Muzzling Unfettered Right To Justice

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The Tax Laws (Amendment) Act, 2024, passed by the National Assembly of Pakistan on April 29, 2024 and received the assent of the President of Pakistan on May 3, 2024, contains some highly lamentable—rather unconstitutional amendments. These are made in the Income Tax Ordinance, 2001, Sales Tax Act, 1990 and Federal Excise Act, 2005, in respect of availing unfettered right of appeal, which is bridled with heavy fee. Besides keeping the Appellate Tribunal Inland Revenue (Tax Tribunal) under the administrative control of the Ministry of Law & Justice, in utter violation of binding judgements of Supreme Court of Pakistan in terms of Article 189 of the Constitution of Islamic Republic of Pakistan [“the Constitution”] that all judicial/quasi-judicial organs and appellate authorities, as a matter of principle and in consonance with the Constitution, should be totally separated from the Executive to ensure their independence in the true sense of the word

The right to unfettered justice is a constitutional guarantee for every citizen of Pakistan, which even the Parliament cannot curtail. The Tax Laws (Amendment) Act, 2024, prepared by a team of Federal Board of Revenue (FBR), vetted by the Ministry of Law (MoL&J), approved by the Cabinet, and finally adopted as a law by the National Assembly, exposes their level of competence in understanding the Constitution

The condition of heavy appeal/reference fee and payment of 30 percent of disputed demand to avail stay at High Court level amounts to curtailment of fundamental right of citizens. The pecuniary limits of hearing appeals at the levels of Commissioners of Appeals and Tax Tribunal would be extensively abused to collect tax through capricious orders creating exorbitant demands

It proves that the Government of Pakistan Muslim League (Nawaz)—PML(N)—like its predecessors, has no respect for the supreme law of the land (the Constitution) and judgements of the superior courts; violating Article 189 and Article 201 of the Constitution. In Mehram Ali and Others v. Federation of Pakistan and others PLD 1998 SC 1445, the Supreme Court held:

That the right of ‘access to justice to all’ is a fundamental right, which right cannot be exercised in the absence of an independent judiciary providing impartial, fair and just adjudicatory framework i.e. judicial hierarchy.  The Courts/Tribunals which are manned and run by executive authorities without being under the control and supervision of the High Court in terms of Article 203 of the Constitution can hardly meet the mandatory requirement of the Constitution”.

It needs to be reminded to all that in the wake of the Constitution (Eighteenth Amendment) Act, 2010 [“18th Amendment”] right of fair trial is guaranteed under Article 10A of the Constitution. This fundamental right should be given the widest possible amplitude so as to cover the well-established principle that all judicial/quasi-judicial organs and appellate authorities as a matter of principle and in consonance with the Constitution should be totally separated from the Executive to ensure their independence in the true sense of the word. 

On thes issue of independence of Tax Tribunal from Executive, many articles, written by this scribe, include,Draft law on National Tax Tribunal’, Business Recorder, November 3 & 4, 2017, Platinum jubilee of Tax Tribunal, Business Recorder, January 22, 2016, Revamping tax justice system, Business Recorder, December 19 & 20, 2014,  Recuperate tax justice system, Business Recorder, November 29, 2013, Hoodwinking Dar, Business Recorder, August 23 & 24, 2013 and Tax Appellate System: Need for paradigm shift, Business Recorder, June 2, 2009. 

Unfortunately, our legislators (sic) while passing the faulty Tax Laws (Amendment) Act, 2024 ignored the clear commands of supreme law of the land—the Constitution. Obviously, now the matter will go to high court by way of writ petitions under Article 199 of the Constitution and finally to the Supreme Court of Pakistan, being the final custodian of protecting the fundamental rights of the citizens. 

There is still time for the Attorney General of Pakistan to advise the government to table an amending Bill to remove/amend the following provisions contained in Tax Laws (Amendment) Act, 2024 as these are patently against the fundamental rights enshrined in the supreme law of the land.    

  • Sub-section (2) of substituted section 130 of the Income Tax Ordinance, 2001 reads: “The Appellate Tribunal shall consist of members who shall be appointed by the Federal Government in such numbers, in accordance with such procedure and on such terms and conditions as the Federal Government may prescribe by rules, which shall be made and take effect notwithstanding anything contained in section 237 of this Ordinance or the Federal Public Service Commission Ordinance, 1977 (XLV of 1977) or any other law or rules, for the time being in force”.

