ISLAMABAD: Expressing dissatisfaction over the Federal Board of Revenue’s Alternate Dispute Resolution (ADR) system, the Federal Tax Ombudsman (FTO) has recommended that the ADR function may be entrusted to the FTO to redesignate it as a neutral forum.

The FTO’s annual report for 2020 revealed that the taxpayers were not showing interest in availing ADR forum provided by the FBR.

One of the reasons for disinterest could be that the FBR was also a party in the dispute.

In order to make available a neutral forum, it was proposed that ADR function may be entrusted to the FTO.

The proposal was also repeated at the time of sending budget proposals for 2021-22, the FTO added.

In the past, the FBR had constituted 18 Alternative Dispute Resolution Committees (ADRCs) of sales tax, federal excise and income tax for resolution of tax disputes.

The FBR claimed that it is making all out efforts to restore taxpayer’s trust by taking several steps including resolution of tax disputes through constitution of ADRCs.

The FBR has stated that the said mechanism, as part of out of court settlement and revenue mobilisation, has been mobilised to enable taxpayers to get their disputes settled in lesser time and without incurring litigation cost.

While explaining, the FBR has stated that by virtue of major facilitative change introduced through Finance Act-2020, an applicant, in order to avail ADRC, is not required to withdraw his case pending before any appellate forum.

To make the process more transparent and trust-worthy, the ADRC is composed of three members including Chief Commissioner-IR from the department’s side and notable Chartered Accountants/ lawyers and businessmen from the private sector.

The committee is also empowered to stay the process of recovery in case of hardship.

Taxpayer’s application has to be finalised by the Committee within a short period of 120 days which in itself is a big relief considering the usual time taken in various appellate fora before a case attains finality, the FBR added.

The Federal Tax Ombudsman (FTO) has taken up mega own motion cases involving systemic issues and large revenue losses including denial of benefit of Assets Amnesty Scheme to many taxpayers; tax evasion on agriculture income; bogus sales tax refunds and presence of non-duty paid vehicles on roads.

The FTO’s annual report for 2020 revealed that the Section 9(1) of the FTO Ordinance empowers FTO to investigate, inter alia, on his Own Motion, any allegation of maladministration on the part of Revenue Division or any tax employee.

Accordingly, several Own Motion cases, highly important to Tax Administration, involving systemic issues and large revenue losses were initiated/finalized during 2020.

Detailed briefs on such cases are given in the chapter of “Selected Findings and Recommendations”.

These included: Denial of Benefit of Assets Amnesty Scheme to many taxpayers; evasion of tax on agriculture income; presence of Non-Customs Paid (NCP) vehicles on roads; large number of vehicles stuck up at ports due to non-clearance/auction, and bogus sales tax refunds.

Copyright Business Recorder, 2021