Senate panel rejects proposed powers of FBR
RECORDER REPORT
ISLAMABAD: The Senate Standing Committee on Finance has rejected the proposed discretionary powers of the Federal Board of Revenue (FBR) for selection of cases for Alternative Dispute Resolution Committees (ADRCs) and proposed criteria for selection of such cases.
On the other hand, the FBR officials informed the committee here on Friday that in order to facilitate resolution of disputes between taxpayers and tax department, the decisions of the ADRC would be binding on the FBR and the aggrieved person. To ensure effectiveness of ADR mechanism, it will be made obligatory for the Board and aggrieved person to withdraw appeals pending before appellate authorities before making recourse to ADR mechanism and decision of ADRC will be binding on the Board and the aggrieved person. Moreover, efforts will be made to align ADR mechanism with other tax laws under administration of the FBR, the FBR officials added.
The ruling and opposition Senators were unanimous during the meeting against proposed discretionary powers given to the FBR for picking up cases for ADRC.
Chairman of the committee Senator Farooq H Naek argued that there should be criteria for selection of cases.
Senator Musaddik Malik also supported him as no one was in support of discretionary powers to the FBR. At the end of discussion, the committee asked the Law Division to redraft the proposal.
The amendment proposed for ADR was that “notwithstanding any other provision of this Act or the rules made thereunder, an aggrieved person, who has filed an appeal which is pending before an Appellate Authority, may apply to the Board for the appointment of a committee for the resolution of any hardship or dispute mentioned in detail in the application, except where prosecution proceedings have been initiated or where interpretation of question of law having effect on identical other cases is involved.
“The Board after examination of the application of an aggrieved person shall, within sixty days of receipt of such application in the Board, appoint a committee consisting of an officer of Inland Revenue not below the rank of commissioner and two persons from a panel comprising of retired high court justices, retired district and session judges, chartered or cost accountants, advocates, income tax practitioners or reputable taxpayers for the resolution of the hardship or dispute.”
The committee members argued that the proposed amendment grants discretionary powers to the FBR whereas in the existing provision any registered person aggrieved in connection with any dispute pertaining to; (a) the liability of excise duty against the registered person or, as the case may be, admissibility of refunds; (b) the extent of waiver of default surcharge and penalty; (c) the confiscation of goods; (d) relaxation of any procedural or technical irregularities and condonation of any prescribed time limitation; and (e) any other specific relief required to resolve the dispute, may apply to the Board for the appointment of a committee for the resolution of any hardship or dispute mentioned in detail in the application and if dispute is under litigation in any court of law or an Appellate authority, except in the cases where first information reports (FIRs) have been lodged under this Act or criminal proceedings initiated or where interpretation of question of law having larger revenue impact in the opinion of the Board is involved, may apply to the Board for the appointment of a committee for the resolution of dispute in appeal and only such application may be entertained for dispute resolution under the provisions of this section.
(2) The Board may, after examination of the application of a registered person, appoint a committee within thirty days of receipt of such application in the Board, consisting of an officer of Inland revenue not below the rank of an commissioner and two persons from the notified panel consisting of retired judges not below district and sessions judge, chartered or cost accountants, advocates, representatives of trade bodies or associations, or any other reputable taxpayers, for the resolution of dispute.
(3) The committee constituted under subsection (2) shall examine the issue and may if it deems fit, conduct inquiry, seek expert opinion, direct any officer of the sales tax or any other person to conduct an audit and shall make recommendations within ninety days of its constitution in respect of the dispute. If the committee fails to make recommendations within the said period the Board shall dissolve the committee and constitute a new committee which shall decide the matter within a further period of ninety days. If after the expiry of the period the dispute is not resolved, the matter shall be taken up by the appropriate forum for decision.
(2) The Board may, on the recommendation of the Committee, pass such order, as it may deem appropriate within ninety days of the receipt thereof:
Provided that if such order is not passed by the Board within the aforesaid period, the recommendation of the Committee shall be treated to be an order passed by the Board under this sub-section.
(4A). Notwithstanding anything contained in subsection (4), the Chairman, FBR, and a member nominated by him, may, on the application of an aggrieved person, for reasons to be recorded in writing and on being satisfied that there is an error in order or decision, pass such order as may be deemed just and equitable.
(5) The registered Board may, make payment of duty and other taxes as determined by the Board in its order under sub-section (4), and such order of the Board shall be submitted before the forum, tribunal or the Court where the matter is sub judice, for consideration and orders as deemed appropriate.
Amendment proposed: Section 38 is proposed to be substituted as under:
Alternative Dispute Resolution.— (1) Notwithstanding any other provision of this Act or the rules made thereunder, an aggrieved person, who has filed an appeal which is pending before an Appellate Authority, may apply to the Board for the appointment of a committee for the resolution of any hardship or dispute mentioned in detail in the application, except where prosecution proceedings have been initiated or where interpretation of question of law having effect on identical other cases is involved.
(2) The Board after examination of the application of an aggrieved person shall, within sixty days of receipt of such application in the Board, appoint a committee consisting of an officer of Inland Revenue not below the rank of Commissioner and two persons from a panel comprising of retired high court justices, retired district and session judges, chartered or cost accountants, advocates, income tax practitioners or reputable taxpayers for the resolution of the hardship or dispute.
(3) The aggrieved person and the Board as the case may be, shall withdraw the appeal pending before the appellate authority.
(4) The committee shall not commence the proceeding under sub-section (2) unless the order of withdrawal from the appellate authority is communicated to the Board:
Provided that if the order of withdrawal is not communicated within seventy-five days of the appointment of the committee, the said committee shall be dissolved and this section shall not apply.
(5) The committee appointed under subsection (2) shall examine the issue and may, if it deems necessary, conduct inquiry, seek expert opinion, direct any officer of the Inland Revenue or any other person to conduct an audit and shall decide the dispute by majority, within one hundred and twenty days of its appointment.
Provided that in computing the aforesaid period of one hundred and twenty days, the period, if any, for communicating the order of withdrawal under sub-section (3) shall be excluded.
(6) The decision of the committee made under sub-section (5) shall be binding on the Board and the aggrieved person.
(7) If the committee fails to decide within the period of one hundred and twenty days under sub-section (5), the Board shall dissolve the committee by an order in writing and the matter shall be decided by the appellate authority, which issued the order of withdrawal under sub-section (3) and the appeal shall be treated to he pending before such appellate authority as if the appeal had never been withdrawn.
(8) The Board shall communicate the order of dissolution to the appellate authority mentioned in sub-section (1) and the commissioner.
(9) The aggrieved person may make the payment of federal excise duty and other duties and taxes as decided by the committee under sub-section (5) and all decisions, orders and judgments made or passed shall stand modified to that extent and all proceedings under this Act or the rules made thereunder by any authority shall abate.
(10) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.
