FBR’s Rs260bln stuck in court cases, says member legal

KARACHI: The tax authorities are struggling with some 583 court cases related to various levies and duties during the current fiscal year with a senior official saying on Wednesday lingering disputes potentially hindered Rs260 billion in revenue collection.

Tariq Masood, member legal FBR said constitutional and writ petitions in tax matters are increasing and they have stays against the tax recovery proceedings.

“The interim relief granted by higher court in the shape of stay in such cases is a bigger relief than ultimate relief,” Masood said in a report on the backlog of court cases. “This encourages taxpayers to drag feet in the proceedings on merit. Thus, actual issue is buried in cold storage and cases remain undecided for years.”

The government revised down FBR’s revenue target at Rs3.935 billion for the current fiscal year of 2017/18.

FBR’s member legal said the government’s fiscal policy outlay fails to achieve desired objectives due to stay granted by the courts “as no revenue is collected nor the decision is arrived”. “During pendency, the government does not plan for amendment or generate revenue from alternate sources as it weakens the case of government,” he added.

Masood said there are 583 duty and tax related cases where stay granted by the superior judiciary has extended beyond the period of six months. He acknowledged that Article 199(4) of the Constitution provides mechanism for granting interim relief, which requires proper notice and opportunity of hearing to law officer.

The courts are required to record reasons in writing that interim order would not impede the assessment or collection of public revenue. “But such recording of reasons is rarely seen in the interim orders,” he said.

The official said the constitution states that the interim order should cease to have effect after expiry of six months provided the higher courts should finally decide the matter within the period, “but courts seldom decide the matter in that stipulated time”.

“This encourages taxpayers to bypass the statutory remedies available to them and thus more constitutional petitions, writ petitions and civil suites (are) adding to the backlog,” he added.

Currently, there is a backlog of tax cases lying in four different appellate forums: 2,660 cases in Supreme Court; 12,396 in higher courts; 37,546 in tribunals; and 11,390 at the commissioner appeal levels.

Masood attributed the delay in disposal of cases to shortage of judges and frequent protests of lawyer community. He said there is a plethora of complex laws and court procedures which are “a source of delay and abuse of process of law”.

“Existing laws and procedures need to be revisited with a view to make them simple and to remove redundancy and duplication,” he said. The member legal also sought formation of a committee of experts in the civil litigation matters to settle FBR revenue backlog.