Good governance is the basic pillar of a welfare state, and the rule of law is a fundamental principle of such governance. It carries connotations not only in terms of transparency, fairness, and due diligence in the exercise of powers but also emphasizes accessibility through hassle-free processes and a low cost of litigation. In developing countries like ours and the least developed countries too, these principles assume even more importance, as access to justice is restrictive, litigation is prolonged, and costs are unaffordable.
However, in compliance with the dictates of good governance and the rule of law, as enshrined in the constitution under Articles 04, 10A, 24, and 25, ombudsman offices have been established both at the federal and provincial levels, besides AJ&K. These offices are independent of the executive and are engrossed with the mindset of providing speedy relief to complainants under the respective statutes.
The assessment of income and computation of tax is a highly complex process, as income has multiple manifestations and nuances. It may be assessed as normal income, presumptive income, or as a separate block of income. Similarly, the computation of tax liability may appear as current demand, final discharge of liability, or as a minimum liability. In certain cases, total income may be tax-exempt or partially exempt. Moreover, tax liability may be reduced in certain cases directly through the exemption of application of a provision or through the grant of credit or allowance.
In addition, legal provisions have to be dovetailed to digital applications in various software run by the FBR. Therefore, such a complex process may cause hardship during or after the completion of proceedings, and grievances may arise, leading to administrative excesses being committed intentionally or unintentionally. This can result in the raising of harsh liabilities due to the lack of complete facts or misinterpretation of the law, and hardships may creep in through the mischief of the law. Notwithstanding, there is a light at the end of the tunnel in the form of a public forum of tax ombudsman which provides justice at the doorstep to complainants. This is done by diagnosing, investigating, redressing, and rectifying any injustice done to a person through maladministration by the functionaries administering tax laws. The FTO Ordinance, 2000 covers any acts of omission and commission found contrary to law, rules, or regulations, which are arbitrary, perverse, unreasonable, unjust, and unfair. It reflects biased and discriminatory treatment, or the action taken is based on irrelevant grounds and reflects neglect, or delay in the discharge of duties and responsibilities.
The process of registering a complaint is the least cumbersome. A complaint may be lodged in person at the office or handed over to the FTO in person or sent by any other means of communication, such as mail, email, WhatsApp, a web portal, or a mobile app. The statute provides an open forum for both non-resident and resident taxpayers. Non-residents can file complaints online or through any other available digital platform and can also avail themselves of online hearings. The same facilities are also available to residents. Additionally, regional offices of the establishment are functional in 13 major cities and at chambers of traders, with a robust presence at major airports to attend to the grievances of overseas Pakistanis.
While going through the FTO statute, it was found that the forum not only entertains individual complaints filed by any aggrieved person but also initiates investigations on tax and tariff issues on a reference sent by the President of Pakistan, the Senate, the National Assembly, or on a motion from the Supreme Court of Pakistan or the High Court, and Own Motion. In addition, the office can arrange studies and research to ascertain the causes of corrupt practices and injustice and recommend appropriate steps for their eradication.
Own Motion investigations are undertaken in matters related to systemic inconsistencies and hardships that affect a large number of taxpayers. Such investigations have been completed in cases relating to salaried individuals and pensioners when it was brought to notice that the income tax return form was too complex for them. The said form contained 66 fields, whereas only four fields were relevant to such taxpayers. Accordingly, the order was issued to the Board authorities to provide the said form in Iris for the facility of such individuals.
In another instance, the complainants brought up the issue of errors and omissions in the updated version of Iris 2.0 launched by the FBR. The said matter was also converted into Own Motion, and the technical glitches and gaps were identified. Suitable suggestions were made to the Board for necessary corrections in the updated version of Iris. In addition, gross inconsistencies in property valuation tables were taken up under Own Motion in as many as 40 cases all across Pakistan. During the investigation, inconsistency and arbitrary valuation of property were found, and recommendations were made to the Board to develop SOPs for adopting a uniform method of valuation of property tables.
During the last three years, the FTO office was able to dispose of more than 6000 complaints. In 2021, a total of 506 complaints were registered, with 2,361 being disposed of during the investigation and 2,867 after the investigation. The following year, 2022, saw a significant increase in both the number of complaints, totalling 1,632, and the total disposal, reaching 4,474 during the investigation and 6,106 after the investigation. Notably, from January to October 2023, a substantial number of 6,703 complaints were recorded, indicating a high volume of grievances in this period.
As for implementation, recommendations are required to be implemented within a specific time. The effective implementation of recommendations made by this office resulted in the issuance of due refunds amounting to billions of rupees to the complainants which had otherwise been pending with the department for a long time. In 2021, a total of Rs. 8499.11 million was refunded, while in 2022, the refunded amount decreased to Rs. 7081.04 million during the last two years through the intervention of this office.
A deeper study of the Tax Ombudsman statute reveals that it provides not only a strong legal framework to address the grievances of the complainants but also caters to speedy relief. All complaints have to be disposed of within 60 days from receipt of filing.
In 2021, the average time taken was 41.06 working days and 57.29 total days, indicating the duration from the filing of a complaint to its resolution. In the subsequent year, 2022, the efficiency improved, with the average time decreasing to 34.39 working days and 49.42 total days. This suggests a positive trend, showcasing a reduction in the overall time required for the resolution of complaints by the office, highlighting its commitment to prompt redressal of taxpayer grievances.
Notwithstanding stellar performance, the organization has its own set of challenges. The most important challenge remains as to how to enhance outreach to the stakeholders and create a paperless environment. The fact is that hectic efforts are underway to leverage digital technology in all their processes for prompt relief and connectivity to the aggrieved parties and stakeholders. At present, processes relating to the registration of complaints, issuance of notices, receipt of replies, and disbursement of final orders are fully automated. Arrangements are also in place for holding online hearings in cases where the complainants so desire.
So, it is all the more important to provide such forums for the timely redressal of genuine grievances of the taxpayers and to protect them from illegal and harsh tax liabilities and coercive measures of tax recovery. At the same time, they have the right to get back access to tax paid by them without any hassle and incurring any additional cost. All these needs are being adequately met by the office of the Federal Tax Ombudsman despite challenges.
MUHAMMAD NASEER BUTT
–The writer, an officer of the Inland Revenue Service, is a Member of FBR (retired) and is working as an advisor with the FTO Secretariat
