Through SRO 316(I)/2011 dated 18 April 2011, the FBR has notified a proposal to amend the 'alternative dispute resolution system' to do away with the limit on time. This follows Chairman FBR's resolve to recover Rs 150 billion, subject matter of tax related litigation.
Side-by-side active are lobbies heralding alternate dispute resolution system to mitigate the sufferings, also of the FBR. Contention is that on the one hand, in a good number of cases, the base of FBR demand is flimsy which cannot stand judicial scrutiny. FBR officials are found wanting the skill of tax practitioners pleading from the opposite side, culminating into quashing of tax demands made at the judicial forums. The argument is that an ADRC would or can have the weeds out at no cost.
ADR is not in replacement of the subsisting FBR machinery. The advisory purpose of ADR system is to quickly find a solution for tax disputes - as near to the law as is convenient, put a prescription in place - out of the several available. A period of 30 days to an ADRC is sufficient to hold two meetings and formulate its recommendations. However, to account for the time lag involved in an FBR communication reaching the concerned quarters and (local) departmental secretariat sending notice of meetings etc to the disputing parties, the period allowed can be 45 days. In a scenario in which 'there is no free lunch' is the going, to expect people to act just in national pursuits for a long time, would be too simplistic to comprehend.
Not putting a time limit on ADRCs' working or giving them more than 45 days may be advantageous to assessees and their 'friends' around. It is not in the interest of justice or of FBR. For efficacious results what may be needed is not (totally) free hand to ADRCs. What is required would be toning the system. Those doing the voluntary job should do the same conscientiously. This should manifest not in terms of the time they claim to have ploughed in. But by way of their play - not to let a party buy time to tarnish justice.
Suppose, an ADRC comes to the conclusion that an audit is required to resolve a dispute before it or certain documents, not in place, are required, the committee should record that and be gone. Similarly, if the committee feels that the issue requires examination or appraisal by an expert, it should record that and call it a day. The committee can even recommend names of the experts or agency to be consulted. Beyond that they should not go.
It is only the FBR doings, which can create a legally valid and binding position. The practices of seeking audit and examination of documents by the committee are not only time consuming. These can be prone to legal complications and abuse of the process etc. For tracing validity of which specific provisions in the law are referred. This leads to the conclusion that audit ordered by ADRC may not be totally valid and binding. Despite an ADRC undertaking the exercise with consent and agreement of the assessee, he can not be stopped from later pleading that there can be no estoppels against law and thus get out of the game. Then why the rigmarole?
Association of "reputable tax payer" is another area to be carefully gone into along with the background and the electoral college he belongs to. ADRC being an advisory network, its members do a staff function. They are not line managers. They should not go beyond recommending on the basis of what they find on the ground. They should quickly say that and retire.
To derive real benefit the 'alternative dispute resolution system' should be revamped, vesting powers, not in an individual, but in the Committee, speaking through its Chairman. This is the convention of rules and regulations in relation to a 'non-profit', voluntary networks.