TAX NEWS APRIL 19, 2016

1.      'Unbridled powers': two review petitions rejected by FTO

April 19, 2016

The Federal Tax Ombudsman (FTO) has rejected two review petitions filed by Director General, Intelligence and Investigation Inland Revenue FBR and a domestic manufacturer of tiles where the agency sought expunction of the FTO observations regarding "unbridled powers" of I&I and recall direction to Chairman FBR to investigate the alleged leakage of confidential information of the case to media.

In this regard, FTO Abdur Rauf Chaudhry has issued order-in-review where both the review petitions filed by intelligence department as well as manufacture have been dismissed. This is a first of its kind of case where the FTO has dismissed the review petitions of both the parties. The main issue is related to the leakage of confidential information by the directorate to the media which was contested by the local manufacture. It is important to mention here that the inquiry against the delinquent has yet to be made by the FBR.

The cross-review petitions were filed by Director General, Intelligence and Investigation IR, FBR and one of the leading tiles manufacture (Complainant) u/s 14(8) of the Establishment of Federal Tax Ombudsman Ordinance, 2000 (FTO Ord.) read with section 13 of Federal Ombudsmen Institutional Reforms Act, 2013 (FOIRA) against Findings / Recommendations of the Federal Tax Ombudsman (FTO) in his order dated 17.12.2015 disposing of Complaint No 53/ISD/IT(39)/648/20 15.

After a careful evaluation of the submissions made by the two sides, it has not been established by either side (Complainant or Deptt) that there was any readily discernible mistake floating on the surface of the order dated 17.12.2015 disposing of Complaint No ISD/648/2015 that was open to remedial action in review. Additionally, as explained supra, Complainant has endeavoured to re-argue his case afresh which is not permissible in review. For all these reasons, review petitions 03/2016 and 05/2016 filed by department and complainant respectively, are hereby rejected, order-in-view of the FTO added.

Findings/Recommendations have been recorded by FTO of his order dated 17.12.2015 disposing of Complaint No 53/ISD/IT(39)/648/2015. Excerpts there-from revealed that the complainants' contention that enquiry/investigation carried out by the Directorate of I & I and issuance of notices by them were out of jurisdiction, has not been found to be legally correct.

As regards leakage of information of the Complainant to the press and the Complainant's claim of defamation/vilification campaign by the FBR functionaries....in case the Complainant and its directors had felt that their honour/ dignity was tarnished they could have followed proper recourse by filing defamation suit in a court of law. No such action has been taken at the relevant/proper time.

Moreover, it needs to be probed as to who was responsible for leaking the confidential information with specific details of Complainants to the press. Chairman FBR is advised to reconsider the unbridled powers given to Directorate General (I & I), IR. According to the order-in-view issued by the FTO, the complainant's Review Petition No 05/2016 seeks cognisance under the provisions of FTO Ordinance 2000 on the following assertions: Firstly, alleged defamation / vilification of Complainant due to alleged deliberate release of sensitive information available in a confidential I&I report regarding the Complainant by Assistant Director I&I Lahore.

The review petition also talked about the alleged departmental failure to file counter affidavits on which date the investigation proceedings allegedly stood closed. This alleged lapse is stated to be fatal to the departmental stance and the contents of the uncontroverted affidavit filed by Complainant, therefore, according to Complainant, stand confirmed.

In the case of the departmental review petition, seen holistically and in proper context, it is clear that the FTO's remark regarding "unbridled powers of I&I and direction given to Chairman FBR to conduct enquiry in order to determine who was responsible for leakage of confidential information, if any, do not countermand FTO's unequivocal finding, in para-6 of FTO order dated 17.12.2015 recorded before the cited remarks appear in the order:

The complainant's contention that enquiry/investigation carried out by the Directorate of I & I and issuance of notices by them were out of jurisdiction, has not been found to be legally correct." The officers of the Directorate of I&I were, therefore, legally justified to conduct enquiry and issue notice under the provisions of section 230 of the Ordinance read with SRO No 115(1)/2015 dated 09.02.2015,", it added.

Be that as it may, the FTO, evidently by way of abundant caution, has left the door open to be able to take cognisance of any departmental wrong doing that might come to light at any stage by way of deliberate leakage of confidential information pertaining to the Complainant by I&I personnel. Similarly, should at any stage I&I be found to be lacking in internal check and balance ("unbridled powers") it ought to be possible to address that deficiency too. The corrective action is clearly contingent to conclusive identification of person(s) responsible for the alleged leakage of confidential information pertaining to Complainant or powers available to I&I for which there was no oversight mechanism. The fact that the Complainant might be trying to exploit these remarks in his review petition is not sufficient justification to warrant their expunction. After all, this is what litigants do all the time - exploit what they perceive to be their adversaries weakness or oversight. So the departmental review petition does not establish any readily discernible defect in the order dated 17.12.2015 so far as the Findings/Recommendations pertaining to the Deptt are concerned that might warrant remedial action in review, the FTO said.

The complainant had contested the "conduct" of I & I functionaries, as envisaged in section 9 of the FTO Ordinance, not taxation per Se, as reflected in the processes employed by them during the course of their investigation and this was not properly reflected in the FTO order disposing of the complaint. As a result of the alleged multiple defects/deficiencies in the departmental stance, especially that of I&I officer cited as the respondent directly involved in leakage of confidential and sensitive information pertaining to the Complainant, desires that a finding of maladministration be recorded by the FTO against respondents, especially respondent, it added.

2        .FBR urged to delay launch of Form-I module till July

April 19, 2016

Karachi Customs Agents Association (KCAA) has requested the Federal Board of Revenue (FBR) to delay the launch of Form-I module by July 2016. Nadeem Kamil, General Secretary KCAA, said that the association has sent a letter to the FBR and requested them to delay the launch of Form-I module after June 30, 2016 and start it initially on optional basis.

He said that Directorate of Reform & Automation was going to implement the Form-I under Weboc system and added that the KCAA after attending a demonstration session appreciated the comprehensive efforts of project team to log the import trade business towards a documented procedure of foreign exchange remittance. He said that although customs agents just have to select approved form at the stage of filling of Goods Declaration and demonstrated procedure of Form-I was mostly related to traders, they had some observations which could create a panic situation if the preparation before implementation would not be fulfilled.

He said that Form-I would create problems for those importers, who were doing business under one custom and were not yet registered with Weboc and the traders, who were already registered with Weboc and filing their Goods Declaration through clearing agents had forgotten their password.

He suggested that customs department had to arrange a special arrangement for issuance of new user ID's and refresh of earlier issued User IDs of those traders, who forget their passwords. Following the WeBOC software frequently shutdown in the month of March & April 2016, which might be due to over occupancy of workload & insufficient space on hard drive, it has been suggested to enhance work performance of hardware & software before the implementation of Form-I, he added.