ISLAMABAD: The Federal Board of Revenue (FBR) has instructed field formations that coercive recovery measures, including attachment of bank accounts, are only to be taken after exhausting the 30-day time period available to taxpayers for voluntary deposit of an assessed liability.
As per details, the FBR issued these instructions to the chief commissioners of Inland Revenue to avoid unnecessary litigation. In this connection, the bureau announced two major decisions to avoid litigation and unnecessary freezing of bank accounts.
“Firstly, coercive recovery measures like attachment of bank accounts should be avoided until a case passes the test of the appeal at the level of commissioner Inland Revenue (Appeals). Secondly, a committee comprising of senior commissioner IR headed by chief commissioner IR may be constituted at the formation level to deliberate on cases before approval of any action,” the instruction letter stated.
According to the instructions, litigation involves costs of various types including opportunity cost, legal remuneration and man-hours spent on preparing appeals and defending cases before various appellate fora, both on part of the department as well as the taxpayer. Therefore, it is essential to avoid entering into a protracted litigation by exercising prudence and ascertaining the potential of a case to pass the test of appeal, so as not to divert resources from other potential cases involving substantial revenue.
Furthermore, the letter said that in order to forestall potential litigation by taxpayers on procedural lacuna, it is also important to ensure that no procedural lacuna is left during the proceedings of the case.
It has been observed that in certain cases, officers tend to initiate recovery proceedings without giving the statutorily available time of 30 days to taxpayers.
Subsequently, taxpayers aggrieved by recovery proceedings before the expiry of a grace period obtain stay orders from higher courts, resulting in a vicious circle of litigation at multiple fora.
On the other hand, the business community also strongly opposed the restoration of field formation powers regarding freezing bank accounts of defaulters without prior intimation of 24 hours and urged the government to withdraw its decision and restrain FBR from taking such an “anti-business action”.
In this regard, Sarhad Chamber of Commerce and Industry (SCCI) acting president Imran Khan on Thursday said that the restoration of FBR powers was tantamount to opening a new way of corruption, which need to be withdrawn at earliest. Otherwise, he warned that the business community will be compelled to protest.