ISLAMABAD: The Islamabad High Court (IHC) has ruled that the President of Pakistan has misapplied the law to set-aside the order of the Federal Tax Ombudsman (FTO), who has jurisdiction to recommend criminal/ disciplinary proceedings against the Federal Board of Revenue’s (FBR) officials.
The LHC recently issued a judgment against the order of the President which had set-aside the findings/ recommendations of the Federal Tax Ombudsman (FTO) in 2017.
In his judgment, IHC Justice Babar Sattar set aside President’s order which was issued in the past in favour of the Federal Board of Revenue (FBR). The President order was challenged by a Lahore-based taxpayer Masud Reza through tax lawyer Waheed Shahzad Butt before IHC, wherein LHC set aside President Order and ruled that FTO has jurisdiction to recommend criminal or disciplinary proceedings against FBR officials.
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Petitioners’ counsel Advocate Waheed Shahzad Butt argued before the IHC that the assessing officer attached the petitioner’s bank accounts under section 140 of the Income Tax Ordinance 2001 without serving any tax demand under the assessment order.
The grievance of the petition emanated from the refusal of the tax department to abide by the stay order. The petitioner then filed a complaint before the FTO on the basis that officials of FBR who disregarded the stay order were liable for maladministration in terms of FTO Ordinance, 2000, who concluded that failure to implement a stay order was tantamount to maladministration under Section 2(3) (i) (b) of the FTO Ordinance.
IHC order states: “The finding of the FTO was that the failure or refusal of the relevant tax officials to honour and implement the stay order was perverse, arbitrary, unjust and oppressive. And such conduct fell within the definition of maladministration under Section 2(3) (i)(b) of the FTO Ordinance.
After reaching such conclusion, the learned FTO issued recommendations to the Chief Commissioner to take suitable action against the officials responsible for failure to comply with the order of the Commissioner Appeals. Such recommendations fell within the powers vested in the learned FTO under Section 14 (6) of the FTO Ordinance.
If FBR were to contend that Commissioner could feign ignorance to orders of Commissioner (Appeals), it would in effect be writing a charge sheet against itself, as that would be admission of its own malfeasance under the FBR Act, 2007. If such were the case, it would have been an additional ground of maladministration on the part of FBR and its officials as it cannot be countenanced that one arm of the FBR can claim ignorance in relation to the orders issued by another arm of the FBR.
The Commissioner Appeals falls within the hierarchy of FBR and it is not for the taxpayer to demonstrate effecting notice of orders passed by the Commissioner Appeals on the relevant officials within the hierarchy of the Commissioner Inland Revenue to seek the enforcement of such order.
It is the duty of FBR to ensure that taxpayers are treated justly and fairly during the adjudication process. And it is not for FBR to deny knowledge or dodge service of any orders issued by the Commissioner Appeals and thereby deny any benefits of a stay order.
Consequently, the denial of knowledge is without merits and would constitute an independent ground for FBR, under the relevant provisions of the FBR Act, 2007, to initiate an inquiry and take disciplinary action against officials who claimed that they were unaware of the stay order.
It appears that while hearing the representation against the order of the FTO, the President misapplied himself to the relevant facts & law and consequently passed an order setting aside the order of the FTO in a manner that is not sustainable in the eyes of law. The decision of the President of Pakistan is set-aside for not being in accordance with law, IHC order added.
Copyright Business Recorder, 2023
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