ISLAMABAD: The Islamabad High Court (IHC) on Monday issued notices to secretaries cabinet division, law and justice, finance and chairman Federal Board of Revenue (FBR) on a petition filed by 32 senators against the Finance Act 2017.

The Act empowers the finance minister and the FBR to exercise powers of the federal cabinet in matters related to taxation.

Senators belonging to the PPP, PTI, PML-Q, ANP, MQM, JI and independents have challenged the Act in the IHC.

The lawmakers contended that the substitution of term ‘federal government’ with ‘board’ [Federal Board of Revenue] in the Customs Act 1969, Sales Tax 1990 and Federal Excise Act 2005 through the Finance Act 2017 was ultra vires of the Constitution.

32 senators have moved IHC against delegation of govt’s taxation powers to finance minister, FBR

Mohsin Kamal, the counsel for the petitioners, said the senators had the mandate to protect rights of the federating units and ensure that devolution of powers took place within the constitutional parameters.

He said the Ministry of Law and Justice and the Ministry of Finance introduced the Finance Bill 2017 proposing to amend the Customs Act 1969, Sales Tax 1990 and Federal Excise Act 2005.

The bill, introduced by the government as a money bill, was adopted by the National Assembly on June 13, 2017, and became the Finance Act 2017 despite reservations of the opposition benches.

Mr Kamal said the Finance Act having been enacted as a money bill can only amend the taxing statutes to the extent of fiscal and financial matters which were duly provided in Sub-Article 2 of Article 73 of the Constitution.

He said the substitution, whereby all powers and functions of the federal government as provided in the taxing statutes had been shifted and delegated to the FBR, was illegal.

“The act of delegating powers and functions of the federal government to the FBR in relation to matters falling under the taxation statutes violates Article 90, 91 and 99 of the Constitution, 18th amendment, Rules of Business 1973 and the dictum laid down by the Supreme Court,” he added.

He said that in utter disregard to the mandate of the Constitution the Ministry of Law and Justice and the Ministry of Finance had delegated the powers and functions of the federal government to the FBR without resorting to Article 70 of the Constitution.

“Such delegation of powers cannot be carried out under the garb of Article 73 of the Constitution and hence the act of the respondents is capricious and unconstitutional,” he contended.

The counsel requested the court to declare that the substitution of term ‘federal government’ with the FBR was ultra vires of the Constitution and the amendment through the money bill under Article 73 was opposed to Article 70 as unlawful.

He requested the court to permanently restrain and prohibit the respondents from giving effect to the impugned amendment or from taking action there under.

Published in Dawn, September 19th, 2017