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ISLAMABAD: The Lahore High Court (LHC) has issued contempt notices to the Federal Board of Revenue (FBR) over failure to implement its orders pertaining to the minimum tax computation formula adopted by service sector taxpayers (lawyers/ chartered accountants, etc) liable to pay minimum tax under section 153(1)(b) of the Income Tax Ordinance, 2001.

The contempt of court has been issued by a single bench of Justice Shahid Jamil Khan while hearing the contempt petition, seeking contempt proceedings against Chairman FBR and two Members for not implementing LHC earlier order dated October 14, 2021.

The LHC took exception to non-implementation of its order and observed that "Commitment is not being honoured due to letter: Writ Petition No. 57220 of 2021 in case of Shahid Latif Khilji Vs Federation: I am directed to refer to your note dated 13.10.2021 mentioning calculations made by the petitioner in the subject petition.

I am further directed to enclose copy of email dated October 18, 2021 of Waheed Shahzad Butt wherein he has made serious objections on the proposed changes, affirming that the existing calculations in the system are correct as per law, and confirmed in certain earlier judgments (104 TAX 1 = 2011 PTD 1672) and decisions of the Federal Tax Ombudsman.

Notices under taxation law: SC allows FBR's plea against LHC judgement

He warns that if the changes are made as now being proposed, it will lead to huge and undue loss of revenue. To avoid any mistake, the same is being brought to the notice of IR Policy Wing, with the request to re-examine the calculation in the light of the complaint's assertions and cited case law," LHC added.

Justice Shahid Jamil further remarked that Chief (IT) is confronted how he can write letter/official correspondence on the objections by Waheed Shahzad Butt (Advocate) as reason for resiling from the commitment before the Court. The explanation offered is not satisfactory; therefore, both the officers are put under notice why they should not be proceeded under Contempt of Court Ordinance, 2003. Let Member IT along with Member Policy to appear and explain the state of affairs of the FBR being run by them.

Documents revealed that Waheed Shahzad Butt has sent emails to FBR which states "undersigned is a whilst-blower in 104 TAX 1 (non corporate taxpayer) and C.No.577/2011 in Waheed Shahzad Butt Vs Secretary Revenue Division (108) TAX 155 & Secretary Revenue Division Vs Waheed Shahzad Butt 2013 (108) TAX 164] both related to Corporate sector service provider taxpayer.

During a hearing at LHC in a petition challenging the minimum tax applicability issue IRS functionaries conceded for a tax computation which is not only patently illegal but causing huge loss to the national exchequer. The LHC sought a reply from the FBR and adjourned the contempt case till November 15, 2021.

Copyright Business Recorder, 2021

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