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PRESENTATION BY MR. MUMTAZ AHMAD
MEMBER LEGAL
FEDERAL BOARD OF REVENUE
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OVERALL FUNCTIONS OF THE LEGAL WING
COORDINATION WITH OTHER FBR WINGS
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Dealing with the appeal matters at the Tribunal, High Court and
Supreme Court level.
Monitoring and overseeing work of 06 Collectors (Appeals and 08
Commissioners (Appeals)
Vetting of contracts, rendering of opinion and advice to the line
Members in disputes resolution.

Federal Services Tribunal and Supreme Court matters (service
matters assistance).
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FTO matters. Complaints responses. Representation to the
President.

Alternative Dispute Resolution matters.

Support to the reforms process.
3
Contd…
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Assistant on Legal Issues;
Assistance to all Wings of FBR on Legal Matters.
Transition from the CBR to the FBR. Main statute, IJP
rules, uniform and accommodation regulations,
Employees Foundation matter etc.
Liaison with the Officers of Courts, Ministries, Law
Division and managing work of over 100 advocates on
Panel approved by the Law Division.
Comments: The FBR’s Tax Administration Reforms
Program has enabled the Legal Wing of FBR to
introduce reforms in the matter of reduction in
litigation and creating better environment for taxpayers
to discharge their obligation to the state.
.
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Remedy available to the Taxpayers.
(A) Appeals hierarchy –
(i)
(II)
(iii)
(iv)
within the department, Collector/Commissioner,
Tribunals,
High Court,
Supreme Court.
(B) Writ and Civil Jurisdiction
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Contd….
(C)
(D)
Federal Tax Ombudsman
-
Indirectly controls the mal-administration of the department’s officers and
grants relief to the taxpayers where instances of the mal-administration are
pointed out.
-
Representation against the decision of FTO lies with the President
of Pakistan (through Law & Justice Ministry).
Representation to the Chairman, FBR.
A taxpayer may submit a representation under section 7 of the FBR Act, 2007 to the
Chairman, FBR who may issue appropriate order.
(F)
For foreign investment/N.R companies:
Concept of “advance ruling”. Implementation of the provisions of the agreement for
avoidance of double taxation is faithfully done. We have such agreements with 55
countries.
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IMPACT OF ALTERNATE DISPUTE RESOLUTION ON
APPEALS AND LITIGATION

Common Complaints of taxpayers within the existing system used to involve lengthy
litigations, extending over decades. In order to eliminate such delays in deliverance of
justice and redressal of grievances, the system of ADR has been introduced.

It is resolving of the tax or duty disputes out of court, between the person and the
institution. Parties to the dispute may arrive at a mutually agreed solution of the
dispute.

The system of ADR aims at providing the aggrieved tax payer a platform to raise his
dispute at a forum separate from the conventional forum.

In this system, there are no “Losers” or “Winners”. It is about deciding disputes which
are set and rest on the method of “win-win situation for all”. In fact, ADR is a “hybrid
system” in tax matters.

ADR is yet another example of FBR’s commitment to revamp the existing system.
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Benefits of ADR for FBR and Taxpayer
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Reduces the number of litigation cases and the burden on the courts
Saves the management time of litigants.
Saves litigation costs.
Controls mal-administration.
Avoids diversions of time in bringing cases to the courts.
Settles disputes through tax experts and recognized institutions.
It directly goes to the root of dispute instead of periphery.
Preservation of business relationships.
Better case management.
Greater satisfaction with instant results/outcomes-more options.
Confidentiality.
Flexibility of procedures.
Quicker resolutions.
Lower costs for all parties to the dispute.
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Referring Disputes for ADR

