The High Court (HC) is set to adjudicate shortly the legality of the much-talked-about income-tax provision that allows taxmen to be rewarded with part of the money that is realized from 'outstanding' tax, courts sources said.
A company-and fiscal-law expert challenged the provision as contravention of Articles 21, 27, 83, 85, 86, 87 and 152 of the Constitution and Sections 2(58), 2(64), 3, 4, 4A and 6 of the Income Tax Ordinance 1984 in a writ petition filed with the HC in 2012.
Upon the writ, an HC bench had already issued a rule asking the authorities concerned to explain as to why such endowment 'should not be declared illegal'.
As reply to the rule, the National Board of Revenue (NBR) also submitted an affidavit-in-opposition before the court.
"Legality of the provisions is now set to undergo final adjudication in the HC soon as the matter is coming on the daily 'cause list' of the court," the petitioner, Advocate Mosharaf Hossain, told the FE.
The impugned Section 184D of the Income Tax Ordinance was originally interpolated into the law by the Finance Act 2000, and later substituted by the Finance Act 2010. Very recently, the Finance Act 2014 also slightly amended the section.
It empowered the NBR to grant reward to its officers or employees and its subordinate tax officers or any other person with regard to collection of tax, detection of tax evasion, information leading to detection of tax evasion and in the collection of revenue in excess of revenue target.
In the writ petition, the lawyer alleged that once any tax or other charges are collected in the name of government by the government functionaries concerned, and funded in favour of government exchequer, no scope remains to disburse it to anyone, even the government functionary, without sanction under Articles 85, 86 and 87 of the Constitution.
But, these articles are being breached in case of the reward to the taxmen, the writ petition says.
Section 184D also encourages the taxmen to perform arbitrary action compelling the taxpayers to pay undue tax and bribe, disrupting discipline in the tax administration, it contended.
The impugned section, as per the writ petition, also encourages ill-motivated taxmen to turn every investigation, assessment and tax collection and evasion process in a precise way to get additional money as reward, instead of timely doing the functions they were employed for.
Under the Right to Information (RTI) Act 2009, Mr Hossain added, he sought information from the NBR on February 12, 2013 regarding the amount of money given as 'reward', but to no avail yet.
However, in its affidavit the NBR said, among others, that the taxmen do not get reward for their day-to-day business. Rather a limited number of them got it for their 'more-than-regular efforts' in detention of evasion and collection of taxes.
"The tax-evaders are rich, clever and influential. They hire qualified consultants and employ resources to devise sophisticated evasion scheme. So, detection of tax evasion requires innovative, more-than-usual, highly motivated efforts and often risky initiatives by tax officials and informants," it is stated in the affidavit, signed by Md Rashedul Hasan, NBR's second secretary (taxes and legal enforcement).
And "reward motivates the people to take innovative, gallant and highly motivated efforts and risky initiatives for recovery of evaded tax," NBR said in support of the perks. It is a globally practiced strategy, it added.
However, after issuance of the rule, an HC bench heard the petitioner on several occasions. At one stage, NBR's lawyer questioned jurisdiction of that bench to hear the matter and prayed for constituting a larger bench. However, its prayer was ruled out by the HC Division on October 2, 2013 and later by the Appellate Division, too, the sources said.
The Appellate Division also sent back the matter to an HC bench comprising Justice Mirza Hussain Haider and Justice Muhammad Khurshid Alam Sarkar to hear the writ petition.
As such, the matter was included in the daily cause list of the HC bench -- court 11 (old) -- for the hearing.
The respondents made in the writ petition are the finance secretary, the law secretary, the Jatiya Sangsad secretariat secretary, the NBR chairman, the cabinet secretary and the auditor-general.
Additional Attorney-General Murad Reza appeared for the NBR while Mr Hossain himself stood for the writ petition in the court.
Challenge now on HC cause list
Mohammad Ali | Published: July 23, 2014 00:00:00 | Updated: November 30, 2024 06:01:00
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