TRC for mitigation of FBR’s influence on assessment decision

KARACHI: The Tax Reform Commission (TRC) has asked the finance ministry to mitigate the influence of the Federal Board of Revenue (FBR) over a decision related to a tax assessment appeal by allowing taxpayers to directly file an appeal to the national appellate tribunal, the commission’s chief said.
Masood Naqvi, chairman of TRC told The News that the forums of appeals in Inland Revenue and adjudication in Pakistan Customs should be eliminated and taxpayers should be allowed to directly file an appeal to the appellate tribunal to be worked under the direct supervision of the Supreme Court.
Naqvi said existing 4-tier appeal system under the tax laws, direct and indirect, consumes so much time for the final settlement that the very purpose of seeking remedy becomes nearly meaningless.
“It is prima facie a travesty of justice in the eyes of a taxpayer: an aggrieved taxpayer is to seek relief from the departmental authorities, which could be susceptible to overt and covert pressures from FBR,” a TRC’s interim report, presented to the finance minister in May, said.
“The annual performance evaluation reports — vital for further promotion in the service — of these commissioner (appeals) and collector (appeals) are written by their bosses in FBR. Due to this constraint, they cannot impart full justice.”
The report further said, “The recent perception of attempts by the FBR to influence the commissioner (appeals) and collector (appeals) have added to the distrust in the taxpayers in the first appeal forum.”
The report pinpointed that there is no effective and independent system of monitoring the performance of departmental adjudicating officers.
The appellate mechanism under tax codes provides right to appeal before the commissioner appeals or collector appeals in case a taxpayer is aggrieved by the assessment made by the adjudication officer. In case either of the parties, the taxpayer or the commissioner/collector, is aggrieved of the decision of the commissioner (appeals)/collector (appeals), the aggrieved party can carry the matter further in appeal before the appellate tribunal Inland Revenue or customs appellate tribunal as the case may be.
Naqvi said TRC also proposed a transparent alternate dispute resolution for petty grievances of taxpayers and it should be brought under the Federal Tax Ombudsman.
The body, constituted last year, also recommended merger of tribunals of Inland Revenue and Customs into the national tax tribunal.
It said this should be work under the direct superintendence of the apex court.
However, tax officials said the proposed elimination of the first appeals level may increase the burden on appellate tribunals.