Latest news with #AppellateTribunalInlandRevenue
Business Recorder
2 days ago
- Business
- Business Recorder
FED related cases: FBR allows direct ATIR appeals
ISLAMABAD: The Federal Board of Revenue (FBR) has allowed sales taxpayers to directly file an appeal against the FBR before Appellate Tribunal Inland Revenue in Federal Excise Duty (FED) related cases without availing right of basic appeal under Finance Act 2025. According to the updated FED Act (up to July 1, 2025) issued by the FBR, registered persons shall have an option to directly file an appeal before Appellate Tribunal Inland Revenue without availing right of appeal under this section. Any person, other than an SOE, aggrieved by any order passed by the Board or the Commissioner Inland Revenue under section 35 or an order passed by an Officer of Inland Revenue where sub-section (5) of section 33 applies or the Commissioner (Appeals) under this Act or the rules made thereunder may, within thirty days of the receipt of such order, prefer an appeal to the Appellate Tribunal: FBR meets its Jul collection target Provided that where sub-section (11) of section 134A of the Income Tax Ordinance, 2001 shall apply, an SOE may prefer an appeal under this sub-section. The Appellate Tribunal may admit, hear and dispose of the appeal as per procedure laid down in sections 131 and 132 of the Income Tax Ordinance, 2001, and rules made thereunder. [34A. Reference to the High Court: Within sixty days of the order of the Appellate Tribunal, the aggrieved person or the Commissioner may make a reference in the prescribed form along with a statement of the case and complete record of the Appellate Tribunal to the High Court, stating any question of law arising out of such order. Copyright Business Recorder, 2025
Business Recorder
4 days ago
- Business
- Business Recorder
Rental commercial property: Question arises on legality of taxation by Punjab govt
ISLAMABAD: A question has been raised on the legality of taxation of rental commercial property by the provincial government of Punjab in cases where the same income is already taxed at the federal level, reflecting double taxation. A review of Punjab Sales Tax on Commercial Property by Muhammad Asif Asgher Attorney-at-Law, former Chief Commissioner Inland Revenue/ former Member, Appellate Tribunal Inland Revenue (ATIR) revealed that Punjab's move to tax commercial rentals reflects the broader post-Eighteenth Amendment trend of provincial revenue expansion. However, the constitutional boundaries of such powers- especially where the same income stream is already federally taxed- remains unsettled. The eventual judicial outcome will determine whether this revenue measure becomes a permanent fixture or another short-lived experiment. Muhammad Asif Asgher stated that the Eighteenth Amendment to the Constitution of Pakistan, 1973 brought sweeping changes, the most significant being the omission of the Concurrent Legislative List from the Fourth Schedule. Prior to the amendment, the Federal Legislative List (FLL) contained subjects under exclusive federal competence (Article 142), while the Concurrent List allowed both the Federation and Provinces to legislate. With the deletion of the Concurrent List, legislative power over its subjects was devolved to the provinces. In addition, certain subjects were removed from the FLL itself. Notably, Clause 49 was amended to read: 'Taxes on the sale and purchase of goods imported, exported, produced, manufactured and consumed (except sales tax on services).' This seemingly small bracketed phrase empowered provinces to levy sales tax on services, creating a significant new revenue stream. Tax expert said that following the Eighteenth Amendment, provinces quickly established their own frameworks for taxing services. Punjab enacted the Punjab Sales Tax on Services Act, 2012, and Sindh passed the Sindh Sales Tax on Services Act, 2011. A key drafting challenge was defining 'services' broadly enough to capture emerging transactions. Section 2(38) of the Punjab Act states: 'Service' or 'services' means anything which is not goods or the providing of which is not a supply of goods, and shall include but not be limited to the services listed in the First [or Second] Schedule. This open-ended definition- whether borrowed from India's GST or developed locally — ensured that almost any activity outside the definition of 'goods' could be taxed. Traditionally, a 'service' involves the application of human effort or skill for another's benefit. However, Sindh was first to extend this to letting out of immovable property, reasoning that it did not involve the supply of goods. Amendments were made to include this within the definition of 'service,' and the Sindh Revenue Board began issuing tax notices to landlords. The Sindh High Court, in 2019 PTD 389, faced constitutional and interpretive challenges to taxing immovable property rentals. Rather than directly ruling whether such letting constituted a 'service,' the Court focused on Section 4 (1) (b) of the Sindh Act, which referred only to 'movable property' in defining 'economic activity.' The Court inferred that immovable property was excluded. The Supreme Court, in 2023 PTCL 96, dismissed the Sindh Government's appeal with a single-line observation: 'The mere renting out of property by a landlord to a