FBR withdraws 3-year old notification to pave ways for tax recovery

KARACHI: The Federal Board of Revenue (FBR) has withdrawn a notification issued three years ago related to electronic service of tax notices, paving ways for the recovery.

Through a notification issued on February 22, 2018, the FBR stated the notices served through electronic means would be treated as an additional means of service for facilitation of the taxpayer and may not be treated as a legal mode of service.

However, through a notification issued on February 3, 2021, the FBR withdrew the notification dated February 22, 2018 stating that the clarification was in contradiction to various provisions of the Income Tax Ordinance, 2001.

Recently, the FBR issued system generated notices of assessment, audit, late filing, non-filing, penalty etc. In a statement issued on January 30, 2021, the FBR said it had issued notices to nearly 1.4 million taxpayers, who were supposed to file return, or filed nil return, or mis-declared their assets to comply with their legal obligations. Sources in the FBR said the withdrawal of the previous notification had paved the way for the tax authorities to recover the amount directly from bank accounts and through other means of the recovery.

They said recently the notices to late filers and non-filers were issued directly to taxpayers’ IRIS accounts. The taxpayers were given statutory time as available under tax laws for compliance. However, a large number of taxpayers had failed in compliance, after which the tax authorities would invoice relevant provisions to recovery tax amounts. The notification of the FBR issued on February 22, 2018 stated the Section 218 of the Income Tax Ordinance, 2001 provided various modes through which a notice would be treated as properly served upon an individual or a person.

The modes of service stated in Section 218 are personal service on the individual or the representative of the person, service through registered post or courier service on the registered office or address and where the person does not have such office or address, to any office or place of business through registered post, to the last known address in Pakistan or in the manner prescribed for service of a summons under the Code of Civil Procedure, 1908.

“Electronic mode of service is not expressly provided in Section 218,” the previous notification said, adding that electronic service is provided as substituted services in rule 20, Order V of the First Schedule to the Code of Civil Procedure, 1908. The sources said after withdrawal of such notification the service through electronic mode became legal mode of service.

Individual taxpayers usually opened their IRIS account after a year for filing their annual income tax returns. In case of business individuals and other corporate taxpayers are also not regular visitors of their IRIS accounts. Therefore, in such a scenario making recovery from personal bank accounts or through other available means would create gulf between people and tax machinery.