The Prime Minister has been given discretion to prescribe rules to regulate the functioning of the benches and procedure of the Appellate Tribunal Inland Revenue under the Tax Laws (Second Amendment) Ordinance, 2019.
According to the Federal Board of Revenue (FBR), the section 130 of the Income Tax Ordinance, 2001 provides for the establishment of an Appellate Tribunal Inland Revenue.
In order to streamline the affairs of the Tribunal and to impart greater efficiency and transparency in the working of the Tribunal for ensuring maximum disposal of cases the constitution, functioning of benches and procedure of the Appellate Tribunal shall henceforth be regulated by rules which the Prime Minister may prescribe. The scope of qualifications for eligibility as a judicial member has also been enlarged, FBR added.
Some tax experts told Business Recorder that the amendment made through Tax Laws (Second Amendment) Ordinance, 2019 regarding Tax Tribunal has gone unnoticed by all the concerned through which full control has been given to the Prime Minister regarding appointment and functioning of the Tribunal.
Tax experts have cautioned that the unprecedented discretion given to the PM ought to be exercised reasonably for development of a positive tax culture in the country.
When contacted, Shahid Jami, a tax consultant, explained that prior to Finance Act, 2019 the power to appoint chairperson and judicial and accountant members was with the federal government and the same was exercised by the Federal Public Service Commission in respect of judicial members.
Similarly, the federal government was empowered to direct that all or any of the powers of the Appellate Tribunal shall be exercised by any one member or more members than one jointly or severally. Whereas, Appellate Tribunal had the power to regulate its own procedure, and procedure of the Benches of the Tribunal in all matters arising out of the discharge of its functions including the places at which the benches shall hold their sittings.
Chairperson of the Tribunal was authorized to constitute as many benches consisting of a Single Member as he may deem necessary to hear such cases or class of cases as the Federal Government may by order in writing specify.
However, through Finance Act, 2019 the power to appoint chairman, judicial and accountant members was given to the Prime Minister in the manner as the Prime Minister may prescribe by the rules. This provision has been further amended through the Ordinance providing that the rules made by the Prime Minister shall have effect notwithstanding anything contained in the taxing statutes or any other law or rules for the time being in force.
The Ordinance further provides that the constitution, functioning of the benches and procedure of the Appellate Tribunal shall be regulated by rules which the Prime Minister may prescribe. Jami explained that the most unusual amendment is that for appointment of judicial member, the earlier condition of minimum age of 45 years of an advocate of high court has been dispensed with and instead standing of not less than ten years as advocate of high court has been prescribed.
Jami pointed out that now advocates of high court having ten years of standing but having age of less than 35 years would be eligible for appointment as judicial member because most of the practicing lawyers become advocate of high court when they are still around 25 years of age.
For appointment as judge of the high court, under the Constitution the minimum age is 45 years and at least 10 years standing as an advocate of high court. Earlier, the same criterion of age and experience was applicable to the judicial members of the tax tribunal.
He opined that it appears that the relaxation in age has not been given in good faith and inexperienced and immature persons are likely to be appointed as judicial members by using good offices of the Prime Minister and bypassing the Federal Public Service Commission.
He stressed that since the rules by the Prime Minister are still to be made therefore it is imperative that the appointments are made transparent and recommendation of the chief justice of the respective high courts is taken into consideration as they have more insight about the practicing advocates specializing in tax matters.
As a good beginning the Prime Minister should persuade leading tax lawyers of the country like Dr Ikram ul Haq, Shahbaz Butt and Abid Shaban to accept the responsibly in the best interest of the country, suggested Shahid Jami.
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