'A high court can dismiss income tax reference'

The Supreme Court has ruled that a high court can dismiss an income tax reference for non-prosecution, dispelling the misconception that in case of a tax reference, a high court has just an advisory jurisdiction.

"The application under section 133(1), also referred to as the tax reference, is in effect an appeal and it must be construed as such,” said a 5-page order issued by a three-judge bench.

The bench issued the verdict after hearing an appeal filed by the Federal Board of Revenue (FBR) commissioner inland revenue against a high court order, dismissing a tax reference for non-prosecution.

The order, authored by Justice Syed Mansoor Ali Shah, said there is a misimpression and confusion in some quarters that a tax reference invokes advisory jurisdiction of a high court, which, according to these people, is bound to answer the legal questions brought before it.

“The application under section 133(1) of the ordinance is no different than an appeal and must be construed and applied as such," it said.
A high court on September 8, 2015 dismissed the income tax reference filed by the petitioner under Section 133 (1) of the Income Tax Ordinance, 2001 for non-prosecution.

The petitioner later filed an application for restoration of the said tax reference on June 4, 2016, after a period of almost nine months. The high court also dismissed it vide an order dated December 14, 2016.

Later, the FBR official challenged the order in the apex court.

A tax reference is filed under Section 133(1) of the Income Tax Ordinance, 2001.
Under the ordinance, an aggrieved person or commissioner may prefer an application, in the prescribed form along with a statement of the case, to a high court within ninety days of the communication of the order of the appellate tribunal under sub-section (7) of section 132.

The petitioner argued that tax reference filed under Section 133 (1) could not be dismissed for non-prosecution as it invoked advisory jurisdiction of a high court and therefore legal questions raised in the reference are to be answered by the high court, irrespective of presence of the parties or their counsel.
He also contended that in view of the unique nature of the tax reference, only Article 181 of the Limitation Act, 1908 is applicable, and therefore the petitioner had a period of three years to file an application for the restoration of the Tax Reference.

The court ruled that the application under section 133(1) of the ordinance is no different than an appeal and must be construed and applied as such. To the question of limitation for filing an application for restoration of the tax reference, the court referred to Squibb Pakistan Ltd judgment.

The order said taking application under section 133(1) of the ordinance to be an appeal, Article 168 of the First Schedule of the Act is fully applicable to the case and provides 30 days as the period of limitation for readmission or restoration of an appeal dismissed for want of prosecution.