The Law and Justice Division has not yet responded to the legal issue raised by the Federal Board of Revenue (FBR) whether the Auditor-General of Pakistan (AGP) is legally empowered to challenge the resolution of tax disputes through the FBR''s Alternative Dispute Resolution (ADR) mechanism.
Sources told Business Recorder here on Wednesday that a month back the Board sought legal opinion of the Law and Justice Division whether the Auditor-General of Pakistan (AGP) is legally empowered to challenge the decisions of ADRC committees. Sources stated FBR had forwarded a reference to the Law and Justice Division to know the legal status of AGP office for framing audit objections against decisions made by Alternative Dispute Resolution Committees (ADRCs).
The FBR has settled tax related disputes between the department and the taxpayers through the ADRCs. In case the Law Division empowers the Auditor General to check/securitize the ADRC decisions, the AGP office can raise audit objections against the decisions taken by the ADRC in different tax-related matters. The FBR has not yet received the opinion of the Law Division to confirm the powers and jurisdiction of the AGP on the ADRC.
The FBR is of the view that ADRC is an internal arrangement of FBR to resolve tax-related disputes of the taxpayers through committees. When the AGP office raised audit objections against decisions of ADRC, the FBR opined that the AGP had no legal authority to examine cases of ADRC as ADR mechanism was an internal arrangement of FBR for constitution of committees to settle tax disputes, sources added.
A special study of AGP on evaluation of performance of ADRCs showed that ADRCs of FBR had given financial benefits to many companies by wrong interpretation of tax law. According to the report of the Auditor-General, with a view to create tax-friendly environment, the government introduced a scheme for out of court settlement through enactment (section 47A of Sales Tax Act, 1990). Alternative Dispute Resolution Committees comprises representatives of Collectorates, renowned tax practitioner and Federation of Chambers of Commerce and Industry in each Collectorate. The FBR should examine the observations of audit in the light of prevailing laws and withdraw wrong decisions, which had created ambiguity in law, AGP added.
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