The proposals with reference to Para 118 of the Budget Speech of the Finance Minister made in June 2000.
"The present system of adjudication in tax negates the principle of separation of judiciary and executive. Entrusting adjudication functions to executive officer, multiple appellate stages and absence of any time to pass an order, have combined to create a slow adjudication process marred by inordinate delays. For providing speedy justice to the taxpayers the whole adjudication system is being revamped on the principle of separation of the judiciary from the executive."
The present system of adjudication in tax matters does not conform to the principles of justice and the provisions of the Constitution which require separation of judiciary from the executive.
The present system is executive-oriented in which the department is the prosecutor and the adjudicator as well.
Grievance against such system of adjudication has been raised by the members of the Bar, the Chambers of Commerce and Industry, trade bodies and stakeholders. Experience has shown that the officers deciding appeal against the assessment order or similar proceedings are under the control of the executive, leading to the general impression, which is not misplaced, that such adjudication system cannot deliver fair and unbiased justice and the entire exercise is merely a command performance.
This was also noted in para 118 of the Finance Minister's budget speech 2000-2001, quoted above and it was assured that for providing speedy justice to the tax payers the entire adjudication system is to be rebuilt on the principle of separation of judiciary from the executive.
Since then no effective steps have been taken to transform the present system into an independent Revenue Justice Forum.
The Income Tax, customs and sales tax appellate authorities are under the control of the executive. In revenue justice system there is no concept of these authorities being an independent judicial entity.
They are neither independent nor can apply independent mind. It is therefore necessary to establish Revenue Judicial Service completely separate and independent from the executive, the Revenue Division and the government.
Though significant changes have been brought about on the pattern of Income Tax law in the laws of Sales Tax and Customs and Central Excise, but there has been a long outstanding demand of taxpayers and tax bar for separating even the first forum of appeal from the executive branch and to stop horizontal movement of members of Income Tax Appellate Tribunal between the Income Tax Department and the Tribunal.
To achieve this objective there could be (i) a short term plan and (ii) a long term plan.
(i) The following short term plan should be implemented immediately:-
It is proposed that a Federal Cadre of the posts of Commissioners/Collectors (of Revenue Appeals/Adjudication) may be created. Induction to this Cadre may be through Federal Public Service Commission. Selection may be made on the basis of results of a written examination and viva voce.
Eligibility Qualifications:
(a) Federal Revenue officers with service of 10 years who are not superseded at any stage of promotion and possess LLB degree.
(b) Advocates with ten years standing at the Revenue Bar.
(c) Advocates with ten years standing at the bar possessing ICMA.
The officers of the Federal Judicial Cadre may be placed under the Law Division. They shall work under the administrative control of respective Tribunals. They shall be eligible to elevation to the highest court of Appeal on seniority cum fitness criterion.
(ii) Long Term Plan to be completed within four years:-
In this regard suggestions have been made from various quarters including the Vice President of FPCCI, Karachi. However, to achieve the object and fulfil the promise made by the Finance Minister it would be necessary to introduce a completely independent judicial system in revenue matters. A Revenue Judicial Service should be created, independent of CBR and the ministries. It should be organised in the nature of the subordinate judiciary which should be under the control and management of the respective High Courts. There should be no administrative and financial control or dependence on Revenue Division, Finance Ministry or the Law Ministry. These appellate authorities should act independently under the control of respective High Courts. The Income Tax, Customs and Sales Tax Appellate Tribunals should be so constituted as to be under the control of respective High Courts. For this purpose a sufficiently onerous exercise should be carried out to frame a judicial structure for Revenue Judicial Service to ensure complete justice to the taxpayers. A proper scheme should be framed which should establish a separate Revenue Judicial Service, specifying modalities for recruitment, qualification, appointment and conditions of service.
If Revenue Judiciary is established as proposed, with the Tribunal or similar authority with a different nomenclature at the apex under the High Court, in times to come the senior, meritorious and experienced Revenue Service Judges of integrity may be elevated to the High Court Bench in the same manner as the District and Sessions Judges are being inducted.
The success of this judicial system will lie not only in its establishing but in manning it properly with persons of unmatched integrity, knowledge and reputation.
There should be sufficient personnel to cope with the volume of work so that cases may be disposed of between 3 to 6 months. Such an adjudication system will create confidence in public, taxpayers and even local and foreign investors and is likely to create positive impact on voluntary revenue generation.
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