Reward rules flaws to be ratified

Basic flaws in the existing reward rules need to be ratified to check drainage of billions being paid to customs, sales tax and central excise officials as prize money on revenue recovery.
A senior tax official told Business Recorder on Wednesday that as per existing rules the committee comprising collector concerned along with informer/tax officer determine the reward. This provision is not rational as the claimant of the reward is himself part of the decision-making body in this regard.
Secondly, there should be some mechanism to spend the money in the Common Pool Fund (CPF) more judiciously. Presently, the collectors are empowered to utilise the CPF without consulting the board. The misuse of the CPF could only be checked through proper monitoring and issuance of a new procedure for its utilisation.
Sources opined that rewards should not be sanctioned till the finalisation of cases at the level of tribunal or any other forum. Under the existing rules, some amount is being given to the informer in advance prior to the finalisation of the cases pertaining to confiscated smuggled goods.
Quoting tax authorities that 70 percent of the cases against the taxpayers are frivolous, sources said that huge amounts of rewards were also claimed in these cases having no legal ground. An amount of Rs 250 million has been sanctioned as reward money during 2004-2005 and July-December 2005. This amount clearly reflects that the CBR has recovered billions of rupees in the shape of duties and taxes. Illegal rewards were also issued through recovery of duties and taxes in frivolous cases.
The reward money is usually 10 percent of total amount of duties and taxes involved in a case. If 70 percent of the cases filed by the department are frivolous, then what is the justification of giving Rs 250 billion as rewards.
Another criterion of judging frivolous cases filed by the department is the Alternative Dispute Resolution (ADR) Mechanism and people not happy with the legal proceedings prefer out of court settlement. However, a large number of frivolous cases filed by the department were settled through the ADR committees, officials added.
The CBR has already submitted the draft of the new reward rules to the Prime Minister for approval. Under the revised rules, 15 percent of the reward money will go to informers, 35 percent to officers/officials and 50 percent to the Common Pool Fund. The reward will be restricted to only anti-smuggling activities like seizure of arms/ammunitions, drugs/narcotics, intellectual property rights, liquor and gold. The amount of reward will be restricted to two years' pay in a year and Rs two million in entire service of the officer/official. The reward for meritorious services will also be restricted to two months' pay.