The Central Board of Revenue (CBR) will obtain ruling from Ministry of Law on the powers of customs officials to issue exemption of duties/taxes with retrospective effect under section 20 of the Customs Act, 1969.
The issue came to the limelight on Tuesday when Auditor General of Pakistan challenged CBR officials'' powers to grant exemption of customs duty with retrospective effect.
AG officials claimed that CBR has powers to grant exemption from duty in exceptional circumstances under section 20 of Customs Act. But this exemption could not be granted retrospectively.
Under section 20, the Board may exempt any goods from payment of whole or any part of customs duties chargeable thereon and may remit fine, penalty, charge or any other amount recoverable, the AG officials added.
Defending the Board''s stance, Member Customs Shahid Rahim Shahikh told the Public Accounts Committee (PAC) that section 20 of the Customs Act empowers the Board to issue ''special exemption order''. In one case, there is a Supreme Court ruling that exemption could be granted under section 20 with retrospective effect. The benefit of exemption could be given retrospectively under section 20, but duty cannot be imposed retrospectively under the said provision.
On the other hand, general power to exempt customs duty through notification in the official Gazette is available under section 19 of the Customs Act. Taking into account the SC ruling, the benefit of exemption could be given from back date, Member Customs added.
Meanwhile, CBR Chairman Abdullah Yusuf said that the Board had issued a clarification on May 19, 2006 regarding section 20 in the light of SC''s ruling. The retrospective exemption is covered under the SC ruling, and AG office viewpoint is not correct, tax officials said.
The AG office turned down CBR interpretation, saying that the legal issue should be clarified by the Law and Justice Division, as CBR is not competent authority for interpreting the legal provisions.
Giving observations over the issue, the PAC opined that the Ministry of Law and Justice is the only competent authority to clarify the legal issues. The CBR should approach the law ministry to obtain a clarification whether the SC ruling and section 20 are contradictory or similar for the settlement of the cases.
The PAC observed that there should be some check on officials empowered to give exemptions and waivers, as the department should have ample justification for giving exemption of duties/taxes.
Chairman CBR responded that the board is not empowered to give exemption to anybody without justification. There should be solid reasons as per laid down rules and regulations for obtaining exemption.
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