Retrospective Application of Procedural Tax Amendment


white desk clock near pen and book
white desk clock near pen and book

In a pivotal judgment, the Lahore High Court allowed the appeal of Fauji Fresh and Freeze Ltd., challenging the order of a learned Single Judge regarding the retrospective application of an amendment to the Income Tax Ordinance, 2001. This decision underscores the correct interpretation of legislative amendments concerning tax revisions.

Key Areas:

Case Background: The appeal arose from an order dated 28.09.2020, where the Single Judge refused to apply the amendment brought by the Finance Act, 2015, to the third proviso of Section 114(6) of the Income Tax Ordinance, 2001, retrospectively. The controversy involved the tax years 2010, 2012, and 2013. Fauji Fresh and Freeze Ltd. had filed applications for revision of assessments within these years, but the Commissioner did not decide on these revisions within the stipulated 60 days.

Proviso Interpretation: The amendment introduced by the Finance Act, 2015, stated that if the Commissioner did not approve the revision of a return in writing within 60 days, the approval would be deemed granted. The Single Judge ruled that this amendment was substantive and could not be applied retrospectively, excluding tax years prior to 2015.

Court’s Analysis: The appellate court, comprising Judge Rasaal Hasan Syed and Judge Shahid Karim, held that the learned Single Judge erred in his interpretation. The amendment did not specify tax years but was related to the procedural aspect of the Commissioner’s duties. It aimed at ensuring timely decisions on tax revisions, applying to all pending cases, irrespective of the tax year involved. The court emphasized that the amendment was procedural, thus applicable to ongoing proceedings, including those before 2015.

Legal Precedents: The court’s reasoning was based on the understanding that procedural amendments are generally considered retrospective unless explicitly stated otherwise. The decision supports the retrospective application of procedural laws to pending cases.

Conclusion: The Lahore High Court allowed the appeal, setting aside the impugned order. The court held that since the Commissioner did not decide the revision within 60 days, the approval was deemed granted. This judgment ensures that procedural efficiency and legislative intent are upheld in tax administration.

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