Review plea against apex court verdict: SC rules on Section 45B(2) of ST Act provisos

ISLAMABAD: The Supreme Court by majority declared that first and second provisos to Section 45B(2) of the Act are directory provisions and do not deprive the taxpayer of his right to appeal or deny the tax department the right to adjudicate the matter on merits by virtue of lapse of the maximum statutory timeframe.

A two-member bench, comprising Justice Syed Mansoor Ali Shah and Justice Ayesha A Malik. Justice Syed Mansoor Ali Shah heard review petition against the apex court’s judgment dated 12-05-24, which held that first and second provisos to Section 45B(2) of the Sales Tax Act, 1990 are mandatory provisions and any order passed by the Commissioner (Appeals) under Section 45B(2) beyond the maximum period of 180 days is an “invalid decision.”

Justice Mansoor in his judgment partly allowed the petition and remanded the case to the Tribunal, where the appeal of the taxpayer shall be deemed to be pending, with the direction to the Tribunal to expeditiously decide the appeal on merits.

However, Justice Ayesha A Malik did not concur with the same, and allowed the petition in its entirety and remanded the matter on the ground that the period of adjournments sought by the taxpayer was not considered by the Tribunal.

Justice Syed Hasan Azhar Rizvi, therefore, was appointed as referee judge by the then Acting Chief Justice of Pakistan vide order dated 21.05.2024.

He was directed to give his opinion on the matter due to difference of opinion between a two-member bench of the apex court (Justice Mansoor and Justice Ayesha).

Justice Hassan subscribed to the view taken by Justice Mansoor that the first and second provisos to Section 45(B)(2) of the Act should be treated as directory provisions. “This interpretation effectively safeguards the tax-payer’s constitutional rights while promoting efficient and fair tax governance.

It serves the public interest by preventing procedural timelines from being used against tax-payers in a way that would compromise fairness and justice in the appellate system,” Justice Hassan further wrote in his opinion.

Justice Mansoor judgment also states; “It is the duty of the court to garner the real intent of the legislature as expressed in the law itself.”

The legislative intent can be drawn by consideration of the entire statute, its nature, its object and the consequences whether it will cause serious inconvenience or injustice to persons as a result of construing the provision in one way or the other.

The court must give the statute’s language a meaning that best realizes its purpose. With this understanding when we examine the relevant provisions of the Act.

The object, policy and purpose of original adjudication under the erstwhile Section 36(3) of the Act which requires that the order shall be made within a maximum statutory period of 180 days is to ensure that the show cause notice issued by the tax department is decided expeditiously so that tax recovery can be effected at the earliest and also the sword of alleged tax liability must not hang on the head of a taxpayer indefinitely. Therefore, if the tax department fails to decide the show cause notice within the maximum period provided under the law, the proceedings so initiated against a taxpayer come to an end.

It is for this reason that section 36(3) of the Act has already be declared to be a mandatory provision by this Court in Super Asia.

The object, policy and purpose of the first and second provisos to section 45(B)(2) of the Act is totally different as it deals with the appellate adjudication.

The said provision is invoked by a taxpayer by filing an appeal against the order-in-original. Appel-late adjudication, as opposed to original adjudication, takes a different focus, as it deals with the right to appeal of a taxpayer. Right to appeal of a taxpayer is a right that flows from the constitutional rights of access to justice and fair trial guaranteed to a taxpayer under articles 9 and 10-A of the Constitution of the Islamic Republic of Pakistan, 1973.

While the action of the tax department against a citizen can be regulated through a timeframe, it is not permissible to do so when the citizen has approached the tax department in an appeal. The fundamental rights of the citizen stand invoked and come to his rescue which is not so in the case of a tax department.

With these considerations in mind the statutory timeframe provided for the appellate adjudication under section 45(B)(2) can only be directory, and to conceive it otherwise, would cause injustice and irreparable harm to a taxpayer who is deprived of the right to appeal.

Copyright Business Recorder, 2024