ISLAMABAD: On the face of it, The Tax Law Amendment Bill, 2024, is all set to prove another piece of ineffective legislation apropos efforts to reduce tax-related litigation in the higher courts as the bill falls short in proposing measures for the early disposal of cases involving Rs 786 billion in revenue stuck in the High Courts and the Supreme Court.
A break-up of total litigation of Rs3.6 trillion revenue in courts/tribunals reveals that 20,618 cases are pending with the Commissioner Inland Revenue (Appeals) involving an amount of around Rs1.4 trillion. The Tax Law Amendment Bill, 2024, only attempts to transfer cases from Commissioner IR (Appeals) to tribunals involving higher amounts of revenue.
Speaking on what they see as the loopholes in the proposed legislation, top tax experts told Business Recorder that the Commissioner IR Appeals are directly under the administrative control of the Federal Board of Revenue (FBR) Member Legal and one directive of the FBR on disposal of cases can substantially reduce litigation in appeals. The FBR’s instructions to the Commissioner IR Appeals have legal authority and are strictly binding on them, they pointed out.
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This is a fact that the tax demands created by the FBR’s field offices are highly exaggerated and unrealistic and were mostly remanded back, reduced or ultimately abolished at the level of Commissioner IR Appeals, they said, adding, therefore, the tax demands/cases of Rs1.4 trillion in Commissioner Appeals contain frivolous tax demands created against the taxpayers.
Therefore, the reduction of cases at the level of Commissioner Inland Revenue (Appeals) could be done by the FBR itself instead of introducing new legislation in the National Assembly, they argue while pointing at the futility of the exercise.
The Tax Law Amendment Bill, 2024 has not tackled the issue of real litigation pending at the level of the High Courts and the Supreme Court of Pakistan.
Details of pending cases reveal that the number of cases pending at the level of the Appellate Tribunal Inland Revenue (ATIR) stands at 65,255 involving an amount of Rs1.460 trillion.
After the passage of the Tax Law Amendment Bill, 2024, all income tax appeals of Rs20 million and above would be transferred to the ATIR, which is already overburdened.
Details of pending cases revealed that 2,881 cases are pending with the Supreme Court of Pakistan involving an amount of Rs91.601 billion. The number of pending cases in Islamabad High Court (IHC) stands at 899 involving an amount of Rs221.138 billion. The total pending cases in the Sindh High Court (SHC) stand at 3,335 involving an amount of Rs163.106 billion.
Within the jurisdiction of the Lahore High Court (LHC), the pending cases total 5,506 involving an amount of around Rs300 billion.
The number of pending cases at the Peshawar High Court (PHC) stands at 445 involving an amount of Rs7.64 billion.
The total number of pending cases at the Balochistan High Court (BHC) stands at 13 involving revenue of Rs2.7 billion.
The Tax Law Amendment Bill, 2024, has curtailed the role of the Commissioner Inland Revenue (Appeals) to deal with taxpayers’ income tax appeals up to Rs20 million; sales tax appeals (up to Rs10 million) and federal excise duty-related appeals up to Rs5 million.
Under the proposed Tax Law Amendment Bill 2024, the government has not abolished the post of Commissioner Inland Revenue (Appeals), but any income tax appeal involving an amount above Rs20 million would be decided by the ATIR. Similarly, sales tax appeals above Rs10 million and federal excise appeals above Rs5 million would also be transferred to the ATIR for decision within a six-month period.
Copyright Business Recorder, 2024
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