Lahore High Court (LHC) has issued notices to the federation in a petition challenging validation clauses inducted in fiscal laws to validate all previous notifications (SROs) issued during Prime Minister Nawaz Sharif's regime and powers obtained by Federal Board of Revenue (FBR) to issue any SRO with the approval of minister-in-charge in the Customs Act, 1969, the Sales Tax Act, 1990, Income Tax Ordinance, 2001 and the Federal Excise Act, 2005.
It was leant that the LHC issued notices to the federation of Pakistan through secretary Revenue Division, Ministry of Law through secretary law, and Attorney General for Pakistan in a petition filed by a lawyer Waheed Shahzad Butt, who has challenged the validation clauses inducted in fiscal laws to validate all previous notifications (SROs) issued in Prime Minister Nawaz Sharif's regime and powers obtained by the FBR to issue any SRO with the approval of minister-in-charge in Customs Act, 1969, Sales Tax Act, 1990, Income Tax Ordinance, 2001 and Federal Excise Act, 2005.
Sources told that petition was argued by a well-known international tax lawyer Dr Ikramul Haq before a single bench of the LHC comprising Justice Ayesha Malik, who conducted hearing of petition and issued notices to the aforementioned respondents (secretary Revenue Division, Ministry of Law and attorney general for Pakistan) and directed them to submit their report and para-wise comments.
The petitioner stated that he questions the constitutionality of insertion of validation clauses in various tax codes and powers given to the FBR to levy and vary tax rates through any notification with the approval of minister-in-charge. Finance Act, 2017 has inserted the provisions in various tax codes, Section 221A of Customs Act, 1969, Section 74A of Sales Tax Act, 1990, Section 241 of Income Tax Ordinance, 2001 and Section 47C of Federal Excise Act, 2005. The Finance Act also has provided powers to the FBR to issue any notification, known as statutory regulatory order [SRO], with the approval of minister-in-charge in Customs Act, 1969, Sales Tax Act, 1990, Income Tax Ordinance, 2001 and Federal Excise Act, 2005.
Above provisions are in utter violation of Articles 77 and 162 of the Constitution and are meant to nullify the judgements of the Supreme Court in (2016) 114 Tax 241 (SC) and 2013 SCMR 1337. Insertion of validation clauses without amending the Constitution is void ab initio and in utter violation of Articles 4, 8, 18, 25, 77, 162 and 189 of the Constitution. The subordinate legislation ie amendment in various tax codes cannot alter the principles laid down in the Constitution. The principle of "no taxation without representation", embodied in Article 77 read with Article 162 of the Constitution, has perpetually and flagrantly been violated. In the Finance Act 2017, the power is unlawfully delegated to the FBR with the approval of the minister in-charge. It is well settled proposition that levy of tax for the purpose of federation is not permissible except by or under the authority of an Act of Majlis-e-Shoora (Parliament), the petitioner stated.
The LHC ordered, "Learned counsel stated that the amendment provided through Finance Act, 2017 is essentially to defeat the spirit and law laid down in the cases cited at (2016) 114 TAX 241 (S.C. Pak) and 2013 SCMR 1337. Learned counsel stated that by virtue of the said amendment, the requirements of law and Constitution cannot be bypassed. Issue notices to the respondents to file report and para-wise comments on or before the said date. A notice shall also be issued to the Attorney General for Pakistan," the LHC order added.