Appointment Rules of 2020: LHC declares appointment of chairman, members ATIR illegal

ISLAMABAD: The Lahore High Court (LHC) declared the appointment of members and chairman Appellate Tribunal, Inland Revenue (ATIR) under the Appointment Rules of 2020, illegal and without lawful authority; however, to save the continuity in the system allowed them to continue their service till the appointment of regular incumbents, under the Rules.

The judgment authored by Justice Shahid Jamil Khan stated that after the statement from the Attorney General’s Office, read with the law laid down in Mustafa Impex Case, further interpretation is not required to hold that the words “Prime Minister” as used in the existing subsection (2) of Section 130 of the Ordinance of 2001 shall be read as “Federal Government” from the date when this provision was brought in the statute book.

It stated that the Appointment Rules of 2020 were not approved by the Federal Cabinet and, therefore, are declared ultra vires to the Constitution and provisions of Section 130(2), as read down.

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The judgment said; “Though the appointments, under the Appointment Rules of 2020 are also illegal and without lawful authority; however, to save the continuity in system, the de facto doctrine is invoked to direct that the Members and Chairman appointed under the Appointment Rules of 2020 are allowed to continue their service, till the appointment of regular incumbents, under the Rules, to be framed and promulgated by the Federal Government, in consonance with the law, as laid down in Mustafa Impex Case.

The Rules shall be framed within thirty (30) days from the date of judgment and process of recruitment shall be completed within forty-five (45) days thereafter.“

The additional attorney general gave an undertaking to the Court that fresh Rules under the law ensuring transparency, competition and security of tenure shall be framed within thirty (30) days. “It is; however, observed that the existing Members (Judicial), appointed under the Appointment Rules of 2020 being declared ultra vires, if succeeded, through a competitive process, may be given benefit of their length of service.”

“Needless to say that the Chairman shall also be appointed under the Rules to be framed in accordance with law, soon after the Rules are notified,” the court order said.

The court questioned the constitutional validity of delegating powers to the Prime Minister, to frame Rules for the appointment of Members and Chairman of ATIR and appointments on contract against sanctioned posts, that too in violation of judgment Sh Riazul Haq and another v. Federation Lahore Tax Bar Association Vs. Federation of Pakistan, through Ministry of Law and others (PLD 2013 SC 501).

The petitioner, Lahore Tax Bar Association, had assailed appointment of Chairman, Appellate Tribunal, Inland Revenue (ATIR) along with vires of existing Section 130 of the Income Tax Ordinance, 2001, which is substituted through Tax Laws Amendment Act, 2020, earlier the same amendment was made by Tax Laws (Second Amendment) Ordinance, 2019. Appellate Tribunal Inland Revenue (Appointment of Chairperson and Members) Rules, 2020 inserted through SRO 1405(I)/2020 dated 29th December 2020 (‘Appointment Rules of 2020’) were also assailed.

It is important to sensitise the framers of future Rules for appointments of Members and Chairman in ATIR that the country is going through its worst economic condition. The only way out is economic stability and consequential tax collection. The economic stability cannot be achieved without certainty in decisions on tax and economic matters by judicial and quasi-judicial authorities.

The investment has no nationality, therefore, migrates, like seasonal birds, to a place where conditions are conducive and certain for their survival and growth. Tax Tribunals are last fact-finding independent forum, which must pass prompt and consistent orders, in accordance with the law laid down by Superior Courts. The whole exercise of tax assessment and tax collection in Billions of Rupees, drains, when decision is passed by Members of the Tribunals incompetently or for extraneous consideration.

To bring certainty in judicial decisions on commercial and taxation matters, the relevant Tribunals and Courts should be the nurseries for picking up, on merits, the Judges for Constitutional Courts. For achieving this goal, the Constitutional Courts should have an overarching or supervisory role, in the appointments of Members and Judges of the Commercial Courts and Tribunals.

The Constitutional Courts can always gauge the competence of a member or a judge, when decisions are brought before them in Appellate or Reference Jurisdiction, to elevate from them for Constitutional Courts, based on competence and integrity. Unfortunately, these posts are being filled on political basis, by considering the allegiance, to a political party or a group of lawyers, as eligibility criteria.

The judgment said there is no denial that the posts of members and chairman of ATIR are in connection with the affairs of the Federation, therefore, under Article 240 of the Constitution, appointments to the posts and the conditions of service should be or under the Act of Parliament.

Copyright Business Recorder, 2023