The right of appointment of members to the Tax Tribunal by the Federal Government is unconstitutional. It is also against the command of the Supreme Court of Pakistan that no appellate forum should work under the administrative control of the Executive that is MoL&J. This principle was laid down by the Supreme Court of Pakistan in Government of Balochistan v Azizullah Memon PLD 1993 SC 31 that separation of judiciary from executive is the cornerstone of independence of judiciary”. It is shocking to see how this clear command under Article 189 of the Constitution was ignored by the Ministry of Law and Attorney General of Pakistan, who also briefed the legislators on the importance of this amendment. It is a very serious matter and the Supreme Court should take note of violation of its own order, binding under Article 189 of the Constitution

  • Subsection (3) of substituted section 131 of the Income Tax Ordinance, 2001 says: “The prescribed fee shall be twenty thousand rupees in case of a company and five thousand rupees in case other than a company’. In the same manner, subsection (10) and (12) of the substituted section 133 (relating to reference before the High Court) reads as under: 

“(10) On an application filed in a particular reference and after affording an opportunity of being heard to the Commissioner, the High Court may stay recovery of tax, subject to deposit with the assessing authority of not less than thirty percent of the tax determined by the Appellate Tribunal. Where recovery of tax has been stayed by the High Court by an order, such order shall cease to have effect on the expiration of a period of six months following the day on which it was made unless the reference is decided or such order is withdrawn by the High Court earlier.

“(12) An application under sub-section (1) shall be accompanied by a fee of fifty thousand rupees”. 

The enormous enhancement in the quantum of fees for filing appeals/references and compulsory payment of 30 percent of disputed demand for stay by High Court are unconstitutional, amounting to denying the fundamental right of free and unfettered access to justice! It is a well-established fact that mostly harsh, arbitrary, illegal and excessive orders are passed to show “performance” and/or “collection” (sic) by adjudicating officers that ultimately are quashed in Tribunal or by higher courts—only those sustains that are legal and based on reasons and evidence. However, at the level of Commissioner of Appeal, it becomes difficult in majority of the cases to get relief as they work directly under the administrative control of FBR that by itself is an extreme travesty of justice [Draft law on National Tax Tribunal—I, Business Recorder, November 3, 2017].

  • Subsection (5) of the substituted section 133 (relating to reference before the High Court) says: “The Special Bench shall decide a reference within six months from the date of its filing”. 

Giving directions to the High Court, which is also a constitutional court, is blatant violation of the Constitution, and encroachment on the independence of judiciary. Since there is no mention as to what would happen in case a Court does not decide the reference within six months of the date of its filing, this provision is directory in nature and not  mandatory. 

It may be recalled that in 2003 & 2004, on the dictates of the International Monetary Fund (IMF), the then Central Board of Revenue (CBR), later renamed as FBR under the Federal Board of Revenue Act, 2007, in the Income Tax Ordinance, 2001 made right to appeal conditional on payment of certain amounts before the first appellate authority [Taxpayers’ right to free and fair justice, Business Recorder, February 21, 2002]. Now, after 20 years, such unconstitutional conditions have resurfaced. 

The above-cited amendments are in utter violation of Article 10A of the Constitution, which says: “For the determination of his civil rights and obligations or in any criminal charge against him a person shall be entitled to a fair trial and due process”. Demanding a heavy fee for filing appeal/reference, even if demand is less than the said amount, and 30% of disputed tax upheld by the Tax Tribunal, is gross violation of fundamental right guaranteed by the Constitution of free access to justice. 

The amendments as discussed above are against the Constitution and binding judgements of Supreme Court and High Court under Article 189 and 201, respectively, that unfettered right of appeal before an independent court/tribunal cannot be denied or made conditional. It is a reality that through unbridled and unchecked powers, taxation officers raise unlawful demand that hardly stand the test of appeals/references in Tribunal, High Court and Supreme Court, but taxpayers suffer and incur heavy costs of litigation without getting any cost/damages in the end, even when orders are held arbitrary/unlawful

Tax policies like above are reminiscent of the British period when East India Company’s henchmen used to go to the peasant abodes and snatch most of their produce. According to many historians, the East India Company’s tax collectors used to take away one-half to two-thirds of the crops. Therefore, the peasants’ life was most miserable during the colonial period. The present government of PMLN(N) by imposing exorbitant fees and conditions of depositing 30% disputed tax has resurrected the days of East India Company. 

In seeking justice, no preconditions can be imposed. Some amendments made through the Tax Laws (Amendment) Act, 2024 are violative of the well-established principles of free and fair justice guaranteed under Article 10A of the Constitution. Any law repugnant to fundamental right is ultra vires and void ab initio. The FBR, MoL&J, prepared and vetted these respectively, and the Cabinet obviously overlooked that in a number of reported cases, such as Sonia Silk v. CBR 2001 PTD 1789 and Chenab Cement Products (Pvt.) Ltd v Banking Tribunal, Lahore and others PLD 1996 Lah.672, the superior courts held that condition to deposit a portion of tax to avail the right of appeal, if mandatory, would be violative of fundamental rights of free and unfettered justice guaranteed under the Constitution.