tenant is not taxable as it is not a taxable service.' Notably, the Court gave no reasoning, leaving the constitutional question open and arguably outside the binding scope of Article 189. Former Member Appellate Tribunal stated both Sindh and Punjab amended their laws to explicitly include immovable property in 'economic activity.' Punjab's change came via the Finance Act, 2018 (effective 1 November 2018). However, Punjab delayed taxing such rentals until Finance Act, 2025, which revised the First Schedule: (i); Exempt: dwellings rented for non-commercial use. (ii); Taxable: dwellings and other immovable property rented for commercial use. The Punjab Revenue Authority has since begun issuing notices to landlords for registration and tax payment. Landlords argued they are already paying income tax on rental income and that this dual taxation is impermissible. One possible ground, relying on 2017 PTD 1 (Pakistan International Freight Forwarders), is that post-Eighteenth Amendment there is no concurrent taxing power: a single taxable event cannot be subject to both federal and provincial levies. Another round of constitutional litigation appears inevitable, Muhammad Asif Asgher added. Copyright Business Recorder, 2025
Business Recorder
25-06-2025
- Business
- Business Recorder
SC determines right meaning of FMCG products
ISLAMABAD: The Supreme Court held that Fast Moving Consumer Goods (FMCG) products do not qualify to form part of the definition provided in clause (22A) read with Clause (13AB) of Section 2 of the Income Tax Ordinance, 2001. The judgment, authored by Muhammad Shafi Siddiqui, said that the FMCG are those which are supplied in retail market as per 'their' daily demand. 'These are not directly considered as consumer items, but form a key component for many consumer products. It is meant primarily for an industrial/ commercial use,' it added. These goods in their form, as described in the orders of Appellate Tribunal Inland Revenue, Peshawar, and the Peshawar High Court (PHC), are not utilisable predominantly by the end consumers. High-potential consumer items: Pakistan govt mulling imposing FED The respondent, an individual taxpayer (M/s Sufi Tahir Nadeem), derived income from distribution (per orders) of (i) Bopp Composite/ Plain Film, (ii) Pet Film, (iii) CPP Metalized Film, and (iv) CPP Milky Film. He filed returns for the tax years 2015 to 2017. On examination by the department, that the tax liability on the respondent-taxpayer on the basis of turnover declared by him, was not proper, the return for the tax year 2015 was selected for audit under Section 177 of the Income Tax Ordinance, 2001 and the deemed assessment was accordingly amended under Section 122(1) of the Ordinance by the officer Inland Revenue creating tax liability under Section 113 of the Ordinance on the basis of declared turnover. The declared position for the tax years 2016 and 2017 was the same; consequently, the Additional Commissioner Inland Revenue invoked Section 122(5A) of the Ordinance and created tax liability under section 113 of the Ordinance on the basis of turnover declared by the respondent-taxpayer. Aggrieved of it, the respondent-taxpayer filed appeal against the amended order and took the plea before the appellate authority that he was dealing in distribution of Fast Moving Consumer Goods (FMCG), which were subjected to tax rate of 0.2 per cent (minimum tax) as per Division IX, Part-IV of First Schedule to the Income Tax Ordinance, 2001, instead of 1 per cent (minimum tax) rate applied by the Assessing Officer. The Commissioner Inland Revenue rejected the stance of the taxpayer, who then approached the Appellate Tribunal Inland Revenue, Peshawar. The Tribunal annulled the order of the authority as a consequence the Commissioner Inland Revenue (petitioner) filed Tax References before the PHC, which were dismissed and the questions of law were answered in negative against the department and in favour of the taxpayer. The department then filed an appeal before the apex court. The question before the Court was whether subject goods could be considered as 'consumer goods' for end consumers and stand-alone constitutes consumer goods within the frame of Clause 22A read with (13AB) of Section 2 of the Ordinance. Section 2(22A) describes the 'fast moving consumer goods' which means the consumer goods which are supplied in 'retail market as per daily demand of a consumer' (excluding durable goods). The bracketed insertion was provided to the Statute via Finance Act, 2017. The judgment noted that the consumer goods are those as defined in (13AB) of section 2 of the Ordinance; i.e., 'consumer goods means goods that are consumed by the end consumer rather than used in the production of another good.' Justice Shafi Siddiqui wrote that it was imperative for the Tribunal and the High Court to have adjudged whether the goods by law were FMCG and are meant for 'direct consumption' by the end consumer rather than used in the production of another good(s) in its finished form; as only then this could have been applied for any benefit to the taxpayer. These products (Bopp Composite/Plain Film, Pet Film, CPP Metalized Film and CPP Milky Film) are primarily used as a material for packing other products for various consumer goods and are not typically sold directly to consumers as a stand-alone product. The consumer may buy products packed in such films but would not typically purchase the goods. Copyright Business Recorder, 2025
