ISLAMABAD: The Federal Board of Revenue (FBR) requires automation of the whole appellate system starting from the level of Commissioner Appeals up to the higher courts to end tax-related litigation for recovery of taxes to the tune of billions.
Legal experts told Business Recorder on Thursday that the FBR has automated many business processes e.g. e-filing of returns, withholding statements, issuance of system-generated notices and assessment orders, online filing of refund application, exemption certificates, NPO applications and their disposal through system, online filing of appeals to commissioner appeal and online issuance of order by commissioner appeal.
However, the automation process ends at this stage.
After the decision of appeal by the Commissioner Appeal, the second tier of litigation is manual, they said.
Moreover, the FBR’s appeal filed with the tribunals, high courts and supreme court are also manual. Non-automation of this appeal system before the appellate tribunal, high court and the supreme court is a missing aspect of automation and unless this whole appellate system is fully automated. But automation of the entire appeal system is not within the power of the FBR as it depends upon the willingness of courts to give access to their existing automated system to complete this whole process.
At present, the whole judiciary including the higher judiciary is automated only to the extent of issuing a cause list and to some extent case details. The judicial proceedings from filing of appeal and upto the decision in appeal are manual. The purpose of automation is not limited to automated record keeping but analysis and monitoring and decision and policy making. Within this context, the FBR does not have a single software for all types of data and business processes. For income tax from the tax year 2007 to the tax year 2013 returns data is lying in ITMS software which also includes sales tax data and customs GDs of a taxpayer. From the tax year 2014 onwards, income tax returns data is stored in IRIS software.
Similarly, there are multiple softwares for sales tax e.g. FASTER, CREST and ERs. Commissioner appeal works in another software system. Customs department works in different software PACCSs and One Customs.
The higher courts probably would be working in a different software and when we talk about integration of all softwares then all softwares must be compatible for merger.
Tax experts claimed that biggest feature of tax reforms was universal self-assessment scheme since tax year 2003. Whatever is declared by a taxpayer it is accepted as self-assessed under the law. This self-assessment policy was backed by a deterrence in the form of an audit. But audit has met failure since tax year 2003 for many reasons. Whenever a case was selected for audit by a commissioner or FBR its selection was challenged in high courts through writ petitions. Second, due to the frequent posting/ transfer of officers audit process remained slow. Third, audit quality also remained low as under new self-assessment scheme taxpayer was bound to maintain books of accounts but the production of evidence of business transactions before tax officers is generally avoided by taxpayers.
When an audit is completed then the commissioner is left with no authority but to defend the tax demand before appellate forums, but the system is not automated except Commissioner Appeals.
Representation in high courts and the Supreme Court is made through legal counsels of the FBR. The FBR has developed a panel of advocates who are assigned power of attorney to attend cases on behalf of department. Although, the FBR commissioners keep liaisons with legal counsels and assist them in pleading the cases, but lack of automation delays proper monitoring of pending cases.
Lack of automation of appellate systems of higher courts and monitoring of case assignment to legal counsels are one of the major causes of low ratio of success of tax cases at appellate forums. There is a dire need to develop automated appellate systems in tribunals and higher courts allowing filing of appeal, issuance of notice of hearing, and disposal of appeal and integration of that system with the FBR, experts added.
Copyright Business Recorder, 2022
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