Superior courts: 'specialist tax benches' suggested

Federal Tax Ombudsman (FTO) has recommended constitution of 'specialist tax benches' in High Courts and Supreme Court to promptly decide tax cases, particularly the customs-related matters. In his report on the ISAF containers scam, the FTO said that the penalty provisions under the Customs Act 1969 are covered in chapter XVII (Offences and Punishments).
The offences pertaining to omissions and commissions are handled-administratively by Customs authorities, whereas the offence of smuggling carries imprisonment ranging from 5 years to 14 years after trial by a special judge. (Smuggling of narcotics carries life imprisonment, even death penalty in specified cases.)
Whereas in theory the relevant penal provisions in Pakistan's Customs code seem to be quite stringent, the whole exercise of having such stiff penalties on the statute book looks like a charade the moment one examines closely - both qualitatively and quantitatively - the 'punishments' which are actually handed out. Not only is the extent to which Customs authorities are able to achieve what we might term prima facie detection of tax evaders or their abettors abysmally poor, the real rate of detection is much less when one looks at a very large proportion of cases which are labelled as 'misdeclaration cases' but are not so held as they pass through the appeal stages.
Given the perceived insignificantly low rate of detection, the ubiquity of tax evasion seems hardly surprising. When it comes to penalties, the picture is not any different. Indeed, if one of the purposes of penalty provisions is to deter tax evaders, both individually (in the sense that those found guilty should find it distasteful to do the act again) and generally (the punishment is perceived so awful that others feel compelled not to do such an act), the extent to which this purpose can be achieved in practice depends largely on the number of tax evaders known to have been punished actually. The larger the dark figure of tax evaders, the lower the deterrence effect of penalties, however severe.
As regards prosecution and punishment of tax evaders, it is often suggested that in the field of tax evasion, criminal sanctions, and jail sentences in particular, are of significant value as deterrents. The probability of prosecution is indeed very highly correlated with the tax evader's 'evasion mentality'. However, whilst the prospect of landing in jail can have a much greater deterrent effect in principle, it does not have much effect de facto if the perceived and actual probability of prosecution and/or imprisonment is virtually zero.
Among the many reasons of virtual absence of deterrent effect of 'punishments' handed out to tax evaders is the incredibly long time it takes to finalise the criminal proceedings. If it takes years before the process is finally concluded, it erodes whatever deterrence the sentencing process may potentially entail. There is need to have 'specialist tax benches' in High Courts, as also in the Supreme Court, to provide focus and speed to tax cases in general and customs cases in particular, the FTO added.