Decisions on taxpayers' appeals: Senate body concerned over FBR chief's alleged directives

Senate Standing Committee on Finance has voiced its serious concern over a letter purportedly written by Tax Reforms Commission's (TRC) chairman Masood Naqvi to Finance Minister Ishaq Dar and wherein the former has reportedly alleged that the FBR chairman directed the Commissioner Appeals and Collectors Appeals not to issue decisions in favour of the aggrieved taxpayers.
Chairman of Senate's Standing Committee on Finance Saleem Mandviwala told a meeting of the committee held here on Friday at the Parliament House that it was very disturbing to note that FBR chairman has allegedly issued instructions to the Collectors and Commissioners Appeals for issuing orders only in favour of the tax department. "It reflects that the appellate system of FBR is in disarray," he remarked.
Elaborating, he stated that it has been alleged in the letter that the Commissionerate Appeals were directed through verbal orders by the FBR chairman for not taking any decision against the Board in the filed appeals. "It is shocking as it has never happened," he added. Acting chairman FBR Shahid Hussain Asad clarified that FBR chief Tariq Bajwa is a law-abiding official and he cannot give such kind of instructions to the field formations.
FBR Member (Legal) Ahmad Dildar informed the committee that the litigation relating to the FBR and its field offices primarily originates from the action initiated under the provisions of Inland Revenue Laws ie Income Tax Ordinance, 2001, Sales Tax Act, 1990 and Federal Excise Act, 2005 and the Customs Law ie Customs Act, 1969.
The orders of the tax authorities are firstly challenged by the taxpayers before the Commissioner (Appeals) in case of Inland Revenue Laws and before Collector (Appeals) in case of Customs Law. Commissioner (Appeals) and Collector (Appeals) is the first tier of Appellate hierarchy for resolution of tax disputes, he said. The number of cases pending as on August 31, 2015 at the level of Appellate authority, Commissioner Inland Revenue (Appeals) are 13,986 and number of cases pending as on August 31, 2015 are 518 at the level of appellate authority, Collector Customs (Appeals), he said.
Aggrieved by the order of Commissioner (Appeals) or Collector (Appeals), revenue authority or the taxpayer approaches the Appellate Tribunal for resolution of tax disputes. Appeals relating to Customs laws are filed before the Customs Appellate Tribunal whereas the appeals relating to Inland Revenue laws are filed before the Appellate Tribunal Inland Revenue.
Sharing data, he said that Appellate authority, Appellate Tribunal Inland Revenue has pending cases of 21,262 taxpayers as on August 31, 2015 and Appellate Tribunal Customs has 3,132 pending cases as on August 31, 2015. The meeting was further informed that if a party is still aggrieved by an order of the Appellate Tribunal it may approach the superior judiciary ie High Courts and then Supreme Court.
After the judgement of High Court, the tax disputes finally come before the honourable Supreme Court of Pakistan which is the highest Court of appeal, Dildar said, adding that 2,280 cases are pending with the Supreme Court as on August 31, 2015, and High Courts have 15,099 pending cases as on August 31, 2015.
Field offices are primarily entrusted the functions of administration of Inland Revenue as well as Customs Laws. Commissioner Inland Revenue and Collector Customs are the focal authority under Inland Revenue and Customs Laws respectively, he said, adding FBR's legal wing co-ordinates with field offices to ensure proper representation of cases in honourable courts.
Besides, the legal wing has indigenously developed litigation management system (LMS) with the help of PRAL which is an extension of application of Integrated Tax Management System (ITMS). This system is aimed at improving the process of filing of petitions, references in High Courts and CPLAs in Supreme Court. Similarly, software on Appeal Management and Processing System (AMAPS) has also been developed indigenously which is another extended application of (ITMS), dealing with appeals submitted before Commissioner Inland Revenue (Appeals) and Collector Customs (Appeals), Dildar maintained.
For liquidation of pending cases before Supreme Court of Pakistan FBR chairman and Member (Legal) held meeting with honourable Chief Justice of Pakistan. Consequently lists of "issue-wise categorisation of cases" were prepared and were submitted before the Additional Registrar Judicial.
In compliance with the Supreme Court's order, lists of major cases involving revenue of Rs 50 million or above pending before the honourable Supreme Court and the various High courts was prepared on the basis of data collected from the field offices and submitted to the Supreme Court on August 8, 2015.
In terms of Clause 5(i) of Item 27A of 2nd Schedule to the Rules of Business 1973, in a case in which Federal Board of Revenue or the Revenue Division is a party, the counsel to conduct the case is appointed by the FBR out of the panel of advocates approved by the Law & Justice Division.
According to clause 5(iv) of item 27A of the 2nd schedule to the Rules of Business, 1973, performance of advocates on the panel of Advocates of FBR is reviewed annually in consultation with Law Division. On the basis of recommendations received from all field formations about the performance of panel of advocates, meeting was held in July, 2015 in Law Division and advocates showing good performance have been placed on active list of panel of advocates of FBR. FBR has asked its field formations to utilise services of these advocates to the optimum level by continuous consultation and briefing so that Honourable Courts can be properly assisted. Field formations have been advised that renowned advocates may be hired on special fee where substantial amount of revenue is involved, the FBR Member (Legal) added.