KARACHI: A three member bench of Supreme Court of Pakistan (SCP) in a land mark judgment held here on Thursday that fiscal notification enhancing the levy of tax issued by the, Secretary, Revenue Division or the Minister are ultra vires.
The bench comprising Justice Saqib Nisar, Justice Iqbal Hameed-ur-Rahman and Justice Fasial Arab earlier heard the civil appeals filed by Mustafa Impex Karachi, SSS Enterprises, Fact International, Broadways, M.A. Enterprises and others who import cellular phones and textile goods challenged a decision by Islamabad High Court by filing leave to appeal. They maintained that earlier they enjoyed certain exemptions from Sales Tax granted by the Federal Government. Subsequently the exemption was withdrawn or tax rates revised. The appellant further maintained that such notification had not been issued by the federal government in accordance with section 3 of the Act (Sales tax Act).
The bench which reserved its judgment announcing the same held that ‘grant of exemption is any the privileged authority of the Cabinet as per Article 90 of the Constitution of Pakistan” Even the secretary or advisor to the Prime Minister has no competence to issue such notification or exemption, the judgment said.
It further held that “Federal Government is collective entity described as the Cabinet”.
The judgment said that Neither a Secretary nor a Minister,nor the Prime Minister are the ‘Federal Government’ and the exercise or purported exercise of a statutory power exercised by the Federal Government or any of them specially in relation to the fiscal matters is constitutionally invalid and a nullity in the eyes of the law.
The bench parting with the judgment spreading over 86 pages in concluding para (para vi) held that “Rule 16 (2) which apparently enable the Prime Minister to bypass the cabinet is ultra vires and is so declared”. The bench further held that fiscal notifications enhancing the levy of tax issued by the Secretary Revenue Division or the Minister are ultra vires.
The legal wizards terming the judgment as land mark judgment in respect of levy of taxes, duties etc believe that SRO regime would now be regulated and while it is bound provided relief to the tax payers and commoners it is likely to give rise to complications in terms of revenue collection. The experts when asked to comment and interpret the judgment told Custom news that it is a lengthy judgment and time is needed to read the full text after which they would be able to comment.