The Lahore High Court (LHC) has declared former Prime Minister Nawaz Sharif''s "Tax Incentive Scheme" introduced through SRO 1065(I)/2013 as illegal and without lawful authority, while deciding a petition filed by a Lahore-based tax lawyer Waheed Shahzad Butt. Sources told Business Recorder that Tax Incentive Scheme was introduced by the then Prime Minister Nawaz Sharif, through SRO 1065(I)/2013, dated 20.12.2013, causing a multi-billion rupees loss to the national exchequer.
The petition has been argued by a famous international tax consultant Dr Ikramul Haq before the LHC. The petition was filed by a taxpayer (Waheed Butt), stating that notification SRO 1065(I)/2013 introducing blanket amnesty scheme for tax dodgers by inserting clause 86 in Part IV of the Ordinance, 2001, is unconstitutional being ultra vires, discriminatory and based on mala fide intention.
The petitioner further added that introduction of any tax amnesty scheme for tax evaders is nothing but height of immorality fully sponsored by the state. The government instead of entertaining any such scheme should seriously consider introducing ''Asset-Seizure Scheme'' to confiscate undeclared/untaxed assets created from undisclosed/untaxed money and make laws to bring back looted money from tax cheaters. The state of affairs bluntly speaks the truth that in Pakistan there is no tax collection system but only a "tax sharing" exists in which the exchequer is never a major beneficiary. Major benefits are shared by tax officials and tax evaders in what is called a marriage of convenience. Tackling twin menace of black money and tax evasion has always been a failure of Pakistan''s taxation system. Instead of dealing with these issues with an iron hand, the government has been pardoning the corrupt and appeasing tax evaders through various amnesty schemes. When there are so many FBR employees getting their salaries out of the tax collected from public money, anyone can easily find out unaccounted money. Announcing Tax Amnesty Schemes time and again is nothing but shows helplessness of FBR in tackling black money, the petitioner argued.
It was practically a financial "National Reconciliation Ordinance" under the umbrella of "tax incentive package" announced by the former PM Nawaz Sharif government. The Article 162 of the Constitution debars even the National Assembly to grant tax exemptions or concessions without prior approval of the President. The power to issue SROs delegated to the federal government by the Parliament is a blatant violation of supreme law of the land. "How can the Parliament delegate a power which cannot be exercised by itself without the prior sanction of the President?" said the petition. The principle of "no taxation without representation" embodied in the Article 77 read with Article 162 of the Constitution, is perpetually and flagrantly violated by the FBR. It is the right time to inquire about the motives, considerations, objectives and theme of SROs issued on different occasions in order to benefit a particular class or group of persons. Amnesty scheme is simply a big slap on the face of honest taxpayers, the petitioner added.
The LHC order states: "This petition under Article 199 of the Constitution lays a challenge to the SRO 1065(I)/2013 dated 20.12.2013. At the outset, the counsel for the petitioner has relied upon the judgment of the Supreme Court of Pakistan, to contend that the notification in issue in the present constitutional petition has been promulgated by the federal government without complying with the requirements as spelt out in the judgment of the Supreme Court of Pakistan and must be held to be ultra vires and unlawful. The contention of the counsel seems to have substance. While issuing a notification in terms of the delegated powers under enactments, the federal government has to act in a manner laid down by the Constitution and unless the procedural formalities have been complied with, the notification so issued must be stuck down as void ab initio. Since the impugned notification does not comply with the constitutional mandate as expounded in the Mustafa Impex case, the SRO 1065(I)/2013 dated 20.12.2013 is hereby declared to be without lawful authority and of no legal effect."
"In view of my holding above, it is not necessary to refer to and determine the other grounds urged by the counsel for the petitioner. The petition is allowed in the above terms," the LHC order added.
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