ISLAMABAD: The Supreme Court noted that Section 223 of the Customs Act, 1969, confers a broad and general power, of an administrative and executive nature, on the Federal Board of Revenue (FBR) to supervise, control, and guide the tax authorities in the discharge of their duties and functions under the tax laws.
A three-judge bench headed by Chief Justice Umar Ata Bandial and comprising Justice Syed Mansoor Ali Shah and Justice Munib Akhtar decided the appeals against the separate verdicts of the Balochistan High Court.
The judgment said that SRO 574 cannot be regarded as ultra vires Section 223 of the Act. Justice Mansoor; however, wrote a separate note.
The SC judgment authored by Justice Munib Akhtar; however, said some of those powers and duties are of a quasi-judicial nature such as, e.g., those conferred on officers holding an appellate post (Collector (Appeals)) or exercising powers in revision. “It would obviously be wrong in principle (and contrary to the well-established jurisprudence of this Court and the High Courts) for the FBR to be in a position to influence or affect the proceedings of such authorities. Hence, the proviso. It is not to be regarded as a standalone provision; it makes sense only when read along with the main part of Section 223.
The power exercised by the FBR in terms of the provisos to Section 181 is not an exercise of the general statutory power conferred by Section 223. A notification (SRO 574) issued under Section 181 is not some general administrative or executive order, instruction or direction given by the FBR. It is rather the exercise of a specific and separate statutory power conferred under a different provision for a distinct purpose.
The appeals of Haji Tooti and Muhammad Usman under the Customs Act, 1969, raised the same questions of law, and also the facts.
The truck of the first appellant was confiscated on the ground that it was carrying smuggled goods, while the second appellant operated a coach that was confiscated on the same ground. The charge of smuggling stands established in each case.
The case of each appellant was that his conveyance was merely transporting goods (and/ or passengers), with which the appellant had no concern whatsoever. Each appellant was given the option of their release on payment of a redemption fine under Section 181 of the Act.
The FBR in exercise of the powers granted under the two provisos of Section 181 issued a notification (SRO 574(I)/2005 dated 06.06.2005), whereby, the redemption fine for release of conveyances confiscated in circumstances as those of the appellants’ was 30 per cent.
The first appellant filed a petition in the High Court challenging SRO 574 as being ultra vires the Act. The High Court dismissed the petition. The second appellant approached by Appellate Tribunal, which decided in favour of the second appellant, but allowed the tax reference, filed by the department.
The counsel for the appellants had argued that SRO 574 was ultra vires Section 223 of the Act. This was so because it unlawfully interfered with the discretion granted by the main part of Section 181 to the concerned officer to “give the owner of the goods, an option to pay in lieu of the confiscation of the goods such fine as the officer thinks fit”.
The second proviso made the notification (SRO 574) issued by the FBR binding thereby, wholly depriving the officer of the discretion conferred on him.
This, according to counsel, could not be done by the FBR by reason of Section 223 of the Act.
The SC judgment said that the appeals must fail for three reasons; First, that the order made by the concerned officer under Section 181 is not in the exercise of quasi-judicial functions. It is in the exercise of a statutory power and is in the nature of an administrative or executive order.
Second, if the submissions made by the learned counsel are accepted that would in effect reduce the second proviso of S. 181 to redundancy. This would be so because any exercise of the statutory power thereby conferred would “interfere” with the power conferred on the officer of customs under the main part.
Third, Section 223 is not exclusive to the Act; it is to be found in all fiscal statutes, cast in nearly identical terms. It confers a broad and general power, of an administrative and executive nature, on the FBR (in its capacity as the body at apex of the fiscal hierarchy) to supervise, control and guide the tax authorities in the discharge of their duties and functions under the tax laws.
Copyright Business Recorder, 2023
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