November 15, 2002	Friday	Ramazan 9, 1423

KARACHI, Nov 14: The government has asked the Attorney General of Pakistan to settle all outstanding tax disputes involving billions of rupees between government organizations and the Central Board of Revenue (CBR), official sources said.

The sources said the government had made it clear that the decision and advice given by the Attorney General would be binding on both sides.

The income tax authorities had been pursuing tax liability cases against the government owned organizations like TCP, Karachi Shipyard and Engineering Works (KS&EW), Karachi Dock Labour Board, Federal Bank for Cooperatives and Agricultural Development Bank of Pakistan for the last so many years.

Whenever assessment starts and tax demands are raised the government owned organizations dispute the assessment. When the income tax department pursues recovery of tax, these organizations start agitating the matter through their respective ministries.

However, for early resolution of tax disputes the government in the year 1998 directed all the organizations through their ministries to withdraw all court cases against the CBR and tax departments.

The government objective was to settle such disputes outside the courts through inter-ministerial consultation. And those unresolved matters of such cases were referred to the ministry of law, justice and human rights.

But to utter dismay of the CBR in most cases the law secretary gave decision against the income tax department on points of law and in some of the decisions it contravened the verdict of the superior courts on similar issues.

This created a difficult situation for the tax authorities who approached the government for setting aside the decision of secretary law because apart from causing loss in revenue his decisions were also having a negative impact on non-public cases.

After taking stock of the situation the cabinet decided to refer all those cases which were decided by law secretary but are not acceptable to the CBR to the Attorney General of Pakistan for his advice and decision.

The cause of dispute between tax authorities and government owned organization, besides many other factors, is mainly over the “subsidy” given by the government to these organization to salvage them from financial crisis.

The income tax department treats such a subsidy given by the government to these organization on suffering losses as their income which is taxable but government owned organizations are disputing the same and they say “subsidy” is not a revenue receipt but a contribution by the government towards their capital.