AMJAD QADOOS VS CHAIRMAN, NATIONAL ACCOUNTABILITY BUREAU, (NAB), ISLAMABAD, 2015 PTD-SUPREME-COURT 525 (2014)

(On appeal against the judgment dated 17-4-2014 passed by Peshawar High Court, Peshawar in Writ Petition No. 185-A of 2014)

Income Tax Ordinance (XLIX of 2001)---

----S. 227(2)(3)---National Accountability Ordinance (XVIII of 1999), S.3---Tax Officer alleged to have acted unlawfully---Investigation/ prosecution of such Tax Officer by National Accountability Bureau (NAB)---Whether permission of Federal Board of Revenue was required---Section 227(3) of the Income Tax Ordinance, 2001 provided that acts done by officials of the Federal Board of Revenue were protected to the extent that no inquiry could be initiated against such officers in respect of their official acts without the permission of the Board---Wherever the officials of the income tax department or of any other agency did any act in their official capacity in furtherance of the objectives of the legislation which gave them the power to do so, such acts should remain protected---Such protection, however, could only be extended to legitimate acts i.e. those done in good faith, bona fidely and in the interest of the State and not to acts which were allegedly unlawful---Where a Tax Officer did an act which was allegedly unlawful, e.g. issuing/authorizing bogus and fraudulent tax refunds, then such protection was not available to him and NAB Authorities would not need permission from Federal Board of Revenue before initiating an inquiry into the conduct of such official.

Kamran Murtaza, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Petitioner.

Akbar Tarar, Additional P.-G. NAB and Saeed Akhtar, Assistant Director NAB, Khyber Pakhtunkhwa for NAB.

Syed Zubair Shah, D.C. I.R. for FBR.

Salman Aslam Butt, Attorney-General for Pakistan on Court's Notice.

Date of hearing: 13th June, 2014.

JUDGMENT

SARMAD JALAL OSMANY, J.---This petition impugns the Judgment of the learned Peshawar High Court (Peshawar) in Writ Petition No. 185-A of 2014 filed by the petitioner whereby same was dismissed.

2.Briefly stated the facts of the matter are that the National Accountability Bureau (NAB) had initiated an investigation into reported allegations of unlawful tax refunds in the Regional Tax Office, Abbottabad wherein the petitioner was posted as an Officer and had been held responsible by the NAB authorities to have done so along with other Officers to the tune of crores of rupees. In particular the petitioner had been held responsible for issuing unlawful tax returns in the amount of Rs.70,000,000 out of which statedly an amount of Rs.91,00,000 has been recovered by the NAB. The initiation of such investigation prompted the petitioner to file a number of petitions before the Peshawar High Court, Abbottabad Bench, the gist of which is that the petitioner was directed to join the investigation and the NAB authorities directed to do so within the ambit of law and not to harass the petitioner in any manner whatsoever. In the latest Petition the petitioner had prayed that since the matter had not been concluded since 2011 by the NAB authorities therefore further investigation may be quashed and the matter be concluded in his favour and that he should be declared innocent. As stated above the learned High Court dismissed the petition with the observation that the pleas raised by the petitioner did not have any force and that the NAB authorities would be at liberty to do the needful in accordance with law and to conclude the investigation and submit a Reference to the learned NAB Court etc. We have been informed that at the moment the petitioner is in jail as the request for remand by the NAB authorities had been turned down by the learned Accountability Court.

3.As observed in Order dated 5-6-2014, Mr. Kamran Murtaza, learned Advocate Supreme Court appearing for the petitioner had relied upon section 227(2) of the Income Tax Ordinance, 2001 for the proposition that unless the Federal Board of Revenue authorizes any investigation/inquiry against any officer/official for anything done in his official capacity under the Ordinance, no governmental agency shall do so on which a notice had been issued to the learned Attorney-General for Pakistan to assist the Court. It was also observed that section 3 of the NAB Ordinance whereby the provisions of the Ordinance would have effect, notwithstanding anything contained in any other law for the time being in force, also needed to be interpreted.

