The business community has urged the government to replace the existing four-tier appeal system under the taxation laws with two-tier to make the Tribunal a truly independent forum. The Customs Tribunal and the Appellate Tribunal Inland Revenue should be merged into singular National Tax Tribunal. Like the Services Tribunal this too should work under direct supervision of the Supreme Court.
Appeals against its decisions should go directly to the Supreme Court, said President, Lahore Chamber of Commerce and Industry Sheikh Muhammad Arshad while talking to Business Recorder. If steps are taken to merge the Appellate Tribunal Inland Revenue and Customs Tribunal, the new entity should be renamed as National Tax Tribunal. Appeals against the orders of the Tribunal should lie with the Supreme Court alone, he said.
He was of the view that Members for Tax Appellate Tribunal should be recruited in the same manner as judges of High Court. The pay, perquisites and salary structure of Chairman, members and staff should be at par with the Judge of a High Court, Session Judge and staff of the lower judiciary respectively, he opined. In developing economies like Pakistan, one of the biggest problems is a relatively small tax base and the reluctance of ordinary people to file tax returns and thus submit themselves to scrutiny of their affairs by the tax administration, he said. However, once a taxpayer professes faith in the effectiveness of legal remedies against an unjust tax levy or unjust action of the taxation authorities, he would be more likely to be truthful to the taxation authorities, and willing to accept a reasonable levy of tax, he added.
To a tax collector, an efficient tax judiciary ensures that demands arising out of legitimate tax assessments, which can stand scrutiny of law, are not unnecessarily locked up in litigation. As long as there is a pending litigation in relation to a particular tax levy, there is a natural, and quite understandable, desire on the taxpayer's part not to pay the disputed amount during tendency of litigation, he maintained.
He said, "An efficient tax judiciary resolves disputes quickly, quashes demands which are not legally sustainable, and thus segregates serious tax demands from frivolous tax demands, as also giving finality to legitimate tax demands". This in turn ensures that taxpayers cannot resort to dilatory tactics for paying these genuine and legitimate tax demands which have received judicial approval.
An efficient tax judiciary thus helps removing impediments from collection of genuine tax demands by the State, which, once again, results in greater resource mobilisation, he added. The LCCI chief said the effective tax judiciary does not only settle tax dispute between a taxpayer and the State, but it also lays down principles on the basis of such resolved disputes which provide guidance for the future.
These decisions, which have precedence value in the sense that same decision has to be taken on materially identical facts, also have normative effect thus helping in correcting the judicial course. This way, an effective tax judiciary also contributes to smooth functioning of the tax machinery, he added. He said that over the years taxpayers have stopped using Alternative Dispute Resolution Mechanism (ADRC) as most of the recommendations were not being accepted by FBR. Similarly, cases, where FIRs have been lodged, were excluded from the purview of the ADR. ADRC mechanism is inexpensive, swift, results in resolution of issues/disputes and also eliminates possibility of rent seeking, he said.
Therefore, all disputes between the department and the registered persons may be allowed for ADRC mechanism including cases pending for adjudication before adjudication authorities. The cases where FIRs have been lodged may also be covered by this mechanism so that recoveries in such cases are expeditiously, made without protracted litigation. The unanimous recommendations of the committee should be made binding on the FBR, he maintained.
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