Business Recorder
ISLAMABAD: In a landmark judgment, the Appellate Tribunal Inland Revenue (ATIR), has outlined the consequences of legislative errors in the substitution of Section 11B of the Sales Tax Act, 1990, through the Finance Act, 2024, under which only the Commissioner (Appeals) and the Commissioner, Inland Revenue are authorised to carry out reassessments in pursuance of orders passed by appellate authorities or superior courts. The appeal effect order passed by the Assistant Commissioner, Inland Revenue, has been held to be without jurisdiction. The background facts are that earlier Section 11B inserted through the Finance Act, 2018, provided that the Commissioner (Appeals), Commissioner Inland Revenue, or an Officer of Inland Revenue with powers to issue the appeal effect order within the prescribed period provided therein. This section was substituted through the Finance Act, 2024, and in the new provision reference, an Officer of Inland Revenue empowered in this behalf was not included, and, instead, reference was made to section 124 of the Income Tax Ordinance, 2001. Whereas facts of the case under consideration of the ATIR were that in the first round of litigation, the Commissioner (Appeals) vide appellate order dated 30 June 2024 remanded the matter arising out of the order in original dated 29 February 2024 passed by the Deputy Commissioner, Inland Revenue. Thereafter, the Assistant Commissioner, Inland Revenue, initiated remand proceedings and passed the fresh order on 30 June 2025. The registered person filed an appeal against this fresh order, which was rejected by the Commissioner (Appeals) vide order dated 30 December 2025. Being dissatisfied with the conclusion of the first appellate authority, the taxpayer filed a second appeal before the Tribunal. Before the ATIR, it was argued that after the substitution of section 11B of the Sales Tax Act, 1990, through the Finance Act, 2024, the Legislature had consciously and deliberately aligned the statutory framework with that envisaged under section 124 of the Income Tax Ordinance, 2001. It was argued that under the said provision of the income tax law, the authority to pass an appeal effect order is specifically and exclusively vested in the Commissioner, Inland Revenue, or the Commissioner (Appeals), thereby reflecting a clear legislative intent to confine such power to the designated officer at a particular hierarchical level. It was emphasized that omission of any reference to the subordinate officer in the newly substituted section 11B is neither accidental nor inadvertent; rather, it is a deliberate legislative act. The ATIR framed five legal issues from the point of issue and has answered the same as follows: (i) The authority to pass an appeal effect order is exclusively vested in the Commissioner, Inland Revenue, or the Commissioner (Appeals) (ii) Subordinate Officers lack jurisdiction to pass appeal effect orders. (iii) The delegation provision contained in section 210 of the Income Tax Ordinance, 2001, is not applicable. (iv) The doctrine of mutatis mutandis mentioned in section 11B is limited to procedural adaptation and does not extend to substantive powers. (v) Any order passed in contravention of this framework is void ab initio and without legal effect. The landmark judgment has been authored by MM Akram, and in the concluding paragraph, it has been observed as under: “Before parting with this order, it is considered appropriate to observe that the present controversy has arisen primarily due to the absence of a clear statutory mechanism in section 11B, post its substation through Finance Act, 2024,about the manner and authority for passing an appeal effect order. To obviate such ambiguities and to prevent recurrence of avoidable litigation, it is required that the Federal Board of Revenue examine this issue on a policy level and, if deemed appropriate, propose suitable legislative amendments in section 11B of the Sales Tax Act, 1990. Such legislative clarification would ensure certainty in the field, promote uniformity in practice, and safeguard the interests of both the revenue and the rights of the taxpayer.” When contacted for comments, Basharat Qureshi, a Karachi-based tax consultant, observed that the 72- pages judgment of the ATIR is a landmark in many aspects and serves as a guideline for taxpayers, tax practitioners, as well as the assessing officer, besides policymakers. Basharat noted that there was no need to substitute the existing provision of Section 11B through the Finance Act, 2024, as the earlier provision provided a limitation for passing an appeal effect order, as well as authorized any officer empowered by the Commissioner to pass an appeal effect order. Basharat urged that it is imperative that such draft procedural amendments are shared with the professionals and stakeholders to give their opinion, instead of secretively proposing amendments and in turn creating lacunas. Copyright Business Recorder, 2026
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