The Federal Board of Revenue (FBR) has been served with contempt notices by the Lahore High Court (LHC) for failing to implement its orders relating to the minimum tax computation formula used by service sector taxpayers who are responsible to pay minimum tax under section 153(1)(b) of the Income Tax Ordinance, 2001.
A single bench of Justice Shahid Jamil Khan issued the contempt decision while hearing the contempt petition, which sought contempt proceedings against Chairman FBR and two members for failing to enforce the LHC’s earlier order dated October 14, 2021.
According to the Lahore High Court (LHC), “Commitment is not being honored due to letter: Writ Petition No. 57220 of 2021 in case of Shahid Latif Khilji Vs Federation: I am directed to refer to your note dated 13.10.2021 mentioning calculations made by the petitioner in the subject petition.”
Furthermore, the notice as per Shahid Jamil Khan said, “I am further directed to enclose a copy of an email dated October 18, 2021, of Waheed Shahzad Butt wherein he has made serious objections on the proposed changes, affirming that the existing calculations in the system are correct as per law, and confirmed in certain earlier judgments (104 TAX 1 = 2011 PTD 1672) and decisions of the Federal Tax Ombudsman.”
Moreover, the LHC stated that the implementation of the adjustments can result in an unjustified loss of revenue. To avoid misunderstanding, the matter has been brought to the attention of the IR Policy Wing, along with a request to re-examine the calculation in light of the complaint’s statements and case law.
Justice Shahid Jamil also stated that the IT Chief is perplexed as to how he can write a letter/official correspondence on the objections raised by Waheed Shahzad Butt (Advocate) as a cause for withdrawing from the vow before the Court. Both the officials have been served with a notice to explain why they should not be prosecuted under the Contempt of Court Ordinance, 2003 as the offered explanation has been categorized unsatisfactory.
According to the documents, it has been revealed that Waheed Shahzad Butt sent emails to FBR in which it was written: “undersigned is a whilst-blower in 104 TAX 1 (non-corporate taxpayer) and C.No.577/2011 in Waheed Shahzad Butt Vs Secretary Revenue Division (108) TAX 155 & Secretary Revenue Division Vs Waheed Shahzad Butt 2013 (108) TAX 164] both related to Corporate sector service provider taxpayer.”
During a hearing at the LHC in a petition contesting the minimum tax applicability issue, IRS officials conceded for a tax computation that is not only clearly unconstitutional but also costs the government a lot of money. The LHC requested a response from the FBR and ordered the contempt proceedings to be delayed until November 15, 2021.
