The Tax Law (Amendment) Bill 2024, was introduced in the National Assembly by the Minister for Finance and Revenue as a Government Bill on 24th April 2024. It was swiftly passed by the lower and upper houses of Parliament and has been assented to by the President of Pakistan on 4th of May 2024. Thus, a draft bill has become law within ten short days. The changes made in the law have raised questions regarding the transparency and fairness in the process.
In their conspicuous haste, the government has allegedly violated mandatory provisions under the Rules of Procedure and Conduct of Business in the National Assembly 2007. The bill, as it is appearing in the ‘Order of the Day’ dated 24th April 2024 (as available on the official website of the National Assembly), was defective, for the absence of the Notice of the Bill, as required under Rule 120(1). The certificate, whether it is a money bill or not, as envisaged under Rule 120(2), was missing. The procedure listed under Rule 120(4), was ignored and the Statement of Objects and Reasons was non-speaking.
As per a report contained in Business Recorder dated 30th April 2024, the bill, with amendments, was passed by the Senate Special Committee. Placing of the bill before the Senate Special Committee was violative of Rule 122, which requires that the bill should be referred to the relevant Standing Committee of the National Assembly, unless the minister of Member-in-Charge requests for dispensing with this requirement. No such request has been mentioned on the official website.
The specific exclusion of the Federal Public Service Commission Act speaks volumes about the intended mala fide behind the haphazard legislative process being followed to appoint members in Tax Tribunals on a contract basis without following the transparent and competitive process
The amendments in taxing statutes are normally brought through money bills, which are well-debated across the country as a practice. Departure from this practice, shortly before the expected budget, is beyond comprehension. The amended law has significantly changed the tax dispute resolution system from the Commissioner (appeals) to the high court’s advisory jurisdiction on tax matters. The change in law is without allowing any debate, within or outside of legislative assemblies, despite a request by the Pakistan Tax Bar Association of Pakistan (PTBA), through a letter dated 22nd February 2024, addressed to the Federal Secretary for the Minister of Law, requesting a fair, transparent, and competitive appointment process for appointments of judicial and technical members in tax and other revenue tribunals.
Right from Income Tax 1922, followed by Income Tax Ordinance 1979, till Income Tax Ordinance 2001, the posts of judicial and technical members in the tax tribunal were permanent and were filled by adopting fair and competitive process through the Federal Public Service Commission (FPSC), constituted under Article 242 of the Constitution, reading of which with Article 240 depicts the intention that terms and condition of a post relating to the affairs of federation, have to be through an act of Parliament. The amended law is thus in clear violation of the Constitutional command under Articles 240 and 242, read with Article 27 of the Constitution of 1973. The specific exclusion of the Federal Public Service Commission Act speaks volumes about the intended mala fide behind the haphazard legislative process being followed to appoint members in Tax Tribunals on a contract basis without following the transparent and competitive process.
In the United States, candidates for judicial positions in the Tax Court undergo a rigorous nomination and confirmation process, ensuring impartiality and expertise. Similarly, in the United Kingdom, appointments to tax tribunals follow a structured procedure overseen by independent bodies, promoting trust in the judiciary. In India, selecting members for tax tribunals involves comprehensive vetting procedures, emphasising competency and fairness. The common feature in these jurisdictions is that the selection process is undertaken by a committee or body independent of the appointing authority, for which the Constitution of Pakistan proposed the FPSC. The amended law, however, has specifically ousted it by sidestepping the intent of the Constitution.
Such legislation for tax tribunals, being the back backbone of economic stability in a country standing on the verge of default, shows that no one is serious in improving things. If the fault for the existing economic condition is to be diagnosed, it would be none other than appointments on a political basis or to oblige those who have served persons at the helm of affairs.