KMC given three months for deliberations on tax collection through power bills, approval by City Council

The Sindh High Court (SHC) has directed the Karachi Metropolitan Corporation (KMC) to conclude the exercise with regard to review its agreement for collection of municipal utility tax with the K-Electric (KE) and constitution of a committee to deliberate the issue and present the same before the City Council within three months.

The high court also directed the KMC to proceed with its actions in compliance with the applicable law. It observed that any resolutions or notifications issued by the KMC shall be considered provisional and subject to the final determination of a petition in which vires of the rules had been challenged.

The direction came on petitions pertaining to the collection of municipal utility charges and taxes of the KMC through the KE bills from the citizens.

The petitioners, Syed Najeebuddin Ahmed, then Karachi Jamaat-e-Islami Emir Hafiz Naeemur Rehman and others, had challenged the collection of fire and conservancy charges and other utility charges of the KMC through KE bills.

The petitioners had questioned the viability of collection of utility taxes through the electricity bills and requested the high court to declare the impugned action of the KMC as unlawful.

A division bench of the high court headed by Justice Salahuddin Panhwar observed in the judgment that the Karachi Metropolitan Corporation (Collection of Municipal Utility Charges and Tax) Rules 2002 were legislative instruments governing the levy and collection of municipal utility charges and taxes within Karachi.

The SHC observed that these regulations delineated the procedural framework and methodologies for the accrual of fees associated with municipal amenities. In particular, they stipulated the assimilation of such charges within the power invoices furnished by the KE.

The high court observed that these rules explicated the duties and obligations incumbent upon the KMC and KE in the execution of this mandate.

The SHC observed that efficacy of these collection modalities had been a contentious issue amd the proponents within the KMC asserted that robust collection systems were imperative for the financial fortification of the corporation, but the legitimacy of the KMC’s provisional administration to enforce these levies had been called into question.

The high court observed that the rules had been designed to facilitate the efficient appropriation of municipal utility charges and taxes in Karachi with an emphasis on the utilisation of electricity billing as the primary collection conduit. It observed that the contractual dynamics between the KMC and KE are under the judicial review wherein the constitutional validity of the said rules were being contested.

The SHC observed that in one petition, the validity (vires) of the rules promulgated by the local

government had been challenged to the extent of collection of taxes through the KE and such matter was being adjourned due to paucity of time.

The high court observed that the mayor had been asked about the resolution’s validity as it was noted that the resolution was allegedly enacted by the administrator, not the council. The SHC observed that under the applicable law, the council, not the administrator, held the authority to enact resolutions.

The SHC observed that the mayor had filed a statement mentioning that the KMC would review the agreement with the KE, and he also assured of constitution of a special committee of council members to deliberate on the issue before the matter could be presented before the council for

approval. Besides, the mayor also undertook that deliberations would be made to maximise the tax collection for Karachi and some relief would be given to the citizens receiving power bills of Rs10,000 or less per month, the high court observed.

A counsel for the petitioners submitted that they did not contest the taxation imposed by the KMC and wanted to reinforce the municipal council’s efficacy. However, they expressed concerns regarding the non-passage of the pertinent resolution by the council, coupled with apprehensions that the council members may not be granted the opportunity for deliberation.

The high court observed that the mayor had submitted a statement indicating an intention to establish a committee inclusive of representatives from all political parties to consider the matter.

The SHC directed the KMC to complete the entire exercise within three months and proceed with its actions in compliance with applicable law.

The high court observed that any resolutions or notifications issued by the KMC shall be considered provisional and subject to the final determination of petition in which vires of the rules had been challenged.