Filing of reference before high court: Mandatory payment of 30pc may be withdrawn: PTBA

KARACHI: Pakistan Tax Bar Association (PTBA) has urged the ministry of law and justice to withdraw the mandatory payment of 30% at the time of filing of reference before the high court as it restricts the taxpayers from their fundamental right of appeal.

In a letter sent to the federal minister for law and justice, the PTBA said that after the Promulgation of Tax Laws (Amendment) Act, 2024, appeals over and above the respective threshold, as defined under the Act for Income Tax, Sales Tax and Federal Excise of Rs.20.0 million, 10.0 million and 5.0 million respectively, are required to file as per the criteria given in the Act.

“We understand that the wisdom behind the Act is to meltdown the tax revenue stuck at the Appellate levels. However, the entire document has been drafted and approved with the pretext that the infrastructure in terms of Section 130 (2) of the Income Tax Ordinance, 2001 (The Ordinance) which clearly stipulates that the members of the Tribunal shall be appointed in such numbers and in such manner as the Prime Minister may prescribe by the rules,” the letter said.

“We are afraid that till the time this Act has been assented by the President of Pakistan, rules in terms of Section 237 of the Ordinance, or the Federal Public Service Commission Ordinance, 1977 have not been issued. Therefore, the foundation of the entire desired appellate structure under the Act does not exist and the fundamental right of the taxpayer is being infringed,” it added.

In view of the above, the letter said that till the time that the entire infrastructure, the capacity and the appointment process of the members of the Tribunal are not fully completed through a transparent and independent process, till then the existing mechanism should be allowed to remain in force.

Pakistan Tax Bar Association said that a due diligence exercise may be conducted within the FBR to identify the cases which are pending in appellate forums and courts and have attained the finality in terms of decisions from the Apex Courts. Such cases may immediately be withdrawn which will in our opinion minimize by at least 50% of the case burden on the appellate forums and courts and then the government will be able to actually evaluate the revenue stuck at the appellate levels.

It recommended that the oversight or review committee may be formed to evaluate the standard of assessment made by the assessing officer at the original assessment level in order to evaluate the genuineness, quality and standard of assessment and demand created through that order and added that the committee also analyze that if any issue which has been settled and attained finality, the FBR may be directed to restrain its officers to pass an order in contrast to the appellate decision, under the garb of the acronym of “every year being a different tax year”. This entire exercise after a lapse of years ends up in a futile exercise because courts never deviate from the decisions, which has already attained the finality.

Pakistan Tax Bar Association further suggested that mandatory payment of 30% may be withdrawn at the time of filing of reference before the High Court may restrict the taxpayers from their fundamental right of appeal. It is better to leave it at the Court discretion to decide the stay application of the Appellant, if the taxpayer has a prima facie case, balance of convenience in favor of the taxpayer and prejudice to the irreparable loss to the taxpayer.

Furthermore, it also advised that the FBR IRIS system should be synchronized with the ATIR software system so that the transfer of record will be speedy, smooth and reliable for the quick disposal at ATIR level.

Copyright Business Recorder, 2024