The role of Tax Ombudsman

In an exclusive interview with Business Recorder on the completion of his four-year tenure as Federal Tax Ombudsman, Justice Saleem Akhtar (retd) expressed his satisfaction over the process of change for the better in the mindset of the various taxation departments.
This, in his view was the direct result of the judgements pronounced by him on the complaints of a large number of aggrieved taxpayers in respect of different taxation departments, namely, income tax, customs and sales tax.
Summing up his observations over the working of the taxation departments, he pointed out that because of the lack of trust, confidence and understanding between the taxation officials and the taxpayers, quite a large number of potential taxpayers could not file their tax returns and even those who were enrolled as taxpayers, did not declare their income correctly for fear of harassment and injudicious assessments by the officials concerned.
He recalled that a number of Taxation Reforms Commissions and Task Forces in their studies had pinpointed a host of irregularities and corrupt practices in the taxation departments and called for sweeping administrative reforms.
The establishment of the office of the Federal Tax Ombudsman four years ago was thus an appropriate response of the government as a first step towards reforms in the taxation system of the country.
According to answers given by Justice Saleem Akhtar in response to questions from Business Recorder's representative, the aggrieved taxpayers were afforded timely relief.
In consequence, the tactics of harassment and illegal practices followed by the taxation departments were exposed to the glare of public notice and thus the Central Board of Revenue was rather compelled to enforce necessary corrective measures in various departments so that repetition of unhealthy practices could be checked.
In a large number of cases, the CBR agreed with the FTO's judgements and thus necessary reforms were adopted.
In this way the FTO's role contributed significantly to the process of reforms in the habits of the various taxation departments. Quoting specific instances of illegal practices of the income tax department, Justice Saleem Akhtar pinpointed Section 65 of the repealed Income Tax Ordinance under which assessment of a taxpayer could be reopened with the permission of the I.A.C and accordingly the taxpayer could be served with a show-cause notice followed by lengthy proceedings.
This was declared to be illegal by the FTO as it amounted to harassment of a taxpayer. As a result, the aforesaid section was removed.
Another instance he quoted was the practice of provisional assessment of customs duty on imported goods at higher value by the customs authorities under Section 81 while at the same time the importer was made to furnish a security for the discharge of the remaining liability, if any.
The practice was reflective of open harassment of the importer and the FTO declared this practice to be illegal and since then it has been discontinued. The system of selecting cases for detailed audit through balloting was also declared to be illegal by the FTO.
Similarly, in respect of raids on business premises by the sales tax officials to verify sales tax payments, the FTO provided relief to the aggrieved parties. In all, FTO received 5,866 complaints during Justice Saleem Akhtar's tenure, out of which 5,565 cases were decided.
This undoubtedly was a highly commendable performance of the office of the FTO. The laudable contribution made by the FTO during the last four years in the difficult field of taxation reforms, has been acknowledged throughout the country by the taxpayers at large.
It was for the first time that an institution of this type was established by the government for the accountability of the entire CBR and its subordinate departments which otherwise enjoyed a complete liberty and licence to impose their discretion on the taxpayers irrespective of the law they were supposed to follow.
The discretionary trend of the tax officials has by and large come under a strict check thanks to the bold, impartial and transparent judgements of the FTO.
There is every reason to emphasise here that the office of the Tax Ombudsman should not be left vacant for a long period. Although some reports indicate growing opposition from inside the government's hierarchy to the role of the Tax Ombudsman, it is unthinkable that the President and the Prime Minister would take any serious notice of it.
Indeed, considering the outstanding services he rendered for the promotion of a corruption-free taxation culture, the tenure of Justice Saleem Akhtar may further be extended for four years subject to his willingness to continue in this position, or else a person of high stature be installed at the earliest, to fill in his shoes.