Business Recorder
02-06-2025
- Politics
- Business Recorder
Section 122 (5A) ITO: Power granted to IR commissioners is not without boundaries: ATIR
ISLAMABAD: Appellate Tribunal Inland Revenue (ATIR) has held that the powers granted to Commissioners Inland Revenue to amend assessment orders under Section 122(5A) of the Income Tax Ordinance, 2001 are not without boundaries. The ATIR emphasised that the scope of investigation and inquiry under this provision is not open-ended, and must operate within clearly defined restrictions and limitations. In a strongly worded observation, the ATIR remarked that 'justice is a concept of moral rightness based on ethics and rationality,' asserting that unchecked investigative authority undermines both the legal process and individual freedoms. ATIR further stated that the investigative proceedings under the cited provision 'suffer not only from the vice of excessive delegation of legislative authority but also amount to a patent violation of fundamental rights and constitutional guarantees.' The ruling criticised the absence of adequate safeguards and procedural clarity, arguing that this lack opens the door to arbitrary use of power. Tax lawyer Waheed Shahzad Butt says this judgment could set a precedent for future challenges to administrative overreach and highlight the growing need for a balance between state authority and individual constitutional protections. The decision is being welcomed as a reaffirmation of the principles of due process and rule of law. ATIR order stated: 'under Section 122(5A) the scope of investigation and inquiry is not open ended without any restrictions and limitations. Matter of enquiries and fishing and roving inquiries is to be seen in the context of two mandatory prescribed conditions referred in the provision of law. Enquiries cannot be conducted without the presence of twin criteria of 'erroneous & prejudicial to interest of revenue' otherwise there would be no difference between (Regular Audit) Section 177 & (Amendment of assessment) Section 122(5A). Verification of any factual controversy is obviously out of purview of section 122(5A) and requires conduct of audit (if any) under section 177. Creation of tax demand under the umbrella of Section 122(5A) is a blunt violation. There is no concept of 'unfettered discretion' in the fiscal laws and arbitrary exercise of discretionary powers has to be struck down. Justice is a concept of moral rightness based on ethics and rationality, impugned order merits, cancellation, ATIR order added. Copyright Business Recorder, 2025
Business Recorder
20-05-2025
- Business
- Business Recorder
Affected party (taxpayer): Assessment order communication mandatory: ATIR
ISLAMABAD: The Appellate Tribunal Inland Revenue (ATIR) has ruled that the communication of the assessment order to the affected party (taxpayer) is essential for the order to attain legal efficacy within the statutory timeframe. Through an order issued by the ATIR, it stated that an order passed internally on a file, but not communicated to the affected party (taxpayer) within the legally prescribed time limit, cannot be deemed to have been validly passed within that period. Prior to granting any extension in time for passing of amended order under Section 122(5A) of the Income Tax Ordinance, 2001, it is the bounden duty of the Commissioner to act impartially, providing a fair opportunity of hearing to all rival parties. It is reliably learnt that a landmark order has been passed by the ATIR on arguments made by tax lawyer Waheed Shahzad Butt wherein the ATIR held that communication of the order to the affected party is essential for the order to attain legal efficacy within the statutory timeframe. Merely signing or noting it on a file without informing the concerned party fails to meet the legal standard. Shahzad Butt Advocate, who represented the appellant, hailed the decision as a landmark in administrative and tax jurisprudence. He stated, 'This ruling is a critical reaffirmation that authorities must act transparently, within the bounds of the law, and with full regard to the rights of the parties involved. It sets a powerful precedent for future adjudication where procedural fairness is at stake.' ATIR order states 'Notice was issued on 08.01.2024 and the amended order has been passed on 08.11.2024. Resultantly, it has been proved that the order has been passed after a lapse of 305 days from the issuance of show cause notice, while as per statement of the author extension in time was sought from the concerned Commissioner after lapse of 239 days on 03.09.2024. A total period of 240 days has been provided by the legislature to dispose of the show cause notice (SCN)in the shape of assessment order. It is now settled principle of law that prior to granting extension, it is the bounden duty of the CIR to provide an opportunity of hearing to the rival parties and act like a neutral unbiased umpire. However, in the instant case, admittedly no such opportunity has been granted to the appellant, which renders the extension order illegal & void ab-initio. The impugned amended order is thus time barred, ATIR order added. Copyright Business Recorder, 2025