4.Mr. Salman Aslam Butt, learned Attorney-General of Pakistan in this regard has submitted firstly that in the case of Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary M/o Finance, Islamabad and 6 others (PLD 1997 SC 582) it was held that a special statute would prevail over the Income Tax Ordinance and consequently the provisions of Economic Reforms Ordinance, 1992 being subsequent in time and being special in their nature would prevail over the provisions of section 80(d) of the then Income Tax Ordinance, 1979 qua the protection given by the former Ordinance under section 6 thereof to the assesses. In this regard learned Attorney General has also referred to the case of Khan Asfandyar Wali and others v. Federation of Pakistan through Cabinet Division, Islamabad and others (PLD 2001 SC 607) wherein it has been held that the NAB Ordinance is a special law and hence would prevail over general laws. So also in the case of I.G. HQ Frontier Corps and others v. Ghulam Hussain and others (2004 SCMR 1397) it was held that a special statute overrides a general statute even though the latter may have been earlier in time. Consequently learned Attorney-General is of the view that even though the NAB Ordinance was enacted in 1999 and section 227(3) was inserted in the Income Tax Ordinance by the Finance Act, 2010, yet the former would prevail being a special statue and hence there would be no need to obtain any sort of permission from the Federal Board of Revenue in order to investigate/prosecute the petitioner. Learned Attorney General has also referred to section 31-D of the NAB Ordinance wherein it has been specifically provided that without the permission of the State Bank of Pakistan, no inquiry/investigation or proceedings in respect of imprudent, defaulted or rescheduled loans shall be initiated or conducted by the NAB against any person, company or financial institution without reference to the Governor, State Bank of Pakistan. Consequently this is the only exception contained in the NAB Ordinance with regard to seeking of permission from any authority before commencing any investigation into any official, person or institution under the NAB Ordinance. Furthermore per section 3 of such Ordinance the same is to prevail notwithstanding anything contained in any other law to the contrary. In this regard Learned Attorney-General has referred to the cases of Messrs Kaloodi International (Pvt.) Ltd. and another v. Federation of Pakistan and others (PLD 2001 Karachi 311) and Islamuddin Shaikh v. Federation of Pakistan and others (PLD 2001 Karachi 419).

5.Learned Attorney-General's alternative argument is that even otherwise the acts which are protected in section 227(3) of the Income Tax Ordinance are those done by an Officer in his official capacity under the Ordinance/Rules/instructions or directions which would mean that these have to be done in accordance with the law with bona fide intent and without any ulterior motive. As the allegations against the petitioner are that he issued/authorized bogus tax refunds to even those persons who were not tax payers, therefore such actions could not be protected under the said provisions of the Income Tax Ordinance.

6.Mr. Akbar Tarar, learned Additional Prosecutor-General, NAB has fully supported the arguments of the learned Attorney-General and also added that the amendment in section 227(3) came into operation through the Finance Act, 2010 and this was in violation of Article 73(2) of the Constitution whereby the Government was authorized to make amendments in money bills which are not relatable to section 227(3) of the Ordinance.

7.Mr. Kamran Murtaza, learned Advocate Supreme Court appearing for the petitioner has, in reply, firstly submitted that the authorization of tax refunds was an official act admittedly within the frame work of the Income Tax Laws and hence fully protected under section 227(3) of the Ordinance. He has further relied upon section 3 of the Income Tax Ordinance for the proposition that the same is a non obstante clause and has overriding effect over all other laws including NAB Ordinance and consequently the permission of the Federal Board of Revenue was a prerequisite for initiation of any inquiry into the allegations levelled against the petitioner. Furthermore, per learned Advocate Supreme Court, in section 4 of the Federal Board of Revenue Act, 2007 under subsections (g) and (i), the Board can take appropriate measures to control corruption and hence if any authority which should have acted in the matter against the petitioner, it should have been the Board rather than the NAB authorities. In any event, per learned Advocate Supreme Court, the investigation started in 2011 and hence the initial permission could have been taken from the Board but the NAB failed to do so which speaks volumes about its mala fide intent. Learned Advocate Supreme Court has further submitted that in terms of section 18(c) of the NAB Ordinance no authorization has been received from the Chairman NAB by its regional office at Peshawar to proceed in the matter against the petitioner and hence the inquiry itself is unlawful.

8.We have heard the learned Attorney-General of Pakistan, learned Additional Prosecutor-General, NAB as well as learned Advocate Supreme Court and perused the record along with their assistance.

