Pakistan Case LawCommissioner Inland Revenue and others Versus SKB-KNK Joint Venture, etc.
This matter originated from petitions challenging a notification issued under Section 209 of the Income Tax Ordinance, 2001, which transferred jurisdiction over Large Taxpayer Units (LTU) in Quetta and Peshawar to Karachi and Islamabad, respectively. During the proceedings, the Federal Board of Revenue withdrew the impugned notifications, rendering the primary grievance infructuous. Consequently, the Supreme Court disposed of the petitions as having borne fruit. However, the Court highlighted significant systemic concerns regarding the Federal Board of Revenue Act, 2007. Specifically, it questioned the scope of delegation powers under Section 8 of the Act, particularly whether such delegation applies to fiscal laws lacking explicit delegation provisions, and noted the absence of necessary conditions in delegation notifications. Furthermore, the Court observed the failure to operationalize the Policy Board under Section 6 and the lack of a functional data bank as mandated by Section 14. The Attorney General for Pakistan assured the Court that these legislative and administrative concerns would be addressed in the upcoming Finance Act and that the Policy Board would be made functional.
- Does the delegation power under Section 8 of the Federal Board of Revenue Act 2007 apply to fiscal laws that do not explicitly provide for such delegation?
- Must delegation notifications issued under Section 8 of the Federal Board of Revenue Act 2007 specify the conditions under which such powers are delegated?
ORDER
Syed Mansoor Ali Shah, J.- The petitioners have challenged the notification dated 05.08.2020 issued under Section 209 of the Income Tax Ordinance, 2001 ("Ordinance") by virtue of which Chief Commissioner Inland Revenue, Karachi was conferred the jurisdiction over LTU based in Quetta. Similarly, the Chief Commissioner LTU, Islamabad was given jurisdiction over LTU cases of Peshawar. The result of this was that LTU cases in Quetta and Peshawar stood transferred to Karachi and Islamabad respectively.
2.During the course of proceedings, the aforesaid Notification were withdrawn vide orders passed by the Board dated 12th and 13th March, 2024, copy of which have been placed on the record, therefore, the issue in hand has come to an end. Resultantly, the titled petitions have borne fruit and are disposed of accordingly.
3.However, during the course of arguments, number of legal questions were raised, which were recorded in paragraph 2 of our previous order dated 14.03.2024. During the course of arguments, it was pointed out that Section 8 of the Federal Board of Revenue Act, 2007 ("Act"), which deals with Functions and Powers of the Board needs a revisit and reexamination so as to clarify whether the "delegation" in the said provision applies to the powers vested in the Board relating to all the fiscal laws, which do not provide for any such delegation in their respective laws; secondly the delegation under Section 8 of the Act has to be subject to such conditions "as it deem necessary" and no such conditions have been spelled out in the delegation notification.
4.Learned Attorney General for Pakistan frankly appears to be beyond the scope of the law and needs reconsideration.
5.It is also noticed that the Policy Board envisaged under Section 6 of the Act has not been given effect to. Further section 14 of the Act provides for collection and maintenance of data bank which has also not been fully established because in a number of cases before us FBR is not in a position to apprise the Court whether the FBR has filed appeal against its earlier orders and whether the issue before the Court today stands resolved in earlier round of litigation. Such a data can expedite tax cases and can be of assistance to the courts and needs to be developed accordingly.
6.Faced with this situation, learned Attorney General for Pakistan submits that the questions mentioned in paragraph 2 of our order dated 14.03.2024 and framed in this order will be fully addressed in the upcoming Finance Act. He further submits that as far the establishment of Policy Board is concerned, immediate steps will be taken and it is expected that the Policy Board will be fully functional shortly.
7.Therefore, as far as the main cases are concerned, the same have been disposed of as having borne fruit as the impugned notifications have been withdrawn. Let these cases now be posted in the 2nd week of July 2024 for report of the Attorney General for Pakistan regarding the concerns raised by this Court.
Judges on this bench
- Syed Mansoor Ali Shah1,049 judgments
- Irfan Saadat Khan1,172 judgments
- Athar Minallah898 judgments