The Federal Board of Revenue (FBR) is allegedly interfering in the quasi-judicial functions of Commissioners of Appeal Inland Revenue. A report published in an English daily, not this newspaper, on September 28, 2021 says: “The Commissioners of Appeals will also have to justify and give reasons about “number of orders where substantial (tax) amount is deleted along with reasons for deletion and overall quality of orders-in-original by the office of Inland Revenue officer”. The report, if correct, shows blatant violation on the part of FBR. It may be noted that in the presence of binding judgements of the Supreme Court that no interference should be made in the affairs of tax appellate authorities can lead to serious consequences for those who issue the same.
The most undesirable aspect of the saga is that FBR wants to show higher collection from demands created in billions (report says Rs 3 trillion). The Commissioners of Appeal are now, as per report, being asked to “give reasons about number of orders where substantial (tax) amount is deleted along with reasons for deletion.” In other words, they are being intimidated for giving relief where due. The report further claims: “The directions came after a sharp increase in tax assessment orders by the FBR against taxpayers and according to legal experts many of these orders lacked judicial grounds. FBR spokesman Dr Asad Tahir Jappa did not respond to questions about the legal base for making commissioners appeals subordinate of a Chief Commissioner”.
Interestingly, when a query was sent to Chairman FBR, Official Spokesperson and Member Legal IRS for veracity of above, it was dubbed as “incorrect” by head of Commissioners Appeals. According to him: “No instructions were issued to CIR Appeals to report performance to field formations. Reasons for deletion are recorded in the Appellate Order. FBR doesn’t interfere with judicial functions of CIR Appeals. Legal Wing looks at the administrative matters. The writer of the story before writing should have at least obtained first hand info from some CIR Appeals Office”. The scribe of the story clearly mentioned that official spokesperson opted not to respond. He filed a story after “due diligence” and produced purported evidence. It is up to FBR to refute it.
The crux of the matter is that appellate authorities, as a matter of law and principle, should be independent in the true sense of the word. The honourable Supreme Court of Pakistan has elaborated this principle in Government of Baluchistan v Azizullah Memon PLD 1993 SC 31 by holding that “separation of judiciary from executive is the cornerstone of independence of judiciary”. The right of access to justice to all is a well-recognized inviolable right enshrined in the Constitution of Islamic Republic of Pakistan [“the Constitution”]. This right requires that every citizen should be treated according to law. All citizens have the right to have a fair and proper trial and right to have an impartial court or tribunal.—PLD 1982 SC 146.
Instead of making the Commissioner of Appeals independent, the government has further strangled the tax appellate system even up to the level of Tribunal. It is open mockery of justice and blatant violation of Articles 4, 10A and 189 of the Constitution as highlighted in Subverting Tax Tribunals, Business Recorder, January 24, 2020.
It is a matter of record that office of Member Legal interfered with the independence of the first appellate forum. It was reported in ‘Commissioners (Appeals): FBR withdraws instructions, Business Recorder, February 27, 2021. It asked the Commissioners (Appeals) “to use powers of inquiry under fiscal laws (income tax, sales tax, and the FED) to avoid unnecessary annulment with directions”. Later it was withdrawn on pressure from tax bars. The above confirmed that Member Legal had in the past interfered in the quasi-judicial functions of his subordinate officers and his claim of only issuing administrative instructions is not correct. The matter is that of rule of law so no one in FBR, even the member Legal, should call meetings of Commissioners of Appeals to discuss their judicial functions. Any Commissioner of Inland Revenue, if dissatisfied, can file an appeal against the order of any Commissioner of Appeals, as do the taxpayers.
The root of the problem is independence of tax appellate system. By keeping Commissioner/Collector Appeals under administrative control of FBR, the government is violating Article 189 of the Constitution as elaborated by the Supreme Court in Shahid Pervaiz v Ejaz Ahmad and others 2017 SCMR 206 [page 254, para 105] as under:
“Under Article 189, this Court is the court of last resort and laws declared or principles enunciated by it are binding on all the subordinate courts and authorities in Pakistan as reflected in Farhat Azeem v. Waheed Rasul (PLD 2000 SC 18). We have also held that the decisions of this Court laying down the proposition in law are laws binding on all, regardless whether they were party to the proceedings or not M/s Star Diamond Company v. Union of India (PTCL 1988 FC 229). It has also been held by us that even a decision of Supreme Court for which no reasons are given would be binding upon the Courts in the Country Sardar Ali v. Conservator of forests (1987 PLC (C.S).”
The non-implementation of dictum laid down in the Government of Baluchistan v Azizullah Memon that “separation of judiciary from executive is the cornerstone of independence of judiciary” attracts contempt of court proceedings. It is great tragedy that none of the governments in Pakistan, military or civilian, has ever followed the directions of the honourable apex court cited supra. In the given Pakistani political milieu, it is imperative that all the judicial and quasi-judicial authorities working in tax appellate system should be regulated and supervised by the High Court under whose territorial jurisdiction they work. This is the only way to ensure independence of judiciary in its true substance and as per constitutional requirement [Article 203].
It is time that Supreme Court takes stern action for implementing its order of separation of judiciary from the executive. The request for suo muto action under Article 184(3) by Federation of Pakistan Chambers of Commerce & Industry for implementation of the Government of Baluchistan v Azizullah Memon PLD 1993 SC 31 is already pending with the august apex court.
The All Pakistan Tax Bar Association should also move a petition under Article 184(3). It is its duty being apex body to safeguard the constitutional rights of all citizens, especially the law-abiding taxpayers who are being unnecessarily harassed by tax officials for their own vested interests.
(The writers, lawyers and partners of Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences (LUMS), members Advisory Board and Visiting Senior Fellows of Pakistan Institute of Development Economics (PIDE))
Copyright Business Recorder, 2021
The writer is a lawyer and author of many books, and Adjunct Faculty at Lahore University of management Sciences (LUMS) as well as member of Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE). He can be reached at [email protected]
The writer is a lawyer and author of many books, and Adjunct Faculty at Lahore University of management Sciences (LUMS), member of Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE). She can be reached at [email protected]
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