ISLAMABAD: The Supreme Court has held that lethargy on part of the Federal Board of Revenue (FBR) in not collection of taxes from defaulters will not be of any advantage to an informant who points out evasion or non-payment of taxes by a person or a section of society.

However, if a person drew the tax department’s attention to a particular person or category of persons who have failed to pay taxes, it would not constitute ‘definite information’ within the ambit of tax evasion, Justice Faisal Arab observed in a judgement he wrote recently.

He made the observation on a dispute about a reward claim filed by a person who had written an article highlighting the non-payment of taxes by seafarers working on foreign flagships.

A three-judge Supreme Court bench, comprising Justice Gulzar Ahmed, Justice Qazi Faez Isa and Justice Faisal Arab, had taken up the appeal of the Revenue Division secretary against Muhammad Junaid Talat, who had written the article in Urdu Weekly Takbeer.

The dispute over reward money arose when, in 1999, Mr Talat wrote the article about how Pakistani seafarers working on foreign flagships on the high seas did not pay income tax. Following this call to attention, the income tax department sent 812 seafarers notices for payment of income tax, the amount of which came up to Rs86.606 million, and followed it with ex parte assessment orders.

Mr Talat calculated the reward money he was apparently owed for being an informant under the Reward Order dated May 14, 1974, and lodged a claim for the payment of Rs1.859m.

But before the reward could be paid to Mr Talat, the income tax department commissioner, exercising suo motu powers under Section 122-A of the Income Tax, Ordinance, 2001, examined the assessment orders issued to Pakistani seafarers and set them aside on the grounds that the residential status of a person was the prime factor in determining their tax liability. In this case, it was not ascertainable with regard to Pakistani seafarers discharging their duties on high seas beyond the territorial limits of the country.

After being refused, Mr Talat filed a complaint with the Federal Tax Ombudsman (FTO) who, on July 16, 2001, ordered the payment of a reward to Mr Talat. Subsequently the income tax commissioner gave him Rs3,741 against the recovery of Rs14,910 as income tax collected from only one seafarer because the Reward Order of March 27, 1980 gave instructions for payment of reward only upon recovery of tax.

Published in Dawn, June 4th, 2018