ISLAMABAD:
In another legal reprieve granted to the government, the Federal Constitutional Court (FCC) ruled that tax authorities can conduct searches without notice and without there being a pending case against a taxpayer, a ruling that significantly strengthens the enforcement powers provided by tax law.
The judgment, written by Justice Aamer Farooq, observed that Parliament had given extensive powers to tax officials to ensure compliance with tax laws.
The Court declared that it could not insert into a law a condition which the legislator had not expressly provided for.
Rejecting the argument that a search conducted in the absence of a formally pending case should be considered illegal, the court said that “the existence of a pending case against a taxpayer is not a prerequisite for such action” and that “tax authorities are competent to proceed in accordance with law.”
However, the court introduced a procedural safeguard, requiring the commissioner to record in writing the specific legal provision invoked and the alleged violation that is the basis for the search.
“This requirement,” notes the judgment, “guarantees procedural transparency and accountability.”
The court further held that tax officials are entitled to retain computers, documents and accounts during such operations, provided the action remains within the confines of the law.
This decision is considered an important precedent regarding the scope of powers granted to tax authorities and the enforcement architecture of tax laws.
Remedy in contempt proceedings
Separately, the FCC terminated the 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 in a contempt case against Prime Minister Shehbaz Sharif and federal ministers.
The case concerned the alleged failure to support Dr. Fowzia Siddiqui’s legal efforts in the United States regarding the release of Aafia Siddiqui.
Additional Attorney General Munawar Iqbal Duggal represented the federal government in both the cases.
A senior legal official believes the government’s arguments in both cases are strong and that the FCC’s relief was justified.
Last month, the FCC also upheld Sections 4(b) and 4(c) of the Income Tax Ordinance of 2001 – a move expected to add 310 billion rupees to government revenues. However, the move sparked strong criticism from parts of the legal community.
Legal fraternity divided
A former attorney general noted that the FCC’s Section 4© decision was difficult to justify and appeared unduly favorable to the Federal Board of Revenue (FBR) and the government.
“The function of the court is to interpret the law according to established principles and not to act as the pro-relief wing of government, which is what appears to have happened here,” he said.
He further argued that with respect to the alleged discrimination against 15 industries subject to a higher supertax rate, the FCC should have struck down the relevant provision of the schedule.
According to him, the single and divisional chambers of three higher courts, composed of experts in tax law, were unanimous in declaring the discrimination ultra vires.
“The only relief provided by the FCC is for mining companies, which had foreign arbitration clauses in agreements with the government, which would have resulted in international awards against the government,” he added.
The former lawyer also said that the judges responsible for ruling on the case certainly lacked experience and expertise in tax matters as well as constitutional law.
Debate over the FCC’s three-month performance has intensified in legal circles. It should be noted that the current FCC judges were appointed by the executive branch. Critics argue that the court appears more focused on resolving pending cases than upholding fundamental rights under Article 175 E(1) of the Constitution.
Renowned attorney Faisal Siddiqi noted, “In the language of criminal jurisprudence: for the FCC, the government is the preferred litigant, the opposition is the neglected litigant, and the ordinary citizen is the forgotten litigant.”
Another senior lawyer called the court’s performance disappointing in light of the goals cited by its supporters.
“A massive backlog continues to accumulate with 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 except for the few orders relating to the interpretation of the Constitution, there is not a single detailed judgment which deserves to be cited as jurisprudence of the supreme court.
The emphasis, he observed, was on reasserting their technical superiority over the Supreme Court, as a matter of precedence. “Even with respect to the few orders adopted by FCC, I have serious reservations about the merits of the principles on which these orders are based. The detailed ruling on the supertax is awaited.”
Another former judicial officer was even more pointed 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 determine its stature and acceptability in the public mind, he said, adding that the genesis of the FCC was very dubious.”
“His credibility was seriously damaged 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 part was that he was not even making any effort to inspire the trust and respect of the people by asserting his authority.
“More focused on the executive than the executive itself. If it continues on its current trajectory, it is doomed to failure. It is only a matter of time, because there cannot be two supreme courts in a country.”
Observers note that the FCC still has to deal with dozens of cases related to the PTI, which continues to come under pressure from the executive branch. We also observe that the PTI legal team seems to rely more on the Supreme Court rather than the FCC to enforce fundamental rights.
Although it does not have jurisdiction to enforce fundamental rights in certain contexts, the Supreme Court has continued to take up cases related to Imran Khan and, through its judgments, is evolving jurisprudence in matters of public interest.
Conversely, critics argue that while the FCC has jurisdiction, it has not taken up cases that would dispel the perception that it is dominated by executive-minded judges.
Part of the legal community has demanded that the government disclose details of the salaries and benefits provided to FCC judges.
Former Additional Advocate General Punjab Chaudhry Faisal Hussain said that Pakistan’s judiciary had lost the trust of the common citizen.
“In our country, parliament and bureaucracy still act like a monarch, and the courts were once 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 broader public policy issues to regain credibility.
“Appointments within the judiciary must also be more transparent and based on merit.”
However, some lawyers say the FCC faces significant logistical challenges and needs time to become fully functional. It seems that the debate over its role, independence and direction is far from settled.
