On 6th May 2024, the Parliament amended Tax Laws under the Income Tax Ordinance, 2001, Sales Tax Act, 1990 and The Federal Excise Act, 2005. The article below will discuss all relevant changes to the Federal Excise Act, 2005.
THE FEDERAL EXCISE ACT, 2005
Three types of amendments were undertaken in the Federal Excise Act, 2005;
a) Insertions within existing Sections
b) Introduction of a new Section
c) Substitute Sections
A. INSERTIONS WITHIN EXISTING SECTIONS
S. 29 | 29. Appointment of Federal excise officers and delegation of powers.— (2) Notwithstanding the other designations of the officers of Federal Excise used in this Act or the rules made there under: (a) the Directorate General (Intelligence & Investigation) [Inland Revenue] shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and other officers with any other designation as the Board may appoint by notification in the official Gazette;
(i) specify the functions and jurisdiction of the Directorate General and its officers; and (ii) confer the powers of authorities specified in [subsection (1) of section 29] upon the Directorate General and its officers];
(b) the Directorate General 2 Internal Audit shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and other officers with any other designation as the Board may appoint by notification in the official Gazette;
(c) the [Inland Revenue Services Academy] shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and other officers with any other designation as the Board may appoint by notification in the official Gazette; [and]
(d) the Directorate General of Digital Initiatives shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.] | 29. Appointment of Federal excise officers and delegation of powers.— (2) Notwithstanding the other designations of the officers of Federal Excise used in this Act or the rules made there under: (a) the Directorate General (Intelligence & Investigation) [Inland Revenue] shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and other officers with any other designation as the Board may appoint by notification in the official Gazette; i) specify the functions and jurisdiction of the Directorate General and its officers; and ii) confer the powers of authorities specified in [subsection (1) of section 29] upon the Directorate General and its officers];
(b) the Directorate General 2 Internal Audit shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and other officers with any other designation as the Board may appoint by notification in the official Gazette;
(c) the [Inland Revenue Services Academy] shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and other officers with any other designation as the Board may appoint by notification in the official Gazette
(d) the Directorate General of Digital Initiatives shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such the officers as the Board may, by notification in the official Gazette, appoint: and
(e) the Directorate-General of law shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors, Law Officers and such other officers as the Board may, by notification in the official Gazette, appoint and the Board shall, specify therein functions, jurisdiction and powers of each such officer of the Directorate-General of law."; |
| 33. Appeals to [Commissioner] (Appeals).— [(1)] Any person other than Federal Excise officer aggrieved by any decision or order passed under this Act or the rules made there under by a [officer of Inland Revenue up to the rank of [Additional Commissioner Inland Revenue], other than a decision or order or notice given or action taken for recovery of the arrears of duty under this Act or rules made there under may within thirty days of receipt of such decision or order prefer appeal there from to the [Commissioner] (Appeals). | 33. Appeals to [Commissioner] (Appeals).— [(1)] Any person other than Federal Excise officer aggrieved by any decision or order, [if the value of the assessment or, as the case may be, refund of the tax does not exceed five million rupees] passed under this Act or the rules made there under by a [officer of Inland Revenue up to the rank of [Additional Commissioner Inland Revenue], other than a decision or order or notice given or action taken for recovery of the arrears of duty under this Act or rules made there under may within thirty days of receipt of such decision or order prefer appeal there from to the [Commissioner] (Appeals). |
B. NEW SECTION
33A. Pecuniary jurisdiction in appeals.- (1) Subject to other provisions of this Act,- (a) an appeal to the Commissioner (Appeals) shall lie where the value of assessment of tax or, as the case may be, refund of tax does not exceed five million rupees; or (b) an appeal to the Appellate Tribunal Inland Revenue shall lie where the value of assessment of tax or, as the case may be, refund of tax exceeds five million rupees.
(2) A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Commissioner (Appeals) in cases under clause (a) of sub-section (1) may file reference before the High Court in accordance with section 133 of the Income Tax Ordinance, 2001(XLIX of 2001). (3) A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Appellate Tribunal in ' cases under clause (b) of sub-section (1) may file a reference before the High Court in accordance with section 133 of the Income Tax Ordinance, 2001(XLIX of 2001). (4) The cases pending before the Commissioner (Appeals) having the value of assessment of tax or, as the case may be, refund of tax exceeding five million rupees shall on and from the 16th day of June, 2024 stand transferred to the Appellate Tribunal Inland Revenue. (5) All cases transferred from the Commissioner (Appeals) to the Appellate Tribunal under sub-section (4) shall be decided by the Appellate Tribunal within the period provided for under section 132 of the Income Tax Ordinance, 2001 (XLIX of 2001) which period shall commence from the 16th day of June, 2024.";
C. SUBSTITUTED SECTIONS
S. 34 | 34. Appeals to the Appellate Tribunal.–– (1) Any person or [officer of Inland Revenue] aggrieved by any of the following orders may within sixty days of the receipt of such orders file appeal to the Appellate Tribunal against such orders,– (a) an order passed by the [Commissioner] (Appeals); and (b) an order passed by the Board or the Commissioner Inland Revenue under section 35: Provided that the Appellate Tribunal shall decide the appeal filed under this sub-section within six months of its filing.
