Proposal to end one tax appellate forum to free up Rs2.7tr stuck in litigation

ISLAMABAD: In a bid to remove one tier in litigations of pending tax cases through forum of Commissioner Appeals, Prime Minister Shehbaz Sharif has granted his nod for promulgation of an ordinance for increasing numbers of tribunal benches and raising remunerations of members of benches equivalent to judges of higher courts.

There are pending tax cases to the tune of Rs2,700 billion in different four appellate forums available including Commissioners Appeals, Appellate Tribunals, High Courts and finally Supreme Court of Pakistan.

Now one forum of Commissioners Appeals is proposed to be abolished through promulgation of ordinance after getting assent of President of Pakistan Asif Ali Zardari. There are 20 benches of Appellate Tribunals operating in different parts of the country at the moment and it is proposed to increase them up to 50 benches.

The Ministry of Law is supposed to issue rules after promulgation of an Ordinance known as Tax Laws (First Amendment) Ordinance 2024. However, the tribunals are known as “graveyard of revenues” within the fold of tax machinery so there is need to ensure meritocracy and accountability of tribunal benches. In the past, the appointments in tribunals in last five years allegedly violated meritocracy and such appointments were made which clearly committed glaring violations whereby the members of benches knew nothing about tax laws and basic facts of tax structures.

Now the government has decided to reduce one tier under which the Commissioner Appeals will be abolished. Under the proposed scheme of things expected to be introduced through promulgation of an ordinance under Tax Laws (First Amendment) Ordinance 2024, the Tribunal will be given authority to ascertain facts of tax cases after abolishing forum of Commissioners Appeals so burden of fact checking would be relied upon solely on them. The high courts and Supreme Court of Pakistan would also give hearing to the tax related cases but they would mainly rely upon giving verdict on the basis of laws of jurisdictions concerned.

In the tribunal, there are around 60,000 pending cases and it is important to ensure appointments on merit when the forum of Commissioner Appeals would be abolished.

One tax official said that there was some oversight on Commissioners Appeals but there was no accountability mechanism for independent members (outsiders) being appointed by Ministry of Law.

The Tax Law (First Amendment) Ordinance 2024 would amend the relevant provisions of the Income Tax Ordinance 2001, Sales Tax Act 1990 and Federal Excise Act 2005.

After the promulgation of the Ordinance, the first stage of appeal would be Appellate Tribunal (Inland Revenue). The aggrieved taxpayers would have to approach the Appellate Tribunal (Inland Revenue) for filing of appeal at the first stage.

The time for filing of an appeal before the tribunal would be reduced from exiting 60 days to 30 days.

The time period available for the decision of an appeal by the Appellate Tribunal (Inland Revenue) has been reduced from 180 days to 120 days. Now the National Assembly prorogued its session on Monday so there are chances that the government might promulgate this ordinance within the ongoing month.