IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
PRESENT: 
MR. JUSTICE GULZAR AHMED 
MR. JUSTICE QAZI FAEZ ISA 
MR. JUSTICE FAISAL ARAB 
 
CIVIL APPEAL NO. 1950 OF 2007 
(On appeal against the judgment dated 24.09.2007 
passed by the High Court of Sindh, Karachi in 
Constitutional Petition No. D-2373/2006) 
 
 
Government of Pakistan through Secretary Revenue Division/CBR 
House, Islamabad and others 
… Appellants 
VERSUS 
 
Muhammad Junaid Talat 
… Respondent 
 
 
For the Appellants: 
Mr. Muhammad Habib Qureshi, ASC 
 
 
 
 
Raja Abdul Ghafoor, AOR 
 
 
 
 
Ms. Sonia Anwar Rana, D.C. Income tax.   
 
 
 
 
 
For the Respondent: 
Mr. Muhammad Jamshed Talat, in person  
 
Date of Hearing:  
07.05.2018 
 
JUDGMENT 
 
 
 
FAISAL ARAB, J.- In the year 1999, the respondent’s 
article on non-payment of income tax by Pakistani seafarers 
discharging duty on foreign flagships was published in daily 
‘Takbeer’. Pursuant to such article the Income Tax department 
raised a demand against 812 seafarers for the payment of income 
tax to the tune of Rs.86.606 million, which was followed by ex-
parte assessment orders. The respondent being the author of such 
an article sought recovery of reward in his capacity as informer on 
the amount which led to recovery proceedings against the 
seafarers. He calculated the reward money to be Rs.1.859 million 
CIVIL APPEAL NO. 1950 OF 2007 
2
under Reward Order dated 14.05.1974 and lodged his claim for 
payment.  
 
2. 
 
Before the reward could be paid to the respondent, the 
Commissioner of Income Tax, in exercise of suo moto powers under 
Section 122-A of the Income Tax, Ordinance, 2001, examined the 
assessment orders issued to Pakistani seafarers and set-aside the 
same on the ground that the resident status of a person is the 
prime factor in the determination of his tax liability and the same 
was not ascertainable with regard to Pakistani seafarers 
discharging their duties on high seas beyond the territorial limits 
of the country. Upon such denial of his claim, the respondent 
made a complaint to the Federal Tax Ombudsman, who vide 
recommendation dated 16.07.2001 directed that reward be paid to 
the respondent. The Commissioner of Income Tax, however, 
awarded Rs.3,741/- against recovery of income tax in a sum of 
Rs.14,910/- from only one seafarer as Reward Order dated 
27.03.1980 envisaged payment of reward only upon recovery of 
tax. The respondent again moved the Federal Tax Ombudsman to 
seek recovery of his entire claim as according to him the Reward 
Order of 1980 was not published in the official gazette so it never 
came into force, the reward was, therefore, to be processed in 
terms of the Reward Order dated 14.05.1974 which envisaged 
payment upon making assessment of the evaded tax. The Tax 
Ombudsman accepted the respondent’s argument and vide his 
recommendation dated 17.02.2006 directed the appellants to pay 
reward in terms of Reward Order dated 14.05.1974. As the 
department still did not pay, the respondent filed a Constitutional 
CIVIL APPEAL NO. 1950 OF 2007 
3
Petition No.D-2373/2006 before the High Court of Sindh for a 
direction to the appellants to implement the recommendation of 
the Federal Tax Ombudsman. The High Court vide impugned 
judgment dated 24.09.2007 allowed the Constitutional Petition by 
maintaining the decision of the Tax Ombudsman and directed the 
appellants to compute the reward in accordance with the 
provisions of Reward Order of 1974 and settle the respondent’s 
claim within a period of six months. Being aggrieved by such 
decision, the department filed the present appeal with leave of this 
Court.  
 
3. 
 
Learned counsel for the department contended that 
the Reward Order dated 14.05.1974 was superseded by Reward 
Order No. C.No:63(88)IT-IV/75-Pt dated 27.03.1980 which was 
published in various tax commentaries and journals and as the 
claim of the respondent pertained to the year 1999 it was the 
Reward Order dated 27.03.1980 that was applicable and not 
Reward Order dated 14.05.1974. He submitted that the Reward 
Order of 1980 contained a proviso “provided that reward will be 
paid only if the tax sought to be evaded has been recovered atleast 
to the extent of the amount of reward being paid”, therefore, 
payment of reward to an informant was contingent upon recovery 
of tax only. Respondent’s brother, who is an advocate and upon 
the death of the respondent claims to be his only surviving heir 
appeared in person. He in rebuttal submitted that the department 
was not even aware that tax was not being paid by the Pakistani 
seafarers discharging duties on foreign flagships and it was the 
respondent who divulged such information, therefore, he rightly 
became entitled to the reward to the tune of Rs.1.859 million 
CIVIL APPEAL NO. 1950 OF 2007 
4
under the provisions of Reward Order dated 14.05.1974 as the 
Reward Order of 1980 had not come into effect for the reason that 
it was not published in the official gazette.   
 
4. 
 
As the whole issue revolves around the entitlement of 
the respondent on providing ‘definite information’ with regard to 
tax evasion, we posed a question to the respondent’s brother to 
point out from the record what constituted definite information 
that justifies the respondent’s claim. He was only able to point out 
a letter dated 19.07.1999, written by the Special Assistant to the 
Commissioner of Income Tax, Karachi appreciating respondent’s 
article published in Daily ‘Takbeer’ identifying non-payment of tax 
by Pakistani seafarers serving on foreign flagships. 
 
