1992 PLP 2568 (MLD)

Minister for Finance Economic Affairs,, . . Government of Pakistan, Block `Q', Pak Secretariat, Islamabad. Subject: 1991‑92 BUDGET: IMPROVEMENTS IN THE EXISTING TAX SYSTEMS THROUGH COMPUTERISATION Dear Sir, The 1991‑92 budget is historic, as about Rs.10 billion are being generated through undertaking improvements in the existing tax system, whereas in the previous budgets the budget measures with additional taxes, used to be about 6 to 7 billion rupees only. To achieve this gigantic target, it is essential that all necessary measures are adopted at the earliest. In this connection the most important measure is the installation on priority basis of suitable computer systems (alongwith data transmission and communication links), in all the tax departments and the CBR. However, if the conventional Government procedures are followed, computerisation would take a very long time resulting in colossal loss of revenue, loss of revenues is one thing the nation cannot afford. Therefore, it is of utmost importance that computerisation of the tax departments be carried out on a war‑footing, and furthermore, one Central agency be delegated the powers for its implementation. At present, computerisation by each tax department is being carried out independently, with the result that the computers in one tax department are incompatible with those of the other departments. The operating systems are different, the programming languages are different and the hard wares are different integration and compatibility between the computers of all tax departments is essential. Sometime back, while discussing the subject, we had offered our services for carrying out the computerisation of the tax departments. A few days back, again this subject was discussed by your kind self with the undersigned, when it was agreed that the computerisation, automation and establishment of suitable communication links between the tax departments and CBR, should be entrusted to the Commission. Accordingly we would be highly obliged if in this connection necessary formalities are carried out at an early date, ensuring the following: (a) The Commission be empowered to carry out the creation of data bases, computerisation and automation of the Tax Departments and the Central Board of Revenue, alongwith the establishment of modern communication links between' them. In this connection the Commission be authorised to have the powers of the Government. (b) Necessary funds in this regard be placed at the disposal of the Commission. (c) The Commission be empowered to negotiate with and engage companies/firms having experience in systems analysis, computer programming, etc. (d) The Commission be further authorised to arrange necessary hardware, communication links, arrangement of necessary space, air conditioning, furniture, standby generators, equipment uninterrupted power supply etc., alongwith necessary peripheral and auxiliary equipment. (e) Commission, be further authorised to either take steps outlined in `c' and `d' together, to suitable vendors who have experience of carrying out both functions combined. (f) Hiring of necessary staff in connection with computerisation, automation and establishment of communication links. (g) Any other items/measures which may be necessary for speedy creation of data bases, computerisation, automation, establishment of communication links, Management Information Systems, etc. (h) Negotiations with the World Bank, Asian Development Banks, UNDP and other loan‑giving and technical assistance organizations etc. to obtain computer hardware, communication links, software and the services of firms of systems analysis and computer programmers etc. Since the end‑user, is the Central Board of Revenue and its tax departments, all computerisation will, of course, be designed keeping in view their requirements. You will be pleased to know that we have already arranged some meetings regarding computerisation of "valuation" and "warehousing" of Customs House, and creation of data‑base of Tax Payers in the Income Tax Department. In this connection, the Customs, Sales and Excise Departments have already supplied us with their ultimate requirements of computerisation, which will be broken‑down into short term and long term implementation plans. The Income Tax Department is at present in the process of preparing a similar brief, which we hope to obtain very soon. Hoping that you will find that above in order, and awaiting to hear from you. I remain, Yours faithfully, (Sd.) (Syed Mazhar Ali) Chairman:' The above letter of respondent No.1 was replied by the Minister of Finance, as under:‑ MINISTER FOR FINANCE AND ECONOMIC AFFAIRS GOVERNMENT OF PAKISTAN D.O.No.2349‑FM/91 Islamabad the 27‑6‑1991. Subject: 1991‑92 BUDGET, IMPROVEMENTS IN THE EXISTING TAX SYSTEMS THROUGH COMPURTERIZATION Dear Senator Mazhar Ali, I am grateful for your letter dated 22 June, 1991 on the above subject. I fully share your view that to realize the additional revenues from improvements in the tax system, as visualized in the budget, all necessary measures have to be adopted at the earliest.

2. In this context we 'welcome your proposal that the Resource Mobilization and Tax Reforms Commission should be empowered to carry out the creation of data‑bases, computerization and automation of the Tax Departments and the Central Board of Revenue, alongwith the establishment of modern communication links between them. We will be pleased to give the Commission the powers and the resources necessary for this purpose to carry out the activities and steps outlined in para. 3 (c‑g). As for negotiations with aid‑giving agencies mentioned in para. 3(h), this should be undertaken in consultation with EAD and participation of CBR.