9.Regarding the controversy as to whether the NAB Ordinance would prevail over the Income Tax Ordinance, it would be seen that both these pieces of legislation contain non obstante clauses which provide that the provisions of each Ordinance would prevail notwithstanding anything to the contrary contained in any law for the time being enforce. Apparently this seems to be the cause of conflict in the provisions of the aforementioned legislative instruments i.e. the Income Tax Ordinance and the NAB Ordinance. It would be seen in this regard that such non obstante clauses are contained in most legislative instruments which either curtail a citizen's liberty or his financial resources and perhaps for the reason that these are designed to be watertight and leave no room whatsoever for the citizen to escape from these provisions once it is established that he has committed any criminal offence or is required to pay any tax to the State. Hence the provisions of section 227(3) are designed to protect the officers who implement the Income Tax Ordinance in order to collect revenue for any acts done in their official capacity in this regard so as to not make them vulnerable to prosecution at the whims of any person/agency. In our opinion the answer to this controversy would be to determine whether or not any of the statutes is a special statute which would then either prevail over the other one or if both are special statutes then what would be the situation. In this regard reference can be made to the case of Messrs Elahi Cotton Mills Ltd. and others (Supra) in which it has been held in no uncertain terms that the Income Tax Ordinance is a general statute qua the Economic Reforms Ordinance, 1992 and hence the provisions of the latter would prevail. Similarly it was held in the case of Khan Asfandyar Wali and others (supra) that the NAB Ordinance was a special statute and hence would prevail over the general laws although at the same time certain provisions thereof were struck down and certain recommendations were made to the Federal Government to amend the same. Finally in the case of I.G. HQ Frontier Corps and others (Supra) it has been held that a special law would prevail over a general law although it has been enacted after the said general law. In view of the foregoing discussion we have no hesitation in holding that the NAB Ordinance is a special law and hence would prevail over the provisions of the Income Tax Ordinance being the general law.

10.The second legal question is whether even otherwise acts done by the officials of the Federal Board of Revenue were protected under section 227(3) of the Income Tax Ordinance to the extent that no inquiry could be initiated against such officers in respect of such acts without the permission of the Board. In this regard we may observe that such provisions are found in most fiscal and criminal statutes as indeed these retrain the citizen's most fundamental rights i.e. the right of liberty/ freedom and the right to engage in any profession of trade for the purpose of generating income and rightly so because such rights are most jealously guarded both by the Constitution as well as the citizen himself and are amongst the fundamental rights given to the people of Pakistan in the Constitution. Hence it is quite understandable that wherever the officials of the income tax department or of any other agency do any act in their official capacity in furtherance of the objectives of the legislation which gives them the power to do so, these should remain protected. However in our opinion such protection can only be extended to legitimate acts i.e. those done in good faith, bonafidely and in the interest of the State and not in the present case where the act done is alleged to be an unlawful one as fraudulent income tax refunds. Hence in any event there was no need for the NAB authorities to seek permission of the Federal Board of Revenue before initiating an inquiry into the conduct of the petitioner.

11.Insofar as learned Additional Prosecutor-General, NAB's argument that section 227(3) of the Income Tax Ordinance came into effect vide Finance Act, 2010 and hence is ultra vires of Article 72(3) of the Constitution whereby a money bill could be initiated by the Government, we may observe that though section 227(3) does not appear to be connected with a money bill, however we would leave this controversy to be decided in any other appropriate matter as we have otherwise come to the conclusion that the NAB authorities are well within their rights to initiate an inquiry into the conduct of the petitioner notwithstanding the provisions of section 227(3) of the Income Tax Ordinance.

12.Finally as regards Mr. Kamran Murtaza's contention that so far three years have elapsed without any prosecution being made in the matter by the NAB authorities and hence the petitioner should not be further tortured or tormented in the matter and a final decision should be made as to whether or not a Reference should be filed, we may observe that per the I.O. who is present in Court and Syed Zubair Shah, D.C. I.R. FBR the petitioner has never cooperated with the NAB authorities and by utilizing the judicial channels has succeeded on one ground or other to avoid being arrested and it was only a few weeks ago that this was done but yet he was not given into the custody of the NAB authorities. Consequently the investigation could not be completed against him. In our opinion this certainly is a mala fide attempt on behalf of the petitioner to avoid arrest which he has been doing so successfully till only recently. We also note that he has not remained with the NAB authorities even for a single day.

13.For all the foregoing reasons we had dismissed this petition vide short Order passed earlier in the following terms:--

"For reasons to be recorded later, this petition is dismissed. However as the learned Additional PG NAB has stated that yet the custody of the petitioner has never been given for a single date to the NAB authority, the petitioner is directed to show cause as to why his custody should not be handed over to the NAB authority. The case is adjourned to the next week."

MWA/A-8/SCPetition dismissed.