ISLAMABAD: The Lahore and Sindh High Courts have issued different judgments on the issue of the Income Support Levy (ISL).

According to the tax experts, the SHC decision announced in the case of Yaqoob Ahmed and 575 other petitioners in CPD-3757/2013, etc that ISL Act is ultra vires the Constitution; while earlier LHC declared it as intra vires Constitution vide order of April-May 2019 in WP 14509-2019, etc in case of Syed Tayyab Hussain Rizvi, etc.

When contacted, Asif Kasbati, a senior tax expert and ICAP Fiscal Law Committee Member, said the SHC interim order which had granted an interim relief to the petitioners as well as to the other taxpayers.

The orders permitted the taxpayers to file their income tax returns for the Tax Year 2013 without filing the computation; payment form and without making payment of ISL.

After discussing the matter threadbare in 50 pages, SHC declared the ISL case in favour of the petitioners, and against the department on the 3 grounds: (a) ISL law was passed along with money bill, it does not possess the character of a tax; and it is a levy in the nature of fund to be charged and utilised for a specific purpose i.e. "to provide for financial resources for raising an income support fund for the economically distressed persons and their families" hence, ultra vires as per Article 73 of the Constitution; (b) for being discriminatory, as it creates unreasonable classification within the same class of persons, i.e., persons having Net Moveable Wealth exceeding Rs1m, whereas, its incidence and charge of levy falls unequally upon the existing taxpayers only, hence against Article 25 of the Constitution; and (c) all the

notices and the proceedings, including assessment order(s) passed under Section 5 of the ISL Act after repeal of the ISL Act, 2013, hence, declared without jurisdiction and lawful authority.

He added that the LHC vide order of April-May 2019 in WP 14506-2019, in the case of Syed Tayyab Hussain Rizvi, etc., dismissed all the petitions (in favour of FBR).

The petitions were filed by various taxpayers against demand notices issued for recovering the Income Support

Levy (ISL) along with surcharge; thereon, holding that "Irrespective of repeal of Act, 2013, the liability to pay the levy subsists and the Officer of Inland Revenue - officer(s) who had issued impugned notices - has the jurisdiction to issue notices, assess payment of levy in accordance with the rate prescribed and collect the same accordingly.

Kasbati summarised three issues, which, according to him, surfaced in the course of submissions and covered adjudication by LHC viz (a) Since the ISL Act 2013 (Act) has been repealed through the Finance Act 2014, without a saving clause, therefore, whether any levy can be claimed, charged or collected on the basis of the Act, which allegedly stood obliterated/abrogated completely, from the date of its promulgation? LHC repelled the argument of petitioners that right accrued in terms of Section 3 of the Act, 2013 stood obliterated/abrogated upon repeal, holding that in the absence of any contrary intention in the repealing act, irrespective of saving clause, Section 6 of General Clauses Act (GCA) would protect the rights and liabilities accrued, precisely in terms of clause(c) of Section 6 of GCA.

There is nothing to indicate in the repealing act that Section 6 of GCA would not apply.

Irrespective of the assent by the president regarding the Finance Act 2014 (repealing Act 2013) on 25th June 2014, Section 10, would, for all intent and purposes, became effective from the first day of July, 2014, which established that the liability accrued on 30th day of June 2013, stood protected and created a vested right in favour of the department.

The position in fact reinforced the intention regarding applicability of Section 6 of the GCA.

(b) whether the officer(s) issuing demand notice has the requisite jurisdiction, authority and power to issue notices, claim recovery, undertake assessment, if and where required, in absence of any delegation or of such powers and functions under the provisions of the Ordinance of 2001? LHC held that the objections regarding recovering the levy by the officers of Inland Revenue - notice issuing officers - is devoid of any force.

The liability of the petitioner(s) cannot otherwise be defeated merely in case of any deficiency in the process of recovery of tax liability, if any at all is there.

(c) whether the petition under reference is incompetent in the wake of alternate remedies available? LHC repelled the objection regarding maintainability of the petition.

Several aggrieved petitioners (taxpayer) have filed petition in Supreme Court against LHC order WP 14506-2019, etc., and the Federation, etc is likely to file petition against the recent SHC order announced on 2.7.2020. Hence, the issue is yet to be decided by the Apex Court, Asif Kasbati added.

Copyright Business Recorder, 2020