(3) The Appellate Tribunal may admit, hear and dispose of the appeal as per procedure laid down in sections 131 and 132 of the Income Tax Ordinance, 2001 (XLIX of 2001), and rules made thereunder. | 34. Appeals to the Appellate Tribunal.–– (1) Subject to section 33A, any person, other than a state-owned enterprise (SOE), aggrieved by any order passed by an officer of Inland Revenue, the Board or the Commissioner (Appeals) under this Act or the rules made thereunder may, within thirty days of the receipt of such order, prefer an appeal to the Appellate Tribunal or, as the case may be, a reference to the High Court:
Provided that where sub-section (11) of section 134A of Income Tax Ordinance, 2001(XLIX of 2001) shall apply, an SOE may prefer an appeal under this sub-section.; |
S. 34A | 34A. Reference to High Court.– (1) Within ninety days of the communication of the order of the Appellate Tribunal under sub-section (2A) of section 34, the aggrieved person or the Commissioner may preference application, in the prescribed form along with a statement of the case, to the High Court, stating any question of law arising out of such order.
(2) The statement to the High Court referred to in sub-section (1), shall set out the facts, the determination of the Appellate Tribunal and the question of law which arises out of its order. | 34A. Reference to the High Court.— (1) Within thirty days of the communication of the order of the Appellate Tribunal or, as the case may be, Commissioner (Appeals), the aggrieved person or the Commissioner may file a reference in the prescribed form along with a statement of the case and complete record of the Appellate Tribunal or, as the case may be, Commissioner (Appeals), before the High Court, stating any question of law or a mixed question of law and fact arising out of such order.
(2) Provisions of section 133 of the Income Tax Ordinance, 2001 (XLIX of 2001) and rules made thereunder relating to a reference to the High Court shall, mutatis mutandis, apply to references to the High Court under this Act."; |
S. 38 | 38. Alternative Dispute Resolution. -- (1) Notwithstanding any other provision of this Act, or the rules made thereunder, an aggrieved person in connection with any dispute pertaining to—
(a) the liability of duty of one hundred million rupees or above against the aggrieved person or admissibility of refund, as the case may be; (b) the extent of waiver of default surcharge and penalty; or (c) any other specific relief required to resolve the dispute, may apply to the Board for the appointment of a committee for the resolution of any hardship or dispute mentioned in detail in the application, which is under litigation in any court of law or an appellate authority, except where criminal proceedings have been initiated.
(2) The application for dispute resolution shall be accompanied by an initial proposition for resolution of the dispute, including an offer of payment of duty.
(3) The Board may, after examination of the application of an aggrieved person, appoint a committee, within fifteen days of receipt of such application in the Board, comprising, —
(i) a retired judge not below the rank of a judge of a High Court, who shall also be the Chairperson of the Committee, to be nominated by the Board from a panel notified by the Law and Justice Division for such purpose; (ii) Chief Commissioner Inland Revenue having jurisdiction over the case; and person to be nominated by the registered person from a panel notified by the Board comprising; a) chartered accountants, cost and management accountants and advocates having a minimum of ten years’ experience in the field of taxation; b) officers of the Inland Revenue Service who stood retired in BPS 21 or above; or c) reputable businessmen as nominated by Chambers of Commerce and Industry: Provided that the registered person shall not nominate a chartered accountant or an advocate if the said chartered accountant or the advocate is or has been an auditor.
(4) The Board shall communicate the order of appointment of committee to the aggrieved person, court of law or the appellate authority where the dispute is pending and the concerned Commissioner.
(5) The committee appointed under sub-section (3) shall examine the issue and may, if it deems necessary, conduct inquiry, seek expert opinion, direct any officer of the Inland Revenue or any other person to conduct an audit and shall decide the dispute by majority, within forty-five days of its appointment extendable by another fifteen days for the reasons to be recorded in writing.
(6) The decision by the committee under sub-section (5) shall not be cited or taken as a precedent in any other case or in the same case for a different tax year. (7) The recovery of duty payable by a registered person in connection with any dispute for which a committee has been appointed under sub-section (3) shall be deemed to have been stayed on the constitution of committee till the final decision or dissolution of the committee, whichever is earlier.
(8) The decision of the committee under sub-section (5) shall be binding on the Commissioner when the aggrieved person, being satisfied with the decision, has withdrawn the appeal pending before the court of law or any appellate authority in respect of dispute as mentioned in subsection (1) and has communicated the order of withdrawal to the Commissioner: Provided that if the order of withdrawal is not communicated to the Commissioner within sixty days of the service of decision of the committee upon the aggrieved person, the decision of the committee shall not be binding on the Commissioner.
