Against FBR representations: President upheld over 80 percent of FTO decisions

President has upheld over 80 percent of the Federal Tax Ombudsman (FTO) decisions against the representations filed by the Federal Board of Revenue during 2010, reflecting authenticity and professionalism in the findings/decisions of the FTO Office.
The annual report-2010 of the FTO office issued here on Wednesday revealed that the weak mechanism of in-house accountability of tax officials encourages recurrence of the same kind of maladministration and needs to be tackled by the Federal Board of Revenue (FBR).
As per report, a total of 212 (14.75 percent) FTO decisions were challenged before the President - 18 (1.25 percent) by taxpayers and 194 (13.5 percent) by the FBR. Further, in about 80 percent of total representations, President upheld the FTO's decision. According to the report, the FBR and taxpayers have the option under the law to either apply to the FTO for review of a decision or challenge it before the President of Pakistan, through a process called representation.
Out of 1,437 decided cases, the FBR and taxpayers went into review and representations in a total of 296 (20.60 percent) cases. Thus, the FBR and taxpayers accepted nearly 80 percent of the FTO decisions, indicating a high level of trust in this institution by both the parties, the report said. Out of 1,437 FTO decisions during 2010, the aggrieved parties moved the FTO for review in 84 cases (5.85 percent).
A total of 212 (14.75 percent) FTO decisions were challenged before the President - 18 (1.25 percent) by taxpayers and 194 (13.5 percent) by the FBR. Further, in about 80 percent of total representations, President upheld the FTO's decision. The report further said while investigating the complaints, FTO Office diagnosed systemic issues which taxpayers are repeatedly facing at the hands of tax functionaries.
During the investigation into complaints, the FTO office came across cases in which tax departments dodged the taxpayers for years. There were instances showing tax officials did not even implement the decisions given in favour of taxpayers by the Appellate Tribunals or the higher judiciary. The extent of maladministration can be judged by the fact that senior tax officials at times blatantly misstate facts during certain hearings before the FTO and make forged entries in the documents to hide their maladministration. It has been observed that weak mechanism of in-house accountability of tax officials encourages recurrence of the same kind of maladministration and needs to be tackled by the FBR.
In 2010, the FTO office recommended several measures to the FBR to rectify systemic problems and the FBR positively responded to them. In this regard, Chairman FBR issued a Standing Order directing immediate issuance of acknowledgement of communication made by taxpayers by letter, SMS or e-mail to improve public confidence in tax departments. Another major development is introduction of Expeditious Refund System (ERS) under which Sales tax refund is being processed through electronic verification system. Under this system, refund applications are promptly acknowledged through the electronic system, eliminating the need for physical interaction of taxpayers with tax officials. Besides, the system electronically indicates discrepancies about input-output and verifies sale-purchase data, which allows ample time to the applications to remove the discrepancies, the report said.
Some other FTO recommendations to the FBR over systemic issues included evolving a workable strategy to address delay in processing of refund claims; issuing interpretations and clarification over impugned SROs; sorting out taxation issue in tax-exempt jurisdictions on permanent basis; and amending relevant rules for examination of imported goods by the Customs in the presence of importers or their representatives, the FTO report added.