ISLAMABAD: The Federal Board of Revenue (FBR) has withdrawn a legal clarification of 2018 in which electronic mode of serving notice may be resorted to as an additional means of service for facilitation of the taxpayers and may not be treated as a legal mode of service of notice.
Asif S Kasbati, a Karachi-based leading tax advisor and the ICAP Fiscal Laws Committee Member explained to Business Recorder here on Friday that owing to serious practical difficulties due to changes made in Section 218 through Finance Act 2017, the FBR had issued “Facilitation and Practical” letter in 2018 whereby, electronic service was declared as an additional means of service and will not be treated as a legal mode of service.
The said letter has now been withdrawn vide the FBR’s letter dated February 3, 2021.
Recently, the matter has been re-examined in the FBR after three years.
Through another letter addressed to the Chief Commissioners of Inland Revenue, the FBR now stated that the old clarification is in contradiction to the following provisions of Income Tax Ordinance (ITO), 2001: (i) clause (d) of sub-section (1) of section 218, Income Tax Ordinance 2001; (ii) clause (d) of sub-section (2) of section 218 of the Income Tax Ordinance 2001 and (iii) rule 74 of the Income Tax Rule, 2002.
In order to bring consistency in administration of the Income Tax Ordinance 2001 and to remove anomaly from the statutes, the FBR’s Clarification of 2018 has been withdrawn with effect from February 3rd, 2021, the FBR added.
Tax expert specified that the FBR's clarification of 2018 has been withdrawn with effect from February 3rd, 2021 without considering its serious repercussion.
Sharing this important development, Asif Kasbati, told Business Recorder here on Friday that the FBR has withdrawn this past clarification, wherein, it was stated that electronic mode of service may be resorted to as an additional means of service for facilitation of the taxpayers and may not be treated as a legal mode of service.
Regarding history of the FBR letter of 2018, he highlighted that it was issued as the ICAP, Bar matters, etc made representations before the FBR the status prior to Finance Act 2017 and due to changes in Order V of the First Schedule to the Code of Civil Procedure, 1908 by the Finance Act 2017 effecting income tax law as well, the FBR letter of 2018 was issued keeping in serious issues.
Asif Kasbati informed that there were certain issues which led to the FBR facilitation direction vide letter dated February 22, 2018.
First, as per several representations made before the FBR by tax bar associations etc. In various cases, e-mail ID of high-level official is given, who may not check the email or may not take timely action.
In certain cases, tax manager, etc e-mail ID is given, who may be on leave when the notice or order is sent by e-mail.
Copyright Business Recorder, 2021
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