Tax Laws 'amendment' bill rejected

The Senate Standing Committee on Finance on Tuesday unanimously rejected Tax Laws (First Amendment) Bill 2019, declaring that the bill does not fall within the purview of the "money bill". The Senate Standing Committee on Finance, Revenue and Economic Affairs in its meeting on Tuesday at the Parliament House, discussed in detail the bill, "The Tax Laws, 2019", laid before the Senate under Article 73 of the Constitution and referred to the committee.

The committee also declared that the remission of taxes could not be treated as part of the "money bill". Senate Standing Committee on Finance has out rightly rejected the bill for extending the scope of Customs Duty exemption available to concession agreement to the China Overseas Port Holding Company, Gwadar International Terminals, Gwadar Marine Services Limited, and Gwadar Free Zone as well as their contractors, and sub-contractors for a period of 40 years.

During the committee proceedings, the FBR member informed the committee that the concerned parties of concession agreement might opt for arbitration, if this amendment was not passed by the parliament.

Earlier, the Senate Standing Committee on Finance had rejected Tax Laws (Second amendment) Bill last month with a majority on the same ground that fines and penalties under amendments into tax laws could not be declared as money bill.

After due deliberation, the committee decided that the exemption was not a remission, therefore, the said bill does not fall within the purview of Money Bill and therefore it unanimously recommended to the National Assembly that the Tax Laws (Amendment) Bill 2019, does not fall within the purview of Article 73 (2) of the Constitution, and may be withdrawn by government and the same be brought under Article 70 of the Constitution of Pakistan 1973.

At the start of the meeting, chairman of the committee Senator Farooq H Naek explained definition of remission and exemption and stated that such amendments could not be declared as part of the money bill.

First of all, he stated that the Minister and Secretary Finance as well as chairperson FBR were not present in the meeting as usual. Secondly, he asked the FBR team that why you did not bring as separate bill as through money bill you made effort to bypass the Upper House of the Parliament.

The FBR's Members Customs Policy, Javed Ghani, and Member Inland Revenue (IR) Policy Dr Hamid Ateeq Sarwar made all out efforts to convince the parliamentarians that the exemptions in tax laws was part of the money bill.

They also give legal and technical observations in support of their viewpoint.

Chairman Committee also inquired whether the said bill deemed to be money bill as provided in Article 73(2) of the Constitution of Pakistan, 1973 or otherwise.

Member (Customs), FBR responded that the said bill contained the remission of taxes, therefore, it was a Money Bill as provided in Article 73 (2)(a) of the Constitution of Pakistan, 1973, which deals with the imposition, abolition, remission, alteration or regulation of any tax.

He further informed that the Customs Act had already given concession to the equipments, materials, plant machinery imported by the concession holder, its operating companies and contractors and sub-contractors for 40 years, however, now the words Gwadar International Terminal and Gwadar Marines Services Limited, their contractors and sub-contractors have been included.

He further explained that these amendments have been moved after discussion and deliberation with the Ministry of Maritime Affairs, and in consequence of concession agreement with the Chinese Government.

Chairman Committee Senator Farooq Hamid Naek briefed the participants of the meeting regarding definition of the word remission given in the Black's Law Dictionary.

He read out the meaning of remission i.e. "A cancellation or extinguishment of all or part of a financial obligation." He was of the view that the amendments containing in the said bill were not remission but these amendments were exemption of tax for 40 years, whereby he read out the meaning of word exemption, which means "Freedom from a duty, liability or other requirement", therefore, the said bill does not fall within the purview of Money Bill as it deals with the exemptions of taxes instead of remission of taxes, as provided in Article 73 (2) (a) respectively of the Constitution of Pakistan 1973.

Later, the FBR officials informed media that it was the prerogative of speaker National Assembly to declare any bill as money bill or not and the speaker National Assembly declared Tax Laws (Second amendment) bill as money bill so the speaker NA would do the same thing and then through majority votes would pass the Tax Laws (First Amendment) Bill in the same manner.

Earlier, during the proceedings of the meeting an interesting situation surfaced when Ministry of Law's draftsman was asked to give viewpoint of Ministry of Law over the definition of remission and exemption but the concerned official of ministry stated that he did not know about difference in remission and exemption.

The committee members, Senator Mushahid Ullah said that the committee must express its displeasure in writing that why a junior officer was sent out into parliamentary committee meeting who remained unable to give their input during the meeting.

Senators Mohsin Aziz and Mian Muhammad Ateeq Shaikh were of the view that the exemption of tax should be project bound, material bound, contractor bound, it should be free for plants and equipments and specifically for the development of Gwadar Port.

Senator Dilawar Khan was of view that the proposed exemptions in the said bill could be misused as being misused in result of SRO No 517 issued for the exemption of taxes in Gadoon Amazai.

After due deliberation, the committee decided that the exemption was not a remission, therefore, the said bill did not fall within the purview of Money Bill, and therefore it unanimously recommended to the National Assembly that the Tax Laws (Amendment) Bill 2019, does not fall within the purview of Article 73 (2) of the Constitution, and may be withdrawn by the government and the same be brought under Article 70 of the Constitution of Pakistan, 1973.

The meeting was attended by Senator Mian Muhammad Ateeq Shaikh, Senator Anwarul Haq Kakar, Senator Imamud Din Shouqeen, Senator Muhammad Akram, and officers of the Ministry of Finance, Revenue and Economic Affairs, and the Ministry of Law and Justice.