A tax payer plays a vital role for the Federal Board of Revenue (FBR) in Pakistan. In the event of a slight discrepancy in the total components of the tax administration, it has to take an arbitrary defeat. That’s why, senior FBR officials need to keep a close eye on the actions of their subordinates because if any mishap happens, the reputation of the FBR will be tarnished.
In the last month, the president house directed FBR’s top management to take action against all the concerned officials in 12 important cases. President Dr. Arif Alvi rejected 12 cases sent to the presidency. He directed the FBR to resolve the issues through negotiations, giving the complainants a chance to be heard instead of wasting the time of the presidency, the Federal Tax Ombudsman (FTO), the high court and the tribunal. He rejected the requests of the FBR and ordered to implement the decisions of the Federal Tax Ombudsman.
A number of companies and entities have approached the FTO against the tax administration for the misuse of powers, attachment of industrial and manufacturing units without fulfilling legal requirements and rejection of refund applications without providing a hearing. 11 petitions sent to the president also pointed out issues of negligence, mismanagement or misconduct of FBR officers or staff. In some cases, the FBR management issued an attachment order to the production unit without O-IN-O, which is against the law. After a detailed hearing, the FTO ruled against the misconduct of the FBR and issued redressal orders. Nevertheless, instead of implementing these decisions, the FBR officials filed 11 petitions for review with the president, which were rejected on January 20, 2022.
One company complained that anti-smuggling staff (Mianwali) raided one of their trucks on July 9, 2019 and seized 195 drums filled with coal wire. According to staff, the coal wire was Iran-made and would be seized during the transfer from Karachi to Tarnol. Later, the collector appeal Faisalabad and the educating authority ordered the release of the seized goods after payment of duties and taxes. Also, a fine was ordered. But 15 months later, the department failed to implement the order. The complainant therefore approached the FTO. Later in the final decision, the president ordered to refund the 1,730,000, taken for illegal duties/taxes and fines.
One case of income tax relates to a company supplying tiles, on which for the financial years 2013-14 to 2016-17, a fine of Rs113.25 lakhs was collected while the department deducted about Rs90 lakhs from the complainant’s bank account through attachment without completing the O-IN-O process. On which the complainant sent an appeal under section 45-B to commissioner IR Karachi, which was granted. Complainant later demanded refund of illegally received funds from RTO-III Karachi but FBR did not respond.
The FBR later sent a request for review to the president. In his final decision, the president wrote that the FBR had interfered in the decision of the FTO without any real justification on which the president had rejected all the 11 petitions. President directed the FBR to refrain from engaging in an irrational and illegitimate behavior in these cases. Also, the president directed FBR to complete its activities in a timely manner within the ambit of the law. He said that not only the FTO, courts and tribunals were wasting their time but also the time of the presidency. He also stressed the need to resolve issues through mutual dialogue among stakeholders.
In a similar case, action has been ordered against those responsible for the delay in the refund case of 82-year-old Muammar Pensioner. This case is a unique example of mismanagement within the FBR.
Before discussing the performance of the FBR, let us look at an interesting case. The details are as follows: Hamid Ali Khan filed an income tax return for the financial year 2020 under section 114 (1) and demanded a refund of only Rs2,333. Complainant first sent the application by e-mail, then appealed to the FBR chairman. Complainant’s first application was filed on October 19, 2020, while he referred to FBR chairman on December 24, 2020. Now, in my opinion, the FBR should have paid Rs2,333 which would also increase the good name and the pleasure of Allah Almighty.
On the contrary, on January 29, 2021, the FBR unit officer dismissed the refund case under discussion. The manner in which the unit officer handled the case is a unique example of legal considerations and deviation from FBR rules and regulations and procedural orders.
Later, the taxpayer took the matter to the FTO for redressal of the grievance. The FTO noted that the 82-year-old man had been deliberately harassed and ridiculed. He directed the FBRCO to reconsider its order dated January 29, 2021 under Section 122 and issue a new order under Section 170 (4). Disciplinary action was ordered against the officer concerned. Surprisingly, instead of following the FTO’s directive, the FBR filed a presentation before the president. On which the president ordered that he apologize to the senior citizen Abdul Hameed Khan for the inconvenience caused by the FBR and directed that disciplinary action should be taken against the whole concerned staff and decision makers in this matter. The president directed that the FBR chairman, the officials of the institution and others in general should ensure the process of teaching priority and politeness.
The actions of the subordinates are causing defeat for the senior officers of the FBR. It is suggested that issues of mutual negotiation be resolved in accordance with Section 33 of the FTO Ordinance 2000. This will reduce the unnecessary burden on the high courts as well as the complaints of the complainants. It will also improve the tax payment environment, which will ultimately lead to an increase in tax revenue.
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