Present rules prescribe the stages at which disputes could be referred for ADR
subject to FBR’s agreement to form the Committee.·
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A matter can be referred for ADR from either of the following stages:
o
o
o
o
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After adjudication or assessment, i.e. during pendency of appeal before
the Collector (Appeals) or Commissioner (Appeals)
After decision of appeal by the Collector (Appeals) or Commissioner
(Appeals), i.e. during pendency of appeal before the Appellate
Tribunal;
After decision of appeal by the Appellate Tribunal, i.e. during pendency
of appeal before a High Court;
After decision of appeal by High Court, i.e. during pendency of appeal before
the Supreme court.
ADR does not involve any fee, charges or costs. There is no time limit for applying for
ADR. The application can be submitted any time during the pendency of the matter
before any appellate authority, tribunal or court and that it should not be a past and
closed transaction.
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Provisions in Various Tax Laws Pertaining to ADR
The
Legislature has provided following provisions regarding the ADR in various tax laws
through the Finance Bill, 2005:
Income Tax
Sales Tax
Section 134 A of the Income Tax Section 47 of the Sales Tax Act,1990 and
Ordinance, 2001 and Rule 231 C of the Chapter X of the Sales Tax Rules,2004.
Income Tax Rules,2002.
Customs
Section 195 C of the Customs Act, 1969
and Chapter XVII of the Customs Rules,
2001.
Federal Excise:
Section 38 of the Federal Excise Act, 2005
and Rule 53 of the Federal Excise Rules,
2005.
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AMENDMENTS MADE BY FINANCE ACT,2007 & 2008
INCOME TAX
ORDINANCE, 2001
SALES TAX
ACT,1990
CUSTOMS ACT,1969
FEDERAL EXCISE
ACT, 2005
SECTION 134 A
SECTION 47A
SECTION 195C
SECTION 38
1.
Sub-section
(4A)
inserted by the Finance
Act, 2008..
[(4A)
Notwithstanding
anything contained in
sub-section
(4),
the
Chairman may on the
application
of
an
aggrieved person, for
reasons to be recorded
in writing, and on being
satisfied that there is an
error in order or decision
may pass such order
may be deemed just and
equitable.]
1.
Sub-section
(4A)
inserted by the Finance
Act,2008..
[(4A)
Notwithstanding
anything contained in
sub-section
(4),
the
Chairman may on the
application
of
an
aggrieved person, for
reasons to be recorded in
writing, and on being
satisfied that there is an
error in order or decision
may pass such order may
be deemed just and
equitable.]
1. Sub-section (4A) inserted by
the Finance Act,2008..
[(4A) Notwithstanding anything
contained in sub-section (4),
the Chairman may on the
application of an aggrieved
person, for reasons to be
recorded in writing, and on
being satisfied that there is an
error in order or decision may
pass such order may be
deemed just and equitable.]
(3). The committee constituted
under sub-section (2) shall
examine the issue and may, if it
deems necessary, conduct
inquiry, seek expert opinion,
direct any of customs or any
other person to conduct an
audit
and
make
recommendations
[,
within
1. Sub-section (4A)
inserted by the Finance
Act,2008..
[(4A) Notwithstanding
anything contained in
sub-section (4), the
Chairman, FBR, and a
Member nominated by
him, may, on the
application of an
aggrieved person, for
reasons to be recorded
in writing, and on being
satisfied that there is an
error in order or
decision may pass such
order may be deemed
just and equitable.]
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AMENDMENTS MADE BY FINANCE ACT,2007 & 2008
INCOME TAX RULES,
2001
SALES TAX
RULES, 2006
CUSTOMS
RULES,2001
FEDERAL
EXCISE
RULES, 2005
RULE 231
CHAPTER X
CHAPTER XVII
RULE 53
1. “within ninety days of receipt
of
such
recommendations”
inserted by S.R.O.771(I)/2008
dated 21.07.2008 to sub-rule 15
(15). The Board, after examining
the recommendations of the
Committee shall finally decide
the dispute or hardship and
make such orders as it may
deem fit for for the resolution of
the dispute or hardship [ within
ninety days of receipt of such
recommendations]
under
intimation to the application,
Chairman of the Committee and
the concerned Commissioner
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Contd…
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Finance Act 2006 has made ADRC available where appeal has been filed.
Supreme Court in its recent judgment decided that where criminal
proceedings have been initiated, the ADR process would not be available.
Amendment made by FBR Act, 2007.
By the Finance Act 2005, Wealth Tax disputes of the erstwhile Wealth Tax
Laws have also been made a subject matter of ADR.
Insertion of these related provisions in various tax laws will provide another
venue to the taxpayers to have easy “access to justice” and to resolve
disputes at private/public institutions, with no costs and delays.
Pakistan is Pioneer and fore-runner in introducing the Alternate Dispute
Resolution mechanism in the tax laws.
The ADR coupled with reduction in the litigations (150,000 appeals were
finalized at the Commissioners and Collectors level, within span of three
years), and special bench of Supreme court deciding appeals, will have
impact on the litigation at High court and Tribunal level and will provide easy
access to justice.
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Conted…
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This strategy is a part of the Reforms Program which is
on the right track. FBR has now been declared as 98%
responsive in the direct tax matters (American Business
Council Survey).
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The
Alternate
Dispute
Resolution
mechanism
supplements traditional mode of dispensation of justice.
The recommendations/decisions of the ADRC are nonbinding on Parties or FBR.
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Contd….
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FBR may, in case of accepting the recommendations,
pass a formal order/judgment and on payment of tax, all
the proceedings abate, and the orders/judgments made
are taken as modified to that extent.
In case when the matter is subjudice before the Court
the recommendations and order/agreement are to be
placed before the Court/Authority, which can then, pass
an appropriate order.
The number of applications for the ADRC is growing.
Once the awareness level is raised, small taxpayers will
also prefer this mode, henceforth the number of appeals
at the High Court and Tribunal level will decline.
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Contd….
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The ADR works on the method of “discovery”; hence “knowing”
the weaknesses and strengths of both the parties to the dispute;
through mediation and/or negotiation, and settlement, as
compared with adversarial litigation under the traditional system.
The ADR has been termed by some taxpayers as a breath of
fresh air; a paradigm shift, and a window of opportunity to have
easy access to justice.
Through the ADR and the consequent reduction in the litigation;
the taxpayer is facilitated to pay his tax dues with certainty,
accuracy
and
in
accordance
with
the
law.
The ADR will go a long way to resolve the disputes and reduce
litigation. The credibility, impartiality and integrity of the ADRCs
will provide impetus to the working of the ADR System.
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TAX WISE PROGRESS ADRC
Total
App.
Received
App.
No. in
Rejected/ which
Withdrawn comm.
Formed
No. in
which
Recom.
Received
Recom.
Not
accepted
Recom.
Impleme
nted
Cases
Pending
with ADR
Comm.
Custom
(JudADRC)
276
60
187
141
29
83
46
Sales Tax
(Jud/
ADRC)
1008
111
897
490
99
391
409
Income
Tax Jud/
ADRC)
286
107
178
134
89
401
40
TOTAL
1570
218
1262
765
217
515
495
90 App.
Pending
Recomm Received
Action Taken
Bal. Order to be Passed
765
732
33
Approx
40%
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DIFFICULTIES.

Generally old and complicated applications/cases are received
which are difficult to dispose off.
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The non-departmental members i.e Retd. Judges, Chartered
Accountant, advocates and businessman are reluctant to join
committees.

Chairman/Members of ADRC already on panel do not take keen
interest in disposing the cases as no remuneration is paid.
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Tax payers are not well informed about the ADR mechanism.
Applicants do not file applicants properly.
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No time limit is observed either by the committee or the department.
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ADRC appeals are accepted if covered under the prescribed rules
and laws, except those which do not cover under the law.
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