ISLAMABAD:
In another legal respite for the government, the Federal Constitutional Court (FCC) ruled that tax authorities can conduct raids without prior notice and without the existence of a pending case against a taxpayer, a decision that significantly strengthens tax law enforcement powers.
The judgment, written by Justice Aamer Farooq, observed that Parliament has given broad authority to tax officials to ensure compliance with revenue laws.
The court stated that it cannot include in a law any condition that the legislator has not expressly provided for.
Rejecting the argument that a raid carried out without a formally pending case should be considered illegal, the court stated that “the existence of a pending case against a taxpayer is not a precondition for such action” and that “the tax authorities are competent to proceed in accordance with the law.”
However, the court introduced a procedural safeguard, ordering that the commissioner must record in writing the specific legal provision invoked and the alleged violation that forms the basis of the raid.
“This requirement,” the ruling states, “guarantees procedural transparency and accountability.”
The court further held that tax officials are empowered to guard computers, documents and accounts during such operations, as long as the action remains within the limits of the law.
The ruling is considered an important precedent regarding the scope of powers conferred on tax authorities and the enforcement architecture of tax laws.
Relief in contempt proceedings
In another development, the FCC stopped contempt proceedings initiated by the Islamabad High Court (IHC) against the defense and interior secretaries in a missing persons case.
A division bench of the FCC, headed by Justice Aminuddin Khan, while hearing appeals against the IHC order, issued notices to the respondents.
This is not the first case of relief granted by the FCC to the federal government. Earlier this month, a court headed by Chief Justice Aminuddin Khan stopped the IHC from proceeding with a contempt case against Prime Minister Shehbaz Sharif and federal ministers.
The case concerned the alleged lack of support for Dr Fowzia Siddiqui’s legal efforts in the United States regarding the release of Aafia Siddiqui.
Additional Solicitor General Munawar Iqbal Duggal represented the federal government in both matters.
A senior legal official believes the government’s arguments in both cases are sound and that the relief granted by the FCC was justified.
Last month, the FCC also upheld Sections 4(b) and 4(c) of the Income Tax Ordinance of 2001, a decision that is estimated to add Rs 310 billion to government revenue. However, that ruling has generated harsh criticism from sectors of the legal community.
Divided legal fraternity
A former attorney general commented that the FCC’s decision on Section 4© was difficult to justify and appeared to unduly support the Federal Board of Revenue (FBR) and the government.
“The role of the court is to interpret the law on established principles and not to act as the recovery wing of the government, which appears to have happened here,” he said.
It further argued that with respect to alleged discrimination against 15 industries subject to a higher supertax rate, the FCC should have struck down the relevant provision of the program.
According to him, single and divisional benches of three high courts, comprising tax law experts, unanimously declared discrimination ultra vires.
“The only relief given by the FCC is to the extraction companies, which had foreign arbitration clauses in their agreements with the government, which would have resulted in international awards against the government,” he added.
The former lawyer also stated that the court that decided the case lacked experience and knowledge in tax matters and constitutional law.
Debate over the FCC’s performance in three months has intensified within legal circles. It should be noted that the current FCC judges were appointed by the executive. Critics argue that the court appears more focused on resolving pending cases than on enforcing fundamental rights set out in Article 175 E (1) of the Constitution.
Renowned lawyer Faisal Siddiqi commented: “In the language of criminal jurisprudence: for the FCC, the government is the favored litigant, the opposition is the neglected litigant, and the average citizen is the forgotten litigant.”
Another prominent lawyer described the court’s performance as disappointing in light of the goals cited by its proponents.
“A huge backlog continues to accumulate and there is little promise for the future. All the high principles invoked for its creation, including its representative federal character, have been compromised and betrayed,” he said.
He pointed out that barring a few orders relating to interpretation of the Constitution, there is not a single detailed judgment worth citing as jurisprudence of the apex court.
Attention has been focused, he noted, on reiterating its technical superiority over the Supreme Court as a matter of precedence. “Even with respect to the few orders issued by the FCC, I have serious reservations about the soundness of the principles on which they are based. The detailed ruling on the supertax is awaited.”
Another former justice official was even more forceful in his assessment.
“No court or institution is inherently good or bad. It is the quality and character of the people who run the institution that determines its stature and acceptability in the public mind,” he said, adding that the genesis of the FCC was highly dubious.
“Its credibility was seriously compromised when the Executive was allowed to choose the first court.”
He said the prime minister acted hastily and in a very partisan manner in filling the seats, adding that the worst thing is that he is not even making any effort to build trust and respect of the people by asserting his authority.
“He is more executive-minded than the executive itself. If he continues on his current trajectory, he is doomed. It is just a matter of time as there cannot be two high courts in one country.”
Observers note that the FCC has yet to address dozens of cases related to PTI, which continues to face pressure from the executive. It is also noted that the PTI legal team seems to trust the Supreme Court more than the FCC to enforce fundamental rights.
Despite lacking jurisdiction to enforce fundamental rights in certain contexts, the Supreme Court has continued to deal with cases related to Imran Khan and, through its judgments, is developing jurisprudence on matters of public interest.
By contrast, critics argue that although the FCC possesses jurisdiction over such matters, it has not taken up cases that could dispel the perception that it is dominated by executive-minded judges.
A section of the legal community has demanded that the government reveal details of the salaries and benefits given to FCC judges.
Former Additional Solicitor General Punjab Chaudhry Faisal Hussain claimed that the judiciary in Pakistan has lost the trust of common man.
“In our country, parliament and bureaucracy always act like a monarch, and courts used to be proactive protectors of fundamental rights.”
He added that the FCC is increasingly seen as an extension of the executive branch and must make strong judgments on larger public interest issues to regain credibility.
“Appointments in the judiciary must also be more transparent and merit-based.”
However, some lawyers argue that the FCC faces significant logistical challenges and needs time to become fully functional. It appears that the debate over its role, independence and direction is far from resolved.
