            Besides, the aforesaid definitions in the Blacks’ Legal Dictionary the word ‘Toll Tax’ and ‘Fee’ has been interpreted by the Superior Courts. In the case of The Burmah OIL COMPANY LIMITED V. THE TRUSTEES FOR THE PORT OF CHITTAGONG reported in PLD 1961 Supreme Court 452 their lordships of Honourable Supreme Court has interpreted the ‘Toll Tax’ as under:-

“There may be tolls of many kinds, such as harbour tolls, anchorage tolls, or even a toll for the use of a Railway system itself. In its generic sense a ‘toll’ may be described as a payment of a sum of money in respect of some benefit derived by the payer from the use of some property, service or facility provided by another. ‘Toll’ is not, synonymous with ‘hire’. It may well be distinct from, and in addition to, a charge leviable for the use of that property, service of facility. Thus a ‘toll’ realizable by a railway, may be a payment in respect of the use of the railway system itself as distinct from a charge for carriage, haulage or collection.”

            A Division Bench of this Court in the case of Mian EJAZ SHAFI and others V. FEDERATION OF PAKISTAN reported in PLD 1997 Karachi 604 while interpreting the word ‘Fee’ has held that “Fees are a sort of return or consideration for services rendered, which make it necessary that there should be an element of ‘quid pro quo’ in the imposition of fee. There has to be a correlationship between the fee levied by an authority and the services rendered by it to the person, who is required to pay the fee”.

            The Government under the garb of the Ordinance can only levy fee or Toll Tax if it provides services as has been held in the aforesaid judgments referred to hereinabove. It cannot under the garb of Ordinance NO.1 of 2009 start collecting user fee or Toll Tax when it has not rendered any service against it to the persons and the road is yet to be constructed. This Court has not examined the relationship of the Government with the Foreign Company or the rate/schedule under which the Government has authorized the Contractor to charge the Toll Tax or user fee nor this issue has been raised before this Court. The Government prima facie has the authority under the law to levy the Toll or Fee. However, this levy of Toll or Fee is subject to providing service. The levy of Fee without rendering any service would amount to taxing the citizens which the law does not authorize.                     

             We in view of the afore said judgments of this Court and the Honourable Supreme Court are clear in our mind that levy of users fee or toll tax under the garb of Ordinance No. 1 of 2009 is unauthorized as the Government has not rendered any service for such Fee/Toll Tax. The Government however in its wisdom, after the project is completed can levy Toll Tax or Fee within the parameters of law. At present the notification dated 7th October 2009 issued by the Secretary to the Government of Sindh in exercise of powers conferred by Section 3 of the West Pakistan Tolls on Roads and Bridges Ordinance 1962, imposing the toll tax on vehicles specified in Column No.2 of the travel, using the Hyderabad-Mirpurkhas road is declared to be without lawful authority and of no legal consequences. The collection of toll tax under the garb of ‘User Fee” either under Ordinance 1 of 2009 or under Section 3 of Ordinance of 1962 is unauthorized and the Government or the Contractor are restrained from collecting ‘Toll Tax’ or ‘User Fee’ under the notification referred to hereinabove. We have inquired from the Project Director as to why notification issued U/s 3 of the West Pakistan Tolls on Roads and Bridges Ordinance, 1962 has been issued when the reliance has been placed under the provisions of Section 29 of the Ordinance 1 of 2009. We were informed that Ordinance 1 of 2009 was promulgated after the notification dated 7th October 2009 and the Toll Tax is being collected on the strength of the said notification. He however has clarified that no other notification has been issued for collection of User Fee.

            We, therefore, for the aforesaid reasons, declare that in absence of services, notification dated 07.10.2009 imposing the Toll Tax by the Government is without lawful authority. This petition is allowed in the above terms. The amount deposited by the Contractor with the Additional Registrar of this Court pursuant to the Court order dated  12.11.2009 passed by this Court, shall be returned to the Contractor on proper verification. The Government is directed to ensure that the contractor who has been awarded contract and who has invested handsome amount for installing the toll cabin for collection of Toll Tax be compensated and the guarantees or securities submitted be refunded and discharged.                       

                                                                                                JUDGE

JUDGE