A legal and administrative dispute has emerged between the Federal Board of Revenue (FBR) and the President of Pakistan over the implementation of a presidential order in a tax matter concerning MH Traders. The controversy highlights tensions between state organs regarding the scope of the President’s authority and the regulatory powers of tax authorities.
The issue surfaced after the FBR obtained a stay order from a provincial court challenging the President’s decision on the classification of imported goods by MH Traders. In response, the President’s Office stated unequivocally that the head of state’s orders cannot be contested in any court, emphasizing the absolute authority of the presidential office. Zia Basit, Director General Legal at the President’s Secretariat, asserted that no agency or department, including the FBR, has jurisdiction to challenge presidential directives.
The case originated when MH Traders imported goods it declared as artificial leather for football manufacturing. The FBR classified the items as polyester fabric, resulting in a tax dispute. The importer initially sought relief from the Federal Tax Ombudsman (FTO), which rejected the complaint citing lack of jurisdiction. Subsequently, MH Traders submitted a representation to the President, who overturned both the FBR’s and the FTO’s orders, granting relief to the importer.
Following this, the FBR approached the Sindh High Court, obtaining a stay on the President’s order. Chairman FBR Rashid Langrial clarified that the department challenged the order not in the President’s capacity as head of state, but as an appellate authority with quasi-judicial powers in tax matters. This stance, however, has been disputed by the President’s legal team, which highlighted that prior instructions from the Law Division explicitly bar challenges to presidential or FTO decisions, citing Section 18 of the Federal Ombudsman Institutional Reforms Act, 2013.
The Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla, reviewed the issue, focusing on the non-implementation of the presidential order. During the proceedings, the FBR stressed that if the President’s orders contradict statutory processes, such as customs adjudication, it could undermine the enforcement of the Customs Act of 1969 and other allied laws. The department warned that traders might bypass legal procedures entirely, seeking relief directly from the President, potentially compromising the operational authority of FBR field formations nationwide.
The President’s Office countered these claims, noting that fresh directives from the Law Division supersede previous cabinet instructions. These directives clearly mandate strict observance of Section 18, requiring all ministries and divisions to withdraw appeals or representations filed against orders of the FTO or the President when acting as appellate authority. According to the DG Legal, the FBR’s challenge is inconsistent with these instructions.
The case also touches on technical aspects of import regulations. FBR officials highlighted that MH Traders was only operating sewing and knitting machines without evidence of football manufacturing, which formed the basis of the original tax classification dispute. The department has consulted the Office of the Attorney General for Pakistan to clarify its legal stance and may adjust its court proceedings accordingly based on guidance received.
This unfolding dispute underscores the complex interplay between presidential authority, tax administration, and statutory compliance, raising questions about the limits of executive powers versus regulatory enforcement. The final resolution will have significant implications for governance, trade regulation, and the procedural authority of federal agencies.
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