Tax-related disputes: ADRC not following time limit for processing of applications: FBR

The Federal Board of Revenue has admitted that the Alternative Dispute Resolution Committees (ADRC) as well as the department is not following the time limit for processing of applications filed by taxpayers to resolve tax-related disputes. According to a latest FBR presentation on the ADRC Mechanism, the board has identified some difficulties in smooth implementation of the ADRC system.
The number of applications to ADRC are growing for settlement of tax disputes. Firstly, generally old and complicated applications/cases are received under the ADRC, which are difficult to dispose off. Secondly, non-departmental members i.e. retied judges, chartered accountants, advocates and businessmen are reluctant to join the committees.
Thirdly, chairman/members of ADRC already on panel do not take keen interest in disposing the cases as no remuneration is paid. Fourthly, taxpayers are not well informed about the ADRC mechanism. Fifthly, taxpayers do not file applications properly.
Sixthly, no time limit is observed either by the committee or the department. Seventh, ADRC appeals are accepted if covered under the prescribed rules and laws, except those which do not cover under the law. Data revealed that the board has so far received 1570 applications pertaining to customs, sales tax and income tax under the ADRC mechanism.
Around 218 applications have been rejected or withdrawn by taxpayers. The committees were formed in 1262 cases, whereas the board received recommendations in 765 cases. The recommendations of the committee were not accepted in 217 cases. Presently, 495 cases are pending before the committee and recommendations of the committee were implemented in 515 cases.
Out of 765 recommendations received by the committees, action has been taken in 732 cases, reflecting a balance of 33 cases. Interestingly, 1008 applications related to the sales tax/excise disputes. The applications against income tax and customs disputes were 286 and 276 respectively.
The impact of ADRC on appeals and litigation showed that the common complaints of taxpayers within the existing system used to involve lengthy litigations, extending over decades. To avoid delays and redressal of grievances, the ADR system has provided aggrieved taxpayer a platform to raise his dispute at a forum separate from the conventional one.
The presentation further revealed that there are a number of benefits of ADR for both the FBR as well as taxpayers. It has reduced a number of litigations and the burden on the courts; saved management time of litigants and effectively controlled maladministration. The system avoided diversions of time in bringing cases to courts and settled disputes through tax experts and recognised institutions.
It directly goes to the root of the dispute instead of periphery and provides speedy resolution at lower costs for all parties to the dispute. The FBR may, in case of accepting the recommendations, passes a formal order/judgement and on payment of tax, all the proceedings abate, and the orders/judgements made are taken as modified to that extent. In case when the matter is sub judice before the court the recommendations and order/agreement are to be placed before the court/authority, which can then, pass an appropriate order, the presentation added.