Member Inland Revenue: move to split post termed 'big conspiracy' against reforms

The proposal to split the Federal Board of Revenue (FBR) Member Inland Revenue post into two posts ie FBR Member Income Tax and FBR Member Sales Tax has been termed as a big conspiracy against the ongoing reforms in the tax administration, which has been checked by the concerned officials.
Sources told Business Recorder here on Friday that the internal documents/files of the FBR showed that a sales tax official has made serious remarks on the existing post of the FBR Member IR and proposed splitting of the position into two posts. This move has been termed as a big conspiracy by the top IR officials against the Inland Revenue Service and reforms to integrate taxes and creation of a separate intelligence agency for the Inland Revenue.
The official documents, particularly an official file No 2 (28) BTB /FED-11, showed that how a sales tax officer has given detailed remarks against the FBR Member IR through an official file which only deals with the notification for creation of a separate Directorate General of Intelligence IR.
The file is related to the issuance of the notification for setting up a separate intelligence agency for sales tax and federal excise. Instead of giving comments on the relevant topic, the dealing sales tax officer had written a detailed note against the post of the FBR Member IR which has no relevance to the actual topic.
Surprisingly, the complete file only talks about strengthening the newly created directorate of intelligence IR which has been strongly opposed by the sales tax officer, who proposed splitting of the FBR Member IR position into FBR Member Income Tax and FBR Member Sales Tax. The two issues have no link, but the sales tax officer totally changed the topic for dividing the FBR Member IR into two separate posts.
Sources were of the view that due to seriousness of the issue, Member Inland Revenue Service (IRS) Khawar Khurshid Butt is expected to take into confidence senior officials of the IR across the country from Saturday. Besides other policy issues, FBR Member IRS will visit Lahore on Saturday and is likely to inform IRS officers that a sales tax officer is making deliberate move to split the IRS group into two posts.
He may also share the conspiracy against the Inland Revenue Service by this sales tax officer. On the other hand, Chief of RGST in separate direct note to Chairman of FBR stated that Member IRS is not member of RGST, both technically or otherwise.
In this official file, the Chief (RGST) proposed in absence of Member IRS on July 17, 2011 when he was on visit of India that the IRS should be separated into groups by appointing Member GST and Member Direct Taxes by deviating with the service structure endorsed by the donor agency.
The FBR documents showed that when the file was moved to issue a formal notification for the directorate of intelligence IR in accordance with budget 2011-12, the Chief RGST (who was given acting charge of IRS because of absence of member to visit India), instead of giving input on DG (I&I), opposed the establishment of DG I&I by stating that it was not advisable to create another Police force into the fold of the FBR and it was rather more appropriate if the existing Directorate General Customs Intelligence was declared to be DG I&I of IRS with proper staffing with income tax experience from defunct income tax group.
He further stated that the trade bodies such as FPCCI and All Pakistan Textile Mills Association (Aptma) have already vehemently started demanding separation of the post of Member (Inland Revenue) at FBR level into two categories: one for income tax and the other for sales tax and federal excise. With the establishment of Inland Revenue department, he stated, that problems of the taxpayers' community have painfully multiplied to the detriment of the taxpayers' voluntary wishes and efforts for compliance.
"Complaints of corruption and malpractices have increased manifold" he alleged. He further contended that several adjudication orders have been passed in clear deviations of the law creating, legally unsustainable tax liabilities. It is unfortunate that neither the income tax officials nor the sales tax officials have so far learnt each other's law, nor they are sincerely making any efforts to share each other's knowledge and experience.
It is believed that still there is a long way ahead when the Inland Revenue department will be able to give quality service in the composite management of three (so-called) inland taxes (income tax, sales tax and Federal excise), Chief of RGST added.
Sources said that when FBR Member IR returned from India, the lower staff tabled this file before Member IR, who read the whole story written by the sales tax officer against the post of the FBR Member IR. FBR Member IR read the whole comments of the sales tax officer against the directorate of intelligence IR as well as FBR Member IR.
At the same time, Director I&I IR wrote officially on the file by revealing that the Chief RGST claim that the Chairman of FBR was not on board was wrong as the Board-In-Council's meeting dated 23-2-2011 minutes confirmed that on the orders of worthy Chairman this issue was discussed threadbare by all the stakeholders in Chairman's office on February 24, 2011 and then orders were issued. The said order was vetted word to word by Chairman himself before issuance.
It is not fair to label a professional organisation like DG I&I-IR as FBR's police because it does not deal with criminals but its clients are white collared taxpayers. The initiative of Directorate General I&I through banks audit recovered Rs 4.253 billion within few months without registering so many FIRs.
Commenting on the remarks of the sales tax officer, FBR directorate of intelligence IR further stated that tax authorities' recent visit of Karachi with "unnecessary interceptions" by Customs Intelligence was highlighted by the President of FPCC&I, but no bank or trade body raised any issue pertaining to DG l&1-IR.
It is not fair to label a professional organisation like Dte.General I&I-IR as FBR's police because it does not deal with criminals but its clients are white collared tax payers. FBR's Management can well differentiate the organisation which believes in police action from the one which upholds professionalism. The decision to create a separate organisation with the mandate to deal with issues pertaining to Sales Tax, Federal Excise and Income Tax was a well considered and thought out decision.
This decision now has obtained legislative assent through the Finance Act, 2011 and represents the will of legislature and cannot be undone by administrative measures. It is also worth mentioning that handling of I&I matters relating to Sales Tax and Federal Excise laws by officers belonging to the Pakistan Customs Service would be illegal and void in view of the clear cut provisions of Establishment Division's O.M.No F.61212009-CP-ll dated 12 th September, 2009, directorate of intelligence added.
In order to take the spirit of Tax Reforms forward, through an Administrative Order, Directorate General I&I-IR was created on March 25, 2011 and a skeleton Department was raised accordingly. Finance Act, 2011 recognises the aforesaid initiative and provides legal cover to this organisation by incorporating necessary amendments in section 29 of Federal Excise Act, 2005. Through the said amendments, now Directorate General I&I-IR replaces Directorate General I&I, FBR to the extent of Federal Excise.