A Senate panel on Tuesday recommended the government to sack taxmen who made exaggerated tax demands and then rejected appeals of taxpayers under pressure from the Federal Board of Revenue (FBR) headquarters.
The Senate Standing Committee on Finance gave the unanimous recommendation amid a sharp increase in tax assessment orders by the FBR against the taxpayers. This resulted in a 70% increase in litigation in relation to tax matters and the disputed amount jumped to over Rs3 trillion within eight months.
All those FBR commissioners who issued unjust tax demands or rejected appeals of taxpayers against these demands should be terminated, ruled the standing committee while showing its annoyance over what it called the “high-handed” manner in dealings with taxpayers.
Standing Committee Chairman Senator Talha Mehmood of the Jamiat Ulema-e-Islam-Fazl (JUI-F) assured the committee that he would get the recommendation adopted by the Senate to put more pressure on the government to accept the proposal.
For the last over one year, the FBR has been focusing on big cases to raise tax demands on suspicion that even the registered and those taxpayers filing tax returns were not fully discharging their obligations.
In 2018, the FBR had issued about 52,000 tax notices and raised tax demand for roughly Rs31.9 billion, said Talha while reading a document of the FBR. The number of tax notices increased to 87,000 and the demand surged to Rs1.8 trillion in 2020-21, he added.
The standing committee chairman said that tax recoveries were not matching the tax demands, suggesting that undue demands were made.
“I received calls from FBR commissioners who swore that they were under pressure to issue tax notices and reject appeals,” Talha said, adding that the FBR put pressure on the commissioners on June 29 and 30.
FBR’s new Member Inland Revenue Operations Qaiser Iqbal denied the allegations. “I vow as a gentleman that there was no pressure from the FBR headquarters to decide appeals in favour or against anybody,” said Iqbal.
He said that the amount and number of tax notices increased after the FBR changed its approach and decided to reassess every Rs1 billion and above turnover.
Finance Minister Shaukat Tarin had promised that the FBR would not issue fresh tax notices and in cases where wrong notices had been sent would be withdrawn but these promises remained unfulfilled, said Senator Faisal Sabzwari of the MQM-P.
The standing committee directed the FBR to submit details of tax demands made, appeals rejected and recoveries made against notices sent over the past five years.
The Express Tribune reported last month that the FBR had directed the commissioner appeals to update their respective chief commissioners about their performance. The directives have been questioned by legal experts.
At the end of December 2020, Rs1.8 trillion was stuck in litigation, which has gone up to Rs3 trillion, an increase of Rs1.2 trillion in just eight months, according to FBR data.
Eight months ago, about 76,700 cases were under litigation from commissioner appeals in the Supreme Court of Pakistan, which have now increased to nearly 90,000.
About 60% of the disputed tax amount is pending with the commissioner appeals, which is also a reason for bringing them under the FBR control.
There are roughly 23,000 cases pending before the commissioner appeals, involving Rs1.8 trillion in revenues – the highest amount pending before any forum.
In just eight months, there had been an increase of about 175% in the disputed taxes pending before the commissioner appeals.
FBR’s statistics showed that in the Appellate Tribunals, about 56,000 cases were pending involving another Rs631 billion in revenues. In December last year, Rs442 billion was under litigation before the Appellate Tribunals, which has now increased by 43%.
Published in The Express Tribune, October 6th, 2021.
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