3. As soon as possible, we would like to have an estimate of the funds that will be required for this purpose in 1991‑92 and a time schedule for the completion of the first phase of computerization.

4. I will also like to have a meeting with the Commission, hopefully by the middle of July, to discuss the overall follow up of the Taxation proposals in the budget specifically with regard to the Commission's participation in the implementation process. With regards, Yours sincerely, (Sd.) (SARTAJ AZIZ)." The above correspondence was followed by the following memorandum issued by the Finance Division:‑‑‑ Islamabad, July 1, 1991 Chairman, Resource Mobilization and Taxation Reforms Commission is hereby authorised to arrange computerization of the Tax Departments as well as Central Board of Revenue, in consultation with the relevent Members of the Central Board of Revenue. (Sd.) (SAEED AHMAD OURESHI), FINANCE SECRETARY. Senator Mazhar Ali, Chairman, Resource Mobilization and Taxation Reforms Commission, Karachi:" After going through the Notification issued by Federal Government constituting respondent No.1 and the dof`uments reproduced above we are of the view that respondent No.1 was competent and authorised to enter into the contract with respondent No.4 for purchase of computer machines for use in the departments working under respondents Nos.2 and

3. Apart from it the petitioners having participated in the tenders issued by respondent No.1 and having failed to get the contract cannot turn round and question the authority of respondent No.1 to invite tenders. The next objection of the petitioners is, that the contract for purchase of computer machines was awarded by respondent No.1 to respondent No.4 by unfair means and mala fide. It is urged that at the time of issuance of tenders the petitioners were not made aware of the fact that in case of acceptance of their tender the same machines will be required by respondent No.1 for other departments of respondent No.2 and as such they could not make their bids competitive; while respondent No.4 was aware of these facts as its business partner was the consultant of respondent No.1, and accordingly respondent No.4 made his bid more competitive keeping in view the future sale prospect of its machines. It is also contended that the issuance of proprietary certificates by respondent No.2 to enable respondent No.1 to purchase computer machines for Income Tax and Central Excise Departments was illegal and mala fide as no fresh tenders were issued for purchase 'of computer machines for these departments and the deal was finalized secretly between respondent No.1 and on the basis of proprietary certificates issued by respondent No.2.

4. The contentions of the petitioners have no force. Respondent NO in its comments filed in the above petition has set out in detail the reasons for appointment of M/s. System (Pvt.) Limited, as consultant of respondent No.1. The petitioners have not denied the assertions of respondent No.1. It is quite obvious from the comments that the appointment of M/s. System (Pvt.) Ltd., as consultant of respondent No.1 was made openly on a competitive basis purely on merit, because of their vast experience in the field of computer consultancy. It is admitted before us by the learned counsel for the petitioners that M/s. Systems (Pvt.) Ltd., were appointed as consultant of respondent No.1, much before the issuance of pre-qualification tenders by respondent No.1 and petitioners were aware of this fact when they submitted their bids to respondent No.1. The petitioners raised no objection at the time of submitting their bids to respondent No.1 that presence of M/s. System (Pvt.) Ltd. as consultant is likely to cause prejudice to petitioners or advantage to respondent No.1 The petitioners having participated in the bidding with notice of all the material facts cannot, now raise objection to the validity of the bidding process after they failed to get the contract. The respondent No.1 has clearly stated in their comments that the computers were purchased by them directly from IBM (respondent No.4) and that M/s. System (Pvt.) Ltd., did not act as GMA of IBM (respondent No.4). Respondent No.1 has also annexed with their comments a letter from IBM certifying that no commission was paid to any firm or person in connection with the sale of IBM Computers to respondent No.1. These facts clearly show that there was no underhand deal between respondents Nos.1 and 4 in connection with the purchase of computer machines. The admitted position in the case is that the prices offered by E respondent No.4 for their computer system were about 40% less than the prices offered by petitioner No.1 and as such the acceptance of the bid of respondent No.4 by respondent No.1 was not only justified but perfectly legal and in the interest of public exchequer. In addition to it, the preference expressed by respondent No.1 to have same computer system in various tax departments of respondent No.2 was based on sound technical judgment and did not suffer from lack of bona fides on the part of respondent No.1. The contention of the petitioners that at the time they submitted their bid for supply of computers to Customs Department they were not aware that in case their bid is accepted the same machine will be required for other departments of respondent No.3 is devoid of any force. The advertisement issued by respondent No.1 inviting applications for prequalification clearly stated that the machines were required for selected areas of the tax departments of Federal and Provincial Governments. No particular tax Department was mentioned in these advertisements. There was sufficient indication in these advertisements that the machines were required for more than one tax departments of Government. No case for interference is made out. Dismissed summarily. A.A./J‑142/K Petition dismissed.