Irrelevant appeals: SC urges govt departments to avoid unnecessary litigation

Not advisable for government to waste public time and money by filing appeals

ISLAMABAD: The Supreme Court has urged the government departments to avoid unnecessary litigation and should not file appeals as a matter of routine.

“Appeals should not be filed as a matter of routine or because a decision has been rendered against the Department. Decisions should be taken on a reasonable basis. It is not advisable for government departments to waste public time and money by filing appeals routinely”, says the three judge bench, headed by Chief Justice of Pakistan Mian Saqib Nisar while issuing 31 page detailed judgment over the appeal of Federal Board of Revenue (FBR) and other tax departments.



These departments had challenged 10 years old Peshawar High Court verdict, wherein it was held that the industries, which are functioning in the part of the Provincially Administered Tribal Areas (PATA) are not liable to pay income tax on the importation of their goods in view of Article 247(3) of the constitution.

Later, the department challenged the PHC verdict but the SC while upholding the PHC order wondered that they are at a loss to understand why and how, the present appeal has been filed.

The CJP while authoring 31 pages order said that they have been informed that the respondent (industries) has suffered substantial financial loss since the factory was shut down for over a year as a consequence of the ex parte stay order obtained by the department. The court also noted that this must have had serious consequences for the workers who lost employment.

“The position would have been different if the respondent (companies) had been engaged in an illegal activity but that is not the case pleaded by the Department…citizens of Pakistan have suffered substantial financial losses with no corresponding benefit to the Revenue Department. This can only be described as an undesirable status of affairs”

The judgment says that the tax department lacks the jurisdiction in relation to an activity taking place in PATA. However, it does have jurisdiction to carry out an inquiry in the settled areas of Pakistan where the tax laws are applicable.



“The initial burden of proof rests on the importer to establish that the goods are intended for PATA and once that has been discharged, the burden shifts to the department to establish that a fraud has been committed and the goods have, in fact, been processed or sold in the areas where the tax does apply…it cannot raise demands against the importers. This principle safeguards the interests of both sides,” said the judgment.

The judgment said that the federal government should lay down a uniform policy in terms whereof the facility for importation against post-dated cheques is extended to all the manufacturers’ in Federally Administered Tribal Areas (Fata)/PATA.

“It does not require any argument to establish that the policies in relation to grant of exemptions should be applied on a uniform and a non-discriminatory basis…power of granting exemptions is discretionary…Exemptions are to be granted and regulated in terms of consistent policies for sound reasons,” said the judgment

The court added that there is no justification for granting or refusing exemptions arbitrarily or on an unproven statement of the concerned officials. The power to grant an exemption or to decline to grant an exemption must be exercised in accordance with the general principles relating to good governance.