Time bar prompts NBR to recover taxes from taxpayers facing legal action

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Doulot Akter Mala
The revenue board has decided to realise unpaid taxes from taxpayers against whom legal actions have been initiated. The decision has been taken out of the fear that a substantial amount of outstanding taxes could never be realised if the disposal of the cases took longer than five years - the legal limit.
Under the existing rule, the board is authorised to assess tax files of preceding five years after which period the cases are deemed to be legally time-barred.
The National Board of Revenue (NBR) has found that some of the pending cases will be time-barred shortly and hence the taxes will remain unrealised.
The board has, in the meanwhile, instructed all of its tax offices to assess the tax files which would be losing the legal validity tax assessment.
The NBR has filed tax evasion cases against 78 leading businessmen and politicians.
"We have been facing legal complexities to realize income tax from the taxpayers facing legal action for evasion of taxes. The board has sought law ministry's opinion to resolve the matter," said a senior revenue board official.
"The law ministry opined that re-assessment of files of taxpayers who are facing tax evasion charges will also fall under the five-year time-bar rule," he said.
The revenue board differed with the law ministry, he said adding "For the sake of revenue earning, the board will have to collect taxes from the taxpayers."
In the last board meeting, the NBR has decided to place the matter again to the law ministry so that the taxmen could collect the due taxes from the taxpayers facing legal action, he said.
The government will be deprived of the revenues as disposal of cases usually takes a long time, he said adding that the revenue board will not be able to claim the revenue after expiry of five year time-bar.
The legal procedure might take five to ten years while there is a five-year time bar for re-assessment of tax files.
The revenue board is planning to incorporate a law in the next finance bill-2010-2011 which will permit the board to re-assess files of the taxpayers facing criminal charges, the official said.
The caretaker government for the first time started filing criminal cases against the taxpayers in special courts in 2007.
"After filing the cases NBR saw the legal complexities of realizing taxes of the year before expiry of time-bar," he said.