Notices to taxpayers: Field formations required to follow FBR instructions: expert

ISLAMABAD: The Federal Board of Revenue's field formations are required to strictly follow the Board's instructions on service of manual notices/orders to the taxpayers and provide time period of 15 days for compliance of the statutory notices.

A tax expert Yawar Muhammad of Rafaqat Babar & Co Chartered Accountants told Business Recorder that although electronic services are legally valid but the Board had made it mandatory to issue the notices through registered post and the time frame of 15 days for response must be allowed. The FBR's circulars are binding on the field formation as per section 206 of the Income Tax Ordinance 2001 on all Inland Revenue officials and other persons employed in the execution of the said Ordinance.

In spite of the presence of specific provision of law and FBR's binding circular, manual notices/orders are not being served. The time frame has also not been followed in this regard. This practice is resulting in undue harassment to the existing and potential taxpayers leading to hasty demand and recoveries from the taxpayers.

He added that FBR has issued the circular after the amendments in section 218 of the Income Tax Ordinance 2001, knowingly that it will cause undue burden on the taxpayers if registered post and sufficient time frame are not followed. The FBR need to take action against such practices and ensure that the officers follow the clear instructions regarding service of notices/orders and time frame of 15 days to restore the confidence of taxpayers.

Referring to the law, a tax expert stated that the Finance Act 2018, applicable since July 1, 2018, inserted the electronic services of notices and order under section 218 of Income Tax Ordinance, 2001. The notices and orders were issued electronically through the IRIS. The FBR has received complaints that the unit officers in the field do not allow the adequate time in compliance of the statutory notices.

The FBR has issued Circular cited as C.No 6(4)Rev.Bud/2018 to stop such practice on July 23, 2018 which is read as follows:

Board has received consistent complaints that Unit Officer do not allow adequate time in compliance of the statutory notices. This issue has also been highlighted in the recently held seminar of Pakistan Tax Bar Association. Such legal infirmities generate negative image of the department and ultimately result in adverse decisions in appeal.

In order to forestall such practice, it is emphasized that due care must be exercised to ensure that notices, including recovery notices, are properly served on the concerned taxpayers strictly in accordance with the provisions of sections 218 of the Income Tax Ordinance 2001, section 56 of the Sales Tax Act, 1990 and section 47 of the Federal Excise Act, 2005, Moreover the following instructions must be adhered to for the purposed of taxpayers facilitation:

(i) In addition to electronic service, although legally valid the notices should be sent through registered post with acknowledgement due.

(ii) Sufficient time (at least 15 days)/fair opportunity should be given to the taxpayer, after receipt of notice, to make necessary compliance. These instructions must be observed in letter and spirit, FBR's past instructions added.

Copyright Business Recorder, 2021