Enactment of Tax Laws (Amendment) Act, 2024: ATIR members raise serious questions over benches’ legitimacy

ISLAMABAD: Judicial members of the Appellate Tribunal (Inland Revenue) have apprehended that Tax Laws (Amendment) Act, 2024 has made all existing ATIR benches ineffective from May 3, 2024.

In this regard, two members of the ATIR have approached chairman Appellate Tribunal (Inland Revenue) on the issue of constitution of benches and distribution of cases.

The members of the Appellate Tribunal (Inland Revenue) have raised serious questions over the legality and working of the benches of the ATIR after enactment of the Tax Laws (Amendment) Act, 2024.

The ATIR bench wanted to highlight a significant matter concerning the constitution of benches within the Tribunal and the allocation of cases among these benches, particularly in light of recent legislative amendments to the Income Tax Ordinance, 2001 (“the Ordinance”) through the enactment of the Tax Laws (Amendment) Act, 2024, effective from May 3, 2024. With the substitution of section 130 in the Ordinance, it has become imperative to address the legal issues enumerated below to avoid unnecessary litigation among the concerned parties.

(i); The newly substituted section 130 in the Ordinance confers legislative powers to the federal government to establish rules governing the procedures of the Appellate Tribunal Inland Revenue (ATIR), including the formation of benches, case management systems, and related matters.

(ii); Consequently, the previously existing ATIR (Functions) Rules, 2023, are now considered impliedly repealed. Although section 24 of the General ClausesAct, 1897, typically allows for the continuation of existing rules, notifications, and orders unless they conflict with newly substituted provisions, the transfer of rule-making authority from the prime minister to the federal government renders the previous rules ineffective. This is evident in the inconsistency between the old rules and the newly substituted provisions of Section 130(6) ofthe Ordinance, 2001.

(iii); Importantly, the newly substituted provisions of section 130 do not includeprovisions for preserving the existing ATIR (Functions) Rules, 2023 in theform of a saving clause. Consequently, starting from May 3, 2024, all existing benches will be deemed ineffective.

Failure to promptly address this issue through the intervention of the Law Ministry or Legislative Authority may lead to legal complications, resulting in orders and judgments of the Tribunal being deemed void ab initio and lacking jurisdiction.

Such an outcome would not only disadvantage litigants but also have adverse implications for the national exchequer.

Therefore, members urged the chairman ATIR to expedite consultations with the Law Ministry to address this matter at the earliest opportunity.

Meanwhile, we are continuing the bench you have recently constituted vide letter dated 09.05.2024 under ATIR (Function) Rules, 2023, Members of the ATIR added.

Copyright Business Recorder, 2024