FBR SROs AND TAXATION IN PAKISTAN: A CONSTITUTIONAL ANALYSIS

Abstract It is provided in Article 77 of the Constitution of Pakistan, 1973 that no tax shall be levied for the purposes of the Federation except by or under an Act of Parliament. However, in a modern revenue administration system, it is the duty of Parliament to delegate rule making powers and the Federal Board of Revenue (FBR) has been constantly doing so by issuing Statutory Regulatory Orders (SROs). This research is concerned with the constitutional boundaries of that delegation. It relies on a qualitative doctrinal approach to the Constitution, Income Tax Ordinance, 2001, Sales Tax Act, 1990, Federal Excise Act, 2005, Customs Act, 1969, a number of SROs, and the Pakistani case law. The study begins by outlining the concept, rationale, merits, and potential dangers of delegated legislation, as well as the doctrine of excessive delegation, which states that Parliament can delegate detail to the Executive but cannot abdicate its basic role of legislation. It then outlines the federal scheme of taxation as set out in the Constitution, including the Federal Legislative List, money bills, doctrine of separation of powers, and doctrine of ultra vires. Selected SROs that have been put to the test under income tax, sales tax and federal excise law are tested against their parent laws, and the judicial approach is analyzed by quoting the leading cases including Mustafa Impex v. Government of Pakistan (PLD 2016 SC 808) and others. The results indicate that delegated taxation is constitutionally acceptable and practically indispensable, provided that it is based on a clearly formulated legal mandate, is issued by the proper authority as per a statutory prescribed procedure, complies with the content of the parent Act and does not substitute for the core features of the tax. The research identifies the flaws in the current system, including broad enabling provisions without any guiding principles; SROs which change rates and exemptions in a manner similar to law-making; procedural weaknesses like bypassing the Cabinet; weak parliamentary control after the issuance of SROs and the number of SROs that is detrimental to legal certainty. The study suggests introducing statutory standards in the parent tax laws, compulsory laying of major SROs in Parliament, parliamentary scrutiny of the SROs, a reporting requirement by FBR every year, strict cabinet procedure and better publication of the SROs, and continuing strict judicial application of the excessive-delegation doctrine. It’s not that SROs should be eliminated, but that they should be disciplined within a set of well-defined legal boundaries and accountability.