EDITORIAL: The decision of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) to file a human rights application with the Supreme Court (SC) of Pakistan for separation of the tax judicial system from the tax collection/executive machinery, in what it says is “conformance” with the constitution, merits a lot of sense. That is so because as things stand, the first two tiers of tax appellate authorities are working under the Federal Board of Revenue (FBR) and the law ministry in, according to the human rights application, “utter violation of Article 175(3) of the constitution and judgments made by SC are binding under Article 189”.
Since the Finance Bill of 2001-02 vowed to adjudicate the tax adjudication system of the country on the principle of separation of powers, and the SC has already previously ruled that “separation of judiciary from the executive is the cornerstone of independence of judiciary”, FPCCI’s lament that no government whether civilian or military paid much attention to the apex court’s ruling about this separation of powers is quite understandable. The tax codes of Pakistan, as detailed under the Income Tax Ordinance, 2001, the Sales Tax Act, 1990, the Federal Excise Act, 2005, and the Customs Act, 1969, give aggrieved taxpayers the right to appeal against the orders of tax officials from the appellate authorities that are appointed by FBR.
Presently, for any problems with the orders of assessment officers appeals must be directed within respective departments to the commissioner (appeals) or collector (adjudication). But in case the matter is still not resolved it can be raised before the Appellate Tribunal Inland Revenue (ATIR)/Customs Appellate Tribunal, respectively. And since both fall under the ministry of law, which is part of the federal government, this process blatantly contradicts the principle of independence of judiciary as clearly outlined in the National Judicial Policy (NJP) of 2009. “All special courts/tribunals under the administrative control of the Executive must be placed under the control and supervision of the judiciary, their appointments/postings should be made on the recommendation of the chief justice of the concerned high court,” the FPCCI rightly maintains.
It is indeed regrettable that instead of following the dictates of the constitution or the command of the Supreme Court, the Executive got the power to regulate the affairs of ATIR and customs tribunals through the Tax Laws (Second Amendment) Ordinance, 2019, which deprives these bodies of the right to make their own rules and regulate their own affairs as they see fit in light of the constitution. And therefore it is rightly being criticised as a “blatant administrative encroachment of the Executive on the independence of a quasi-juridical organ”.
To put matters on the right track, the federal government may now be required to present a bill in parliament to merge existing tax tribunals of the Inland Revenue Service (IRS) and customs. The body that emerges from the merger should then function under the direct supervision of relevant high courts. All this should lead to a “truly independent tax appellate tribunal - a better arrangement than the present one, at least - with the courts ensuring selection of competent people, complete independence, and also speedy decisions. Granting the executive jurisdiction over tax tribunals not only impinges upon the independence of a very vital organ of the state, it also adds many unnecessary complications to the tax adjudication process.
Making commissioners and collectors of adjudication, which are now subordinate to the FBR, worry about their promotions and careers while passing judgments has clearly made the whole system very inefficient by flooding courts and building a big backlog of undecided tax cases. It was, as it turns out, not a very smart idea for the federal government to fiddle with the tribunals’ chain of command. Surely some sense and sensibility will return to this process once the apex court decides on it.
Copyright Business Recorder, 2021
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