The exorbitant rise in appeal/reference fee will certainly be challenged in the High Court(s) under Article 199 of the Constitution being an impediment in the way of seeking unfettered justice. In fact, conditions of payment of disputed demand when imposed earlier [2002 and 2003] were challenged through writ petitions, and ultimately the same had to be withdrawn by the Parliament through Finance Act 2004. 

The Government of PML(N), instead of making Tax Tribunals free from clutches of Executive as per directions of the Supreme Court, is further muzzling it by giving right of appointment of members to the Federal Government—Subverting Tax Tribunals, Business Recorder, January 24, 2020, was published when this right was given to Prime Minister.

One wonders if the PML(N) Government, contrary to its claims, really believes that “it holds the superior court in the highest esteem”. The members of Parliament, in approving such amendments now and in the past, committed a breach of their oath that they would not only act according to the Constitution but also protect it. 

Needless to point out that obedience to Constitution is even otherwise an obligation of all citizens, as provided in Article 5(2) that says: Obedience to the Constitution and law is the inviolable obligation of every citizen wherever he may be and of every other person for the time being within Pakistan.  

It is high time that the PLM(N) Government and all members supporting it or part of the Opposition in the Parliament take note of the unconstitutional amendments. It should not only be withdrawn, but a stern action should also be taken against those who drafted it to show to the IMF how they intend to achieve the unreasonably fixed revenue target through such unconstitutional measures! 

One hopes that the relatively young but gleaming Attorney General of Pakistan, who claims to be well versed with the Constitution, after reading this article, will advise the PML(N) Government to immediately take remedial measure of withdrawing the amendments mentioned above, and abide by the Constitution and binding judgements of the superior courts cited above—in some cases he also appeared on behalf of taxpayers to uphold the unfettered right of access to justice!

Dr. Ikramul Haq
Dr. Ikramul Haqhttp://www.thescoop.pk
Dr. Ikramul Haq, Advocate Supreme Court, specialises in constitutional, corporate, media and cyber laws, ML/CFT, IT, intellectual property, arbitration and international taxation. He holds LLD in tax laws with specialisation in transfer pricing. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He served in the Civil Services of Pakistan from 1984 to 1996. He established Huzaima & Ikram in 1996 and is presently its chief partner as well as partner in Huzaima Ikram & Ijaz. He studied journalism, English literature and law. He is Chief Editor of Taxation. He is country editor and correspondent of International Bureau of Fiscal Documentation (IBFD) and member of International Fiscal Association (IFA). He is Visiting Faculty at Lahore University of Management Sciences (LUMS) and member of Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE). He has co authored with Huzaima Bukhari many books that include Tax Reforms in Pakistan: Historic & Critical Review, Towards Flat, Low-rate, Broad and Predictable Taxes (revised & Expanded Edition, Pakistan: Enigma of Taxation, Towards Flat, Low-rate, Broad and Predictable Taxes (revised/enlarged edition of December 2020), Law & Practice of Income Tax, Law , Practice of Sales Tax, Law and Practice of Corporate Law, Law & Practice of Federal Excise, Law & Practice of Sales Tax on Services, Federal Tax Laws of Pakistan, Provincial Tax Laws, Practical Handbook of Income Tax, Tax Laws of Pakistan, Principles of Income Tax with Glossary and Master Tax Guide, Income Tax Digest 1886-2011 (with judicial analysis). The recent publication, coauthored with Abdul Rauf Shakoori and Huzaima Bukhari is Pakistan Tackling FATF: Challenges & Solutions available at: https://www.amazon.com/dp/B08RXH8W46 and https://aacp.com.pk/product/pakistan-tackling-fatf-challenges-solutions/ He is author of Commentary on Avoidance of Double Taxation Agreements, Pakistan: From Hash to Heroin, its sequel Pakistan: Drug-trap to Debt-trap and Practical Handbook of Income Tax. Two books of poetry are Phull Kikkaran De (Punjabi poetry 2023) and Nai Ufaq (Urdu 1979 with Siraj Munir and Shahid Jamal). He regularly writes columns for many Pakistani newspapers and international journals and has contributed over 2500 articles on a variety of issues of public interest, printed in various journals, magazines and newspapers at home and abroad. X: (formerly Twitter): DrIkramulHaq

1 COMMENT

  1. The Supreme Court has not yet resolved the issue of the Super Tax and has granted stays on the payment of 50% of the amount. No one is raising objections to this; Is this not a violation of Article 10A? According to this article, the condition imposed on the High Court to decide a case within six months is is directory in nature and not mandatory. Therefore, when it comes to the granting of a stay, the courts should also be able to grant the stay without the condition of paying 30% of the disputed demand. This too should be considered directory and not mandatory. We should blame the governments but the judiciary is also part of currnet situation.

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