Table of Contents
- What This Case Is About
- Who Filed the Case
- What the Law Says
- Main Question Before the Court
- What the Lawyers Said
- Petitioner’s Side
- Government’s Side
- What the Court Observed
- Final Decision of the Court
- Why This Case Is Important
- Old Cases Mentioned
- Conclusion
1. What This Case Is About
This case is about whether the Appellate Tribunal Inland Revenue (ATIR) can ask taxpayers to pay part of the disputed tax before giving them a stay order. A stay order means the tax department cannot collect the money until the appeal is decided.
The Lahore High Court ruled that these payment conditions were not legal.
2. Who Filed the Case
Muhammad Zubair and some other taxpayers filed writ petitions in the Lahore High Court. The Tribunal had granted them short-term stay (15 to 60 days), but only if they deposited 5%, 10%, 25%, or fixed amounts of tax within a few days.
They said these conditions were unfair and against the law.
3. What the Law Says
Section 131(5) – Income Tax Ordinance, 2001
This section allows the Appellate Tribunal to stop tax recovery during an appeal. It does not say the taxpayer must first deposit a part of the tax.
Section 133(10) – Income Tax Ordinance, 2001
This section applies to appeals in the High Court. It says the taxpayer must deposit at least 30% of the tax to get a stay. But this rule does not apply to the Tribunal.
4. Main Question Before the Court
Can the Appellate Tribunal legally order a taxpayer to pay part of the tax before granting a stay during appeal?
The court answered: No.
5. What the Lawyers Said
Petitioners’ Side
- The Appellate Tribunal is the first independent forum outside the tax department.
- The law does not allow forcing a payment for a stay.
- If payment is required, it destroys the right to appeal.
- The Tribunal gave no reasons for these payment conditions.
Government’s Side
- The Tribunal has the power to use its judgment.
- These payment orders are reasonable conditions.
- The Tribunal did nothing wrong by adding these conditions.
6. What the Court Observed
The Lahore High Court said:
- The Tribunal is the first place for independent review.
- Taxpayers must have easy access to justice.
- Section 131(5) does not require any payment for a stay.
- The High Court’s 30% rule does not apply here.
- The Tribunal gave these payment conditions without any reasoning.
- This shows poor use of discretion and lack of proper thinking.
- These conditions are unfair, arbitrary, and have no legal value.
7. Final Decision of the Court
The Lahore High Court allowed all four petitions:
- It removed the payment conditions from the Tribunal’s stay orders.
- It ordered the Appellate Tribunal to decide the pending appeals within 30 days.
- It did not award costs to either side.
The court also asked the office to send a copy of the judgment to the Tribunal.
8. Why This Case Is Important
This case protects taxpayers by:
- Allowing fair and free access to appeals.
- Stopping unjust conditions on stay orders.
- Making sure the law is followed properly.
- Reminding courts and tribunals to use their powers carefully.
9. Old Cases Mentioned
The court referred to earlier similar cases:
- Pak Saudi Fertilizers v. Federation (2002 PTD 679)
- Z. N. Exporters v. Collector Sales Tax (2003 PTD 1746)
- Brothers Engineering v. Appellate Tribunal (2003 PTD 1836)
- Fauji Oil Terminal v. Pakistan (2012 PTD 1762)
- IESCO v. Additional Commissioner Inland Revenue (2024 PTD 30)
These cases supported the idea that stay orders should be unconditional unless clearly justified.
10. Conclusion
The Lahore High Court clearly said that forcing taxpayers to pay part of the disputed tax before a stay is granted is not allowed by law. The court set a strong example by striking down unfair and unreasoned conditions. This case is a big win for taxpayers and a reminder for tribunals to follow the law carefully.