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  • Mar 19th, 2017
  • Comments Off on Rs 300 billion stuck in appeals: FBR to revise ADR system in budget
The Federal Board of Revenue (FBR) has decided to revise the whole system of Alternative Dispute Resolution (ADR) committees in budget (2017-18) under the plan to reduce litigation of Rs 300 billion stuck up in appeals. Sources told Business Recorder here on Saturday that the decision has been taken in the last meeting of the Tax Reform Implementation Committee (TRIC) at the FBR House.

According to details, a comprehensive plan would be implemented for the revival of the ADR system in coming budget (2016-17). It has been proposed that an ADR committee be constituted within 30 days of receipt of application by taxpayer and recommendations be furnished by the committee within 60 days. In the previous meeting of the TRIC, a sub-committee was constituted which was tasked with submitting proposals with regard to constitution of ADR committees in the existing legal framework. The convenor of the aforementioned sub-committee, Member (Legal), FBR made a comprehensive presentation on the existing legal framework of alternate dispute resolution and the amendments introduced in the relevant provisions through the Finance Act, 2016. The committee was apprised that over 27000 cases are pending before the Appellate Tribunal Inland Revenue (ATIR), 5000 cases before the customs tribunal whereas approximately 13000 cases are pending before various high courts. The committee was also informed that it is estimated that a substantial amount of revenue aggregating Rs 300 billion is stuck up in appeals.

On the basis of deliberations made by the sub-committee it was stressed that the concept of alternate dispute resolution would yield the desired results only if the process is quick, judicious, transparent, simple and handled sensitively/confidentially. As regards the composition of the ADR committee(s) it was proposed that it should consist of three members, ie, a tax professional, a member of civil society having high integrity representing trade/commerce/business and a person not below the rank of Commissioner. It was also proposed that the pool be recommended by the field units and approved by FBR. As regards the timelines to be followed during the process of ADR, it was proposed by the sub-committee that ADR committee be formed within 10 days of receipt of application, in case no decision is reached within 90 days the ADR committee be reconstituted within 5 working days and it be made binding upon the reconstituted. The ADR committee will furnish the recommendations within 60 working days.

It was also suggested that the FBR pass an order granting consent to the recommendations of the committee within 5 working days of the receipt and only in exceptional circumstances, within 5 working days give detailed reasons for not approving the recommendations of the committees. The sub committee also proposed that the taxpayer as well as the department be provided with an irrevocable option to accept the majority recommendations.

Thereafter, a detailed discussion was held with regard to the procedural aspects and methodology as well as timelines to be adhered to in order to jumpstart the ADR process and make it effective within the existing legal framework. The modalities involved in the formation/constitution of ADR committees were also discussed at length so as to make the process as practicable/viable as possible within the shortest time spam. Member Tax Reform Commission Abid Shaban dilated upon the main reasons as to why the ADR process has not been able to emerge as a viable alternative vis-à-vis protracted litigation. He also proposed that the time span for decisions/proposals by the ADR committee should be restricted to 21 working days and administrative instructions be issued in this behalf. He also opined that the majority decision should be binding upon the taxpayer as well as the department. He also proposed that it be made mandatory for the board to endorse/approve the recommendations within 5 working days and stressed that attainment of finality in ADR proceedings in a predetermined time frame was of vital importance.

Haroon Akhtar Khan, special assistant to the prime minister on revenue and Chairman FBR opined that the ADR committee should be activated/ made functional on a priority basis within the existing legal framework even prior to the introduction of any amendments in the relevant substantive law in the upcoming budget Chief (IR Ops) apprised the committee that names of suitable CA''s/tax professionals for ADR committees are procured from field formations and scrutinised for constitution of ADR panels. Chairman TRC Masoud Naqvi emphasised that unless finality is ascribed to the ADR proceedings the same cannot be implemented in its true spirit.

It has been decided that the ADR committees to be advertised/reactivated on a priority basis within the existing legal framework. Secondly, the recommendations to the sought from the Zonal CIR''s/TRIC members for constitution/ notification of ADR committee, comprising of 5-10 members each, in three large cities viz Karachi, Lahore and Islamabad. Such ADR panels/committees would be announced/ finalised on a priority basis within 10 working days.

In order to expedite the process of Alternate dispute resolution, administrative instructions to be issued to the effect that ADR committee be constituted within 30 days of receipt of application by taxpayer and recommendations be furnished by the committee within 60 days. Proposals made by the sub-committee on alternate dispute resolution be taken up for consideration in the upcoming budget exercise.



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