EDITORIAL: The Sindh High Court’s (SHC’s) directive to the Federal Board of Revenue (FBR) to withdraw all recovery notices issued to state-owned enterprises (SOEs) and resolve their tax-related issues through alternate dispute resolution committees (ADRCs) is sensible and should substantially reduce the backlog faced by the courts. The SHC issued a judgment in favour of the Trading Corporation of Pakistan (TCP) Pvt Ltd, which would be applicable to all SOEs.

SRO 1377 (I)/2024 mandates SOEs to approach ADRCs of FBR to resolve tax disputes, regardless of the amount of the liability. And the SHC judgment seems to have finally brought home the realisation that certain amendments have been carried out in the Income Tax Ordinance 2001 as well as other federal fiscal laws whereby SOEs are required to apply to the Board for the constitution of ADRCs for the resolution of disputes; hence the obligation to withdraw any and all pending litigation.

This should reduce the burden on the courts, something that is desperately needed, and also get the ball rolling on freeing FBR’s Rs 2-odd-trillion stuck in litigation. The government should issue an executive order to ensure these matters are finally resolved. SOEs and their tax issues have been an unending problem for the courts as well as the economy for the longest time, which is unacceptable especially in the current economic/financial environment, and everybody is looking at the ADRC route to settle them once and for all.

Besides, the IMF programme also demands an end to all SOE-related irritants, not to mention the expectations it attaches with FBR’s revenue collection capabilities. And now that the SHC has also weighed in decisively, this should not remain one of those problems that just cannot be made to go away. This should also put the spotlight on the courts for their own reasons. With millions and millions of cases in backlog, Pakistan’s judiciary has become the very picture of ‘justice delayed is justice denied’. And although there are many reasons for it – some equally unforgivable and unacceptable – one is the way the courts are needlessly burdened with the kind of litigation that is not their business because alternate avenues, just like ADRCs, already exist within the system.

Yet ensuring that ADRCs actually resolve disputes, that too in time, is another matter altogether. FBR’s performance has left a lot to be desired for a very long time. All the talk of, and indeed need for, reforms has led, so far, to nowhere. It still regularly falls well short of doing its basic job, which is revenue collection. Often its own problems – corruption, mismanagement, nepotism, etc – overshadow the issues it faces from other parties.

Now there’s simply no more time for these things. All outstanding tax related matters, especially when it comes to SOEs hemorrhaging trillions of rupees every year, must be resolved immediately. Now it should not take too long for ADRCs to deliver results and settle these tax disputes. Otherwise the courts will have to be revisited, and the circus will start all over again.

Relevant departments should ensure necessary oversight to make sure that this particular irritant does not resurface.

Copyright Business Recorder, 2024