(9) Subject to sub-section (10), the Commissioner shall also withdraw the appeal, if any, pending before any court of law or an appellate authority in respect of dispute as mentioned in sub-section (1) within thirty days of the communication of the order of withdrawal by the aggrieved person to the Commissioner.
(10) The aggrieved person shall make the payment of federal excise duty and other taxes and within such time as decided by the committee under sub section (5) and all decisions and orders made or passed shall stand modified to that extent.
(11) If the committee fails to decide within the period of sixty days under sub-section (5), the Board shall dissolve the committee by an order in writing and the matter shall be decided by the court of law or the appellate authority where the dispute is pending under litigation.
(12) The Board shall communicate the order of dissolution of the committee to the aggrieved person, court of law or the appellate authority and the Commissioner.
(13) On receipt of the order of dissolution of the committee, the court of law or the appellate authority shall decide the appeal within six months of the communication of said order.
(14) The Board may prescribe the amount to be paid as remuneration for the services of the members of the committee, other than the member appointed under clause (ii) of sub-section (3).
(15) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.] | 38. Alternative dispute resolution.- (1) Notwithstanding any other provision of this Act, or the rules made thereunder, an aggrieved person in connection with any dispute pertaining to
a) the liability of tax of' fifty million-rupees or above, against the aggrieved person or admissibility of refund, as the case may be; b) the extent of waiver of default surcharge and penalty; or c) any other specific relief required to resolve the dispute, may apply, except where criminal proceedings have been initiated, to the Board for the appointment of a committee for the resolution of any hardship or dispute mentioned in detail in the application:
Provided that where the aggrieved person is a state-owned enterprise (SOE), in the limit of tax liability of fifty million rupees or above mentioned in clause (a) of sub-section (1) shall not apply and it shall be mandatory for such aggrieved SOE to apply to the Board for the appointment of a committee for the resolution of any dispute under this section:
Provided further that no suit, prosecution, or other legal proceedings shall lie against the SOE in relation to the dispute resolved under this section.
Explanation. - State-owned enterprise shall have the same meaning as assigned thereto in the State-Owned Enterprises (Governance and Operations) Act, 2023 (VII of 2023).
(2) Provisions of section 134A of the Income Tax Ordinance, 2001 (XLIX of 2001) and rules made thereunder relating to alternative dispute resolution shall, mutatis mutandis, apply to applications for alternative dispute resolution under this Act.".
|
SUMMARY OF AMENDMENTS TO THE FEA, 2005
B. NEW SECTIONS
Section 33A (Pecuniary Jurisdiction in Appeals) introduces that appeals with an assessment or refund value below Rs. 5 million can now be disputed before the Commissioner Inland Revenue Appeals, however, those assessments involving an assessment or refund value exceeding Rs. 5 million must be filed directly before the Appellate Tribunal Inland Revenue.
That any appeals currently pending before Commissioner Inland Revenue Appeals will be automatically transferred to Appellate Tribunal Inland Revenue by 16.06.2024.
C. SUBSTITUTED SECTIONS
Section 34 (Appeals to the Appellate Tribunal) was substituted and states that any person aggrieved by an Order of the Tribunal other than SOE’s can file an appeal before the Tribunal or a reference to the High Court within 30 days (originally the time period was 60 days). An SOE can file an appeal before the Appellate Tribunal Inland Revenue, where an alternate dispute committee fails to decide a case within the stipulate period of 60 days.
Section 34A (Reference to the High Court) was substituted by which substantial modifications as detailed hereunder:
a) Previously, only questions of law could be referred by the taxpayer or department to the High Court within 90 days, however, now, both questions of law and facts arising from an order by the Commissioner (Appeals) or Appellate Tribunal Inland Revenue can be referred within 30 days. However, the applicant must submit the complete record of the Appellate Tribunal to the High Court within 15 days of filing the application.
b) The High Court is obligated to ensure that the Reference application is decided within 6 months from the date of filing. To accomplish this, the High Court will establish an adequate number of benches.
c) The department is prohibited from collecting the tax for 30 days from the date of receiving the Appellate Tribunal Inland Revenue order.
d) Other provisions of Section 34A have been substituted in the same manner as those substituted for Section 134A of the Income Tax Ordinance, 2001.
Section 38 (Alternate Dispute Resolution) was substituted and states the Alternate Dispute Resolution Committee has a reduced monetary limit for referral, from Rs. 100 million to Rs. 50 million. Furthermore, SOE’s are required to apply to the Board for committee appointment without any monetary limit. An offer for tax payment and acceptance of Alternate Dispute Resolution Committee’s decision must be submitted with the application. All pending appeals and litigations must be withdrawn. If ADRC fails to resolve a dispute within 60 days, the SOE may appeal to Appellate Tribunal, High Court, or Supreme Court. The Court of law or Appellate Tribunal will decide on the appeal within 90 days of communication of order. Provisions of Section 38 have been substituted in the same manner as Sec 134A of the Income Tax Ordinance, 2001.
Comments