Plea challenging Tax Laws (Amendment) Act: LHC issues notices to ministry of law, FBR & AGP

ISLAMABAD: The Lahore High Court (LHC) has issued notices to the Ministry of Law and Justice, the Federal Board of Revenue (FBR) and the Attorney General for Pakistan (AGP) in a writ petition filed by Pakistan Tax Advisories Association, challenging the newly enacted Tax Laws (Amendment) Act, 2024.

Pakistan Tax Advisories Association has challenged the vires of the newly-enacted Act by filing writ petition No3391/2024 in LHC.

The petition was fixed before Justice Raheel Kamran who has admitted the same and issued notices to the respondents and also issued notice to the AGP.

Tax Laws Amendment Act has a retrospective effect, rules ATIR Islamabad

In this writ petition, Pakistan Tax Advisories Association has challenged the vires of all the amendments made in the Act.

This attempt has been made by the Executive Committee of the Pakistan Tax Advisors Association in the best interest of taxpayers.

The case was argued by Naveed Andrabi and Javed Iqbal Qazi advocates of the Supreme Court of Pakistan on behalf of taxpayers.

According to the petitioners, the changes made in the law by the Act of 2024 have raised serious questions regarding transparency and fairness in the process.

In their conspicuous haste, the government may have violated mandatory provisions under the Rules of Procedure and Conduct of Business in the National Assembly 2007. The bill, as it is appearing in the “Order of the Day” dated 24th April 2024, was defective, for the absence of the Notice of the Bill, as required of the Sales Tax Act 1990 and Section 34A of the Federal Excise Act 2005.

Through amendments embedded in Sections 131, 132 and 133 of the Income Tax Ordinance 2001, time frames for Appellate Tribunal Inland Revenue and High Court have been shortened. Also, the powers to grant stays have been amended by changing the time period for which these two forums can grant a stay of proceedings.

Besides the amendments introduced by the present law regarding time frames, two points are very noteworthy here:

a. If an appeal is not decided within the period of 90 days, the Appellate Tribunal Inland Revenue is required to seek condonation from the Minister of Law and Justice and such condonation shall not be extended beyond 90 days.

b. The High Court may stay the recovery of tax up to six months but “subject to deposit with the assessing authority of not less than 30 percent of the tax determined by the Appellate Tribunal.

Besides, enhancing the court fees as high as 50,000 for High Court is also an unjustified and harsh requirement, for those cases having smaller liabilities would not prefer to seek a remedy from the High Court. Also, the condition that no adjournment should be granted by the Tribunal unless there is a mandatory payment of costs (not less than 50,000 rupees), as stipulated by the Act of 2024 under Section 132(3)(b) of the Income Tax Ordinance 2001, is an unreasonable measure that may cause problems for the taxpayers when seeking reasonable and justified adjournments.

The petitioner said the Tax Laws (Amendment) Act, 2024, is ultra vires to the Constitution as it does not follow the procedure warranted by Rule 120 and 122 of the Rules of Procedure and Conduct of Business in the National Assembly, 2007.

The procedure proposed by the Tax Laws (Amendment) Act, 2024, for the appointment of members is unfair and in violation of the Constitutional mandates under Articles 240 and 242, read with Article 27 of the Constitution of 1973, for it does not bring into account the appointment of members based on the Federal Public Service Commission Act, thereby, creating opportunities for malfeasance, and undermining transparency and merit.

Copyright Business Recorder, 2024