5. 
 
In our view, a person can take benefit of the Reward 
Order only if he had supplied some definite information relating to 
a taxpayer who has evaded tax. So a condition precedent is 
‘detection of evasion of tax’, which must have taken place before 
the question of reward arises. Merely giving general information 
that tax is not being paid by a person on his otherwise taxable 
income would not ipso facto entitle the informant to claim a reward 
as non-payment of tax is not always a case of tax evasion. The tax 
department knows quite very well that many people, whose 
incomes are taxable, do not file their tax returns. Pointing towards 
them would not constitute ‘definite information’ leading towards 
detection of ‘tax evasion’ whereas the basis for claiming reward lies 
in providing information that relates to an assessee who has 
concealed a source of income through manipulation or deceitful 
means that was liable to be taxed had such source been known to 
CIVIL APPEAL NO. 1950 OF 2007 
5
the tax department at the time of making assessment. So 
informing the tax department generally that a person or a section 
of a society is not paying tax would hardly be categorized as 
‘definite information’ leading to disclosure of evaded tax. There is a 
clear difference between failure to pay tax and to evade a tax. The 
evasion is established when a source of income of an assessee, had 
it been disclosed to the tax authorities, would have lead to 
assessing his income more than what has been assessed in 
absence of such information. So disclosure of an assessee’s source 
of income, which he has concealed from the tax department 
through deceit or manipulation, is the key in successfully claiming 
the reward as only in such a situation it could be said to be a case 
of tax evasion. In the case of the Regional Commissioner, Income 
Tax Companies II Vs. S. Sultan Ali Jeoffrey (1993 SCMR 266) this 
Court while exploring the meaning of ‘tax evasion’ held as under:- 
 
“Evasion with reference to taxation laws means to illegally 
manipulate things in such a manner that the tax payable 
under law cannot be assessed. By an act of evasion the 
assessee can reduce his tax liability or completely eliminate it. 
Evasion of tax or duty is always in breach of the applicable 
and binding law. In taxation law evasion will mean adoption 
of such deceitful mechanism and manipulation not permitted 
by law which may result in reduction or elimination of legal 
tax liability. ………….But the moment avoidance is sought by 
illegal contrivance; deceitful methods and adopting a course 
not permissible in law it turns into evasion.”  
 
6. 
 
In the present case merely an article was published in 
the weekly magazine pointing out that Pakistani seafarers 
employed on foreign flagships are not paying income tax on their 
salaries. Though this was initially considered by Income Tax 
CIVIL APPEAL NO. 1950 OF 2007 
6
Officer to be sufficient to claim reward but later this decision was 
reversed by the Commissioner of Income Tax albeit on an entirely 
different ground. The ex-parte assessment orders were set aside on 
the ground that the resident status of a person is the prime factor 
in the determination of his tax liability and the same was not 
ascertainable with regard to Pakistani seafarers discharging duties 
on high seas beyond the territorial limits of the country. On 
account of such reasoning, the Commissioner of Income Tax came 
to the conclusion that the salaries received by Pakistani seafarers 
outside Pakistan on foreign flagships could not be regarded as 
income earned on Pakistani soil and hence is not taxable in 
Pakistan. Resultantly, demand raised in 225 cases was withdrawn 
and the remaining cases were written off in accordance with the 
procedure laid down in the write-off of Irrecoverable Arrear 
Demand. The department did not examine that the key feature is 
detection of evasion of tax and not failure to pay tax without the 
element of tax evasion. 
 
7. 
 
From what has been discussed above, it has become 
quite clear that where a category of persons liable to pay tax have  
failed to do so, merely pointing towards them would not ipso facto 
become definite information leading towards detection of tax 
evasion. The department already knew or was supposed to know 
who are liable to file their tax returns. Department’s lethargy or 
inefficiency or whatever the reason it may be in not collecting tax 
from tax defaulters would not bring any benefit to an informant 
who points out that tax is not being collected from a person or a 
section of a society in absence of any element of tax evasion. So 
merely drawing the attention of the tax department towards a 
CIVIL APPEAL NO. 1950 OF 2007 
7
particular person or a category of persons which has failed to pay 
tax on their incomes would not constitute ‘definite information’ 
falling within the ambit of ‘tax evasion’ as it is the evasion of tax 
that is key in granting of an award not failure to pay tax. The 
whole philosophy of awarding a reward is that if on the basis of 
some specific information the income of an assessee which he has 
concealed through manipulation or by adoption of some deceitful 
mechanism comes to light through an informant, whereby tax 
liability of an assessee increases beyond his declared income or his 
declared loss stands reduced, only then such information would 
amount to detection of tax evasion qualifying the informant to 
claim reward not otherwise. Such a situation does not emerge at 
all in the present case, what to speak of which reward order i.e. 
Reward Order of 1974 or of 1980 was applicable at the time when 
the respondent raised his claim for reward with the tax 
department.     
 
8. 
 
For what has been discussed above, this appeal is 
allowed and the impugned judgment is set aside.  
 
 
JUDGE 
 
JUDGE 
 
 
 
JUDGE 
Islamabad, the 
7th of May, 2018 
Approved For Reporting 
Khurram