The ADR system could prove to be a highly effective, confidence inspiring, low cost system for the CBR, provided it is properly monitored. The Income Tax Bar Association, Karachi in its recent seminar, as reported by Daily Business Recorder on 23 April, 2007 would believe it could be so when 'hands off CBR'.
This scribe is, however, of the view that CBR's local ADR Secretariats need to be intensively regulated. One of the ways could be their superintendence by committees headed by serving High Court judges. The judges may be assisted by accountants practising fiscal laws. Quite a few of them are already CBR's panellists for ADR purposes. At the initial stage, intensive surveillance will be required. The level of monitoring should decrease as the ADRC Secretariats mature in handling the system and level of stakeholders confidence in the system improves.
There have been instances where the non-official ADR members from the private sector on the strength of 'proxy' from another similar member conducted hearing at an ADRC meeting and formulated recommendations to the CBR.
SUCH AN ACT LEADS TO TWO BLUNDERS OR SO TO SAY TO A DOUBLE JEOPARDY TO THE STATUTE, AS FOLLOWS:
(i) signing the recommendation to CBR by an ADRC member without hearing the case - bad in law, ultra vires act.
(ii) lack of quorum at the relevant ADRC meeting - proceedings of the so-called hearing void ab initio.
There have also been cases in which the ADRC members have come up with recommendations which belie superior courts' mandates on the relevant subject. This may be out of arrogance, demonstration of power and pelf-possibility cannot be ruled out.
Often words of the ADRC recommendations and, in certain cases their ditto endorsement by the CBR, is couched in a language which besides being ambiguous is full of mistakes of language, devoid of law support and susceptible to more than one interpretation. The possibility of 'deliberate confusion cultivation' cannot quickly be ruled out, so goes gossip in the relevant circles. The assessees, not amenable at the time of drafting the recommendation, later suffer at the hands of the CBR's field staff because the balance of convenience in such a case later transcends to the field staff.
Particularly, non-official members of ADRC from the business community, may not be well versed with legal intricacies. No wonder that while considering references, specially in the area of sales tax and excise duty, they have been found seeking third party evidences. To this end their looking into books of accounts etc of third parties is not a rare phenomenon. They are not to be blamed.
The fault would be with local ADRC Secretariats, who did counsel relevant ADRC members that interpretation of fiscal statutes is not a 'free for all game'. A tax liability created on the basis of accounting record of third parties shall be struck down by the superior courts due to the same not being according to the law. Same shall be the fate of all formulations based on third party witnesses.
Much of the derailment cited above can be husbanded by CBR through 'proper functioning of ADRC Secretariats' in different cities. The system can be made more effective with CBR's taking the following steps:
(a) The local ADRC Secretariats should formally be made responsible for providing required legal assistance in the matter of orderly convening, holding and handling the meetings once green signal on a date from the ADRC Chairman is in sight. Preferably through issue of an SRO, they should be bound to make available needed legal assistance to the ADRCs, in disregard of members of the committees putting a demand for the same or otherwise. To introduce accountability and reduce time taken by the process, right from the point of initiating steps for obtaining consensus on a date for holding a meeting, the entire process should be documented.
It is to be driven home that when there is an irregularity in the fold of an ADRC, the Secretariat cannot be allowed to reel away. When a deviation from written laws has to be made, for good order, the same should be clearly recorded and conspicuously mentioned in the submission to CBR.
(b) The local ADRC Secretariats should be commanded by the CBR that it is they who are to be responsible for drafting the ADRC recommendations. For a better working of the ADR system the recommendation should, in the first instance, be signed by the departmental representative - normally a Collector. The ADRC Secretariat should be made to suffer in the face of a non-speaking, improper, confusing or otherwise non-acceptable drafting. In case of an apparent legal lacuna in an ADRC formulation or abuse of law they are to be held responsible, the Board should make clear to the local ADRC Secretariats.
Side by side the Board should set up an 'in-house' ADR Committee of Officers at its headquarters. With such a Committee could be associated private practitioners. The suggested CBR nucleus at Islamabad should go into the quality of 'recommendations for CBR' and enforce accountability' on the local ADRC Secretariats. The ADR rules should be amended to give vent to this.
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