TI-Pakistan seeks suo motu action against untaxed/black money

KARACHI: Transparency International Pakistan refers to the news report published in Business Recorder of 3rd April 2018 disclosing that Lahore High Court has declared FBR “Tax Incentive Scheme” of 2013, as illegal and without lawful authority (Annex-A), and requested to take suo-moto action against untaxed/black money whitened by notification S.R.O 1065 - Financial NRO (Tax Amnesty) at the cost of public exchequer, declared illegal by LHC.

The news report has revealed:

1. “The Lahore High Court has declared former Prime Minister Nawaz Sharif’s “Tax Incentive Scheme” introduced through SRO 1065(I)/2013 as illegal and without lawful authority, while deciding a petition filed by a Lahore-based tax lawyer Waheed Shahzad Butt. Sources told Business Recorder that Tax Incentive Scheme was introduced by the then Prime Minister Nawaz Sharif, through SRO 1065(I)/2013, dated 20.12.2013, causing a multi-billion rupees loss to the National Exchequer”.

2. Pakistan at presently is facing war against terrorism and corruption (financial corruption/tax evasion at large scale) and any such scheme to help tax evaders/dodgers under instructions of Prime Minister Office, amounts to sabotaging the Pakistan Armed Forces efforts to counter terrorism and corruption. Instant request is forwarded with the understanding that “A system is corrupt when it is strictly profit-driven, not driven to serve the best interests of its people”.

3. Even the intention of making any scheme to legalize illegal assets is an act of Corruption and Corrupt practice under Section 9 of National Accountability Bureau Ordinance 1999:

(vi) if he misuses his authority so as to gain any benefit or favour for himself or any other person, or renders or attempts to render or willfully fails to exercise his authority to prevent the grant, or rendition of any undue benefit or favour which he could have prevented by exercising his authority];

4. This view point has also been confirmed by the Hon’ble Supreme Court of Pakistan in following cases.

2014 SCMR 585 - Supreme Court of Pakistan

S. 9(a)(vi)— corruption and corrupt practices — Common intention/abetment by public servant—Scope—Section 9(a)(vi) of National Accountability Ordinance, 1999 covered crimes committed with common intention as well as abetment—Public servants who abetted the commission of corruption by allowing acts which it was their duty to stop should be proceeded against under S.9(a)(vi) of National Accountability Ordinance, 1999

2012 SCMR 1757 - Supreme Court of Pakistan

“ ...In the light of the above we are disposing of the grounds on the basis of which leave to appeal was granted, in the following manner.

(i) We find the appellant guilty of misconduct for his role in a transaction which may be considered private, but was executed with a mala fide intention to defraud a person and therefore was unbecoming of a Judicial Officer.

(ii) It is prima facie clear that the appellant had been misusing his judicial office to help and assist his brothers and nephews in acquiring or disposing of properties profits and gains of which were shared by him and this tantamounts to abuse ofjudicial powers.

“ ...that it was prima facie clear that Judicial Officer had been misusing his Judicial Office to help and assist his brothers and nephews in acquiring or disposing of properties, profits and gains of which were shared by him, which tantamounted to abuse of judicial powers—Appeal was dismissed, in circumstances.

M.A. Rahman v. Federation of Pakistan and others 1988 SCMR 691; Inspector-General (Prisons) N.-W.F.P. v. SvedJaffar Shah, Ex-Assistant Superintendent Jail and others 2006 SCMR 815; Auditor-General of Pakistan and another v. Ikramullah Khan 2002 SCMR 584 and Auditor-General of Pakistan and others v. Muhammad Ali and others 2006 SCMR 60 ref.

5. TI-Pakistan is of the firm view that tax amnesty scheme for tax evaders is nothing but height of immorality fully sponsored by the State. The Parliament instead of entertaining any such scheme should seriously consider introducing ASSET-SEIZURE SCHEME to confiscate undeclared/ untaxed assets created from black/undisclosed money and make laws to bring back looted money from tax cheaters/plunderers.

There cannot be two opinions that tax amnesty and black money whitening schemes constitute acts of betrayal cheating the honest and loyal taxpayers and deceiving the exchequer technically.

6. Tackling twin menace of black money and tax evasion has always been a failure of Pakistan’s taxation system. Instead of dealing with these issues with an IRON HAND, Governments in past have been colluding with tax evaders, and have been pardoning the corrupt and appeasing tax evaders through various laws and amnesty schemes. This is the time for the Government to decide that it should not allow such notorious AMNESTY SCHEMES which are against legal ethics and good governance. Government should find out, how this black money got generated in the first place when there are SO MANY REVENUE EMPLOYEES getting their salaries out of tax collected from public money. Anyone can easily find out unaccounted money. Announcing Tax Amnesty Schemes time and again is nothing but showing helplessness of FBR in tackling black money.

7. Notification SRO 1065(I)/2013 dated 20-12-2013 introducing Amnesty Scheme (Annex- 13] for tax dodgers by inserting clause 86 in Part IV of Second Schedule to the Income Tax Ordinance, 2001 is patently illegal and unconstitutional being ultra vires, discriminatory and based on mala fides. Quite surprisingly clarification on the issue circulated by the FBR vide C. No. 4(67)S(ITPV2015/113604 dated 03.12.2015 issued under the signature of learned Secretary- IR Income Tax Policy, is an eye opener...!!! (Annex-C)

8. This is to point out here that any action to provide an illegal benefit in any taxation matter is Corruption and Corrupt practice under NAB Ordinance 1999. It is need of the hour to immediately initiate action against the tax evaders / plunderers after obtaining vital information from the Head of Public Body Federal Board of Revenue.

9. The honorable Court is requested to intervene, and look into the list of beneficiaries of last 5 Tax Amnesty Schemes of FBR (during last 15 years), which will reveal almost many known mega builders, mega businessmen, mega media houses and others who availed tax amnesty, without any increase in number of Tax payers, which has reduced from 2.1 million in 2006 to only 0.94 million in 2013.

Transparency International Pakistan is striving for across the board application of Rule of Law, which is the only way to stop corruption.—PR