Trusts case: SHC imposes cost of Rs25,000 on FBR in each petition

ISLAMABAD: Sindh High Court (SHC) has expressed serious concern over the conduct of the Federal Board of Revenue (FBR) as well as respective commissioners/collectors, that it said is by itself a major impediment to timely disposal of revenue cases.

The SHC has also imposed a cost of Rs25,000 on Federal Board of Revenue (FBR) in each listed petition which shall be deposited in the account of Sindh High Court Clinic.

According to a judgement of the SHC (C. P. NO. D-4669/2022 a/w), we are not hesitant in saying that most of the cases crop up due to their conduct, which includes incompetence, ill-advice, mala fides, callous attitude towards taxpayers and so on and so forth. On several occasions we have tried to apprise the concerned officials at FBR, including its Chairman as well as Members, but of no avail.

“This frivolous litigation has wasted time of this Court; time which would have been better spent in resolving legitimate disputes,” SHC said.

The FBR has also placed this SHC order on its website for the compliance by the relevant tax officials.

SHC order said that instead of withdrawing the impugned action initiated by various Commissioners, on the directions of FBR statement was filed by Shahid Ali Qureshi, who is appearing in C. P. No. D-5535/2022 wherein, it was stated that matter was referred by FBR to the Ministry of Law & Justice for opinion and pursuant to such opinion it has been decided that until the Trusts are registered under the Provincial Laws they are not entitled for exemption under Income Tax Ordinance, 2001, SHC stated.

Unfortunately, despite being cautioned, they have not corrected their stance; rather a new plea has been raised that some legal opinion was obtained from Ministry of Law and Justice. This we may add was an afterthought on the part of Respondents as the advice was sought on 15.2.2022 much after the impugned action of the Respondents.

Though not relevant, but we may observe that the advice sought was on also premised on a wrong assumption of facts and law inasmuch as firstly, it was not mandatory for the Petitioners to get themselves registered under the Trust Act, 1882; secondly, 2001 Ordinance, neither prior to the said repeal; nor as of today mandates that the Petitioners must be registered under the Provincial Laws, SHC said.

In view of the above, read with our order dated 07.02.2023 and the conduct of the Respondents including FBR and so also for the reason that Lahore High Court has also decided the matter against them and despite such position the issue is still being agitated by the Department with no justifiable cause and reason, these Petitions are allowed by holding that the Petitioners are not required to obtain respective registration under The Sindh Trust Act, 2020 for issuance of exemption certificate as it is not a precondition under the 2001 Ordinance, SHC added.

The respective Respondents shall issue requisite Exemption Certificates, after fulfillment of other remaining conditions under the 2001 Ordinance, if any. Moreover, it is a fit case to impose costs as well, as despite being cautioned, Respondents have persisted with their stance.

The SHC observed that FBR must act fairly in dealing with taxpayers and to abide by the law governing it, and if any benefit accrues to taxpayers under the law, it must not be withheld and the assessee’s and its own time and resources should not be needlessly wasted. This frivolous litigation has wasted time of this Court; time which would have been better spent in resolving legitimate disputes.

Accordingly, cost of Rs. 25,000/- is imposed on Federal Board of Revenue (FBR) in each listed petition which shall be deposited in the account of Sindh High Court Clinic. As a matter of clarification, insofar as respective ad-interim orders are concerned, in some of the matters private Respondents were though permitted to deduct tax from the Petitioners; but were required to retain it with themselves, and in view of the above, the said Respondents are directed to reimburse it to the respective Petitioners, SHC order added.

Copyright Business Recorder, 2024