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Decision of Alternative Dispute Resolution Committee to be Binding on FBR

ISLAMABAD (our reporter): The decision of the Alternative Dispute Resolution Committee (ADRC) will be binding on the concerned Commissioner of the Federal Board of Revenue (FBR).

The Finance Act, 2023 has brought about certain amendments in Sales Tax Act, 1990 (STA), Federal Excise Act, 2005 (FEA) and Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (ICTO). Significant amendments are explained including revamping of Alternative Dispute Resolution Mechanism.

In order to facilitate the registered persons and to reduce litigation as well as cost of litigation, common amendments have been made in STA and FEA by revamping alternative dispute resolution mechanism through the Finance Act, 2023.

Major highlights and departure points from previous regime are highlighted as under:

The flexible nature of initial proposition by the registered person for resolution of the dispute including an offer of tax payment has been introduced which previously was fixed in nature, once offered, and un-retractable by the registered person.

The Board will appoint the committee within 15 days of receipt of application for dispute resolution instead of previous 45 days.

The third member of the dispute resolution committee which previously was appointed through consensus between the Chief Commissioner and registered person nominated member from the panel has been replaced with a retired judge not below the rank of judge of a High Court, who will also be the Chairperson of the dispute resolution committee, to be nominated by the Board from a panel notified by the Law and Justice Division.

Previously, both registered person and Commissioner were required to withdraw pending appeals before appellate fora in respect of the dispute. Now no such requirement of withdrawal of appeal is binding on both registered person and the Commissioner for the resolution of the dispute. The Board will only communicate the order of appointment of Committee to the aggrieved person, court of law or the appellate authority where the dispute is pending and to the concerned Commissioner.

Dispute resolution committee is now bound to decide the dispute within 45 days extendable by 15 days for reason to be recorded in writing. Previously, the dispute resolution committee was required to decide the dispute within 120 days.

Recovery of tax payable by the registered person in connection with the dispute will be deemed to be stayed from the date of constitution of the committee till decision or dissolution of the committee. Previously, the deemed stay was applicable from withdrawal of appeal from appellate fora till decision or dissolution of committee.

The decision of the committee will be binding on the commissioner when the aggrieved person has withdrawn his appeal and communicate the same to Commissioner within 60 days of such decision instead of previous binding nature of decision to both Commissioner and the aggrieved person.

The Commissioner will withdraw the appeal pending before any court of law or an appellate authority within thirty days of the communication of the order of withdrawal of appeal by the aggrieved person to the Commissioner subject to payment of sales tax and/ or FED or other taxes within such time as decided by the Committee.

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