ADR in tax dispute resolution

Statistics are daunting. Nearly 23,000 tax-related cases involving revenues worth Tk. 258 billion (25800 crore) are now awaiting disposal in different courts, including the higher ones, of the country.  Many cases are decades-old since the litigation process is slow, cumbersome and faulty. A number of other factors are also responsible for it. Deliberate attempts to slow down the litigation process on the part of the plaintiffs and the incapacity of the courts concerned to dispose of the cases are among such factors. Many large taxpayers in particular find the process of litigation as one of the easiest ways of delaying the payment of the right amount of taxes to the government. They consider it more profitable to keep the money with banks instead of paying the same as tax to the government.
It is not that the taxpayers are to be blamed solely for the slow resolution of tax disputes through courts. The legal lacunae, coupled with some built-in weaknesses of the tax-administration, are also responsible for the unusual delay in the disposal of tax-related cases. But the government did not take until early 2000 the issue of tax-related litigation seriously. When the amount of tax money stuck-up in thousands of court cases became very large the government started thinking about the issue rather loudly. Since the settlement of disputes through courts appeared a time-consuming affair the National Board of Revenue (NBR) decided to try the alternative dispute resolution (ADR) mechanism that encourages out-of-court settlement through negotiations between the parties involved in disputes.  
 More than a couple of years have gone by, but the attempt to resolve tax disputes using the ADR mechanism has only produced disappointing results. Only three out of 2,566 cases involving disputes over NBR's value added tax (VAT) claims could be resolved through ADR. The situation with Customs duty-related cases has also been dismal. The state of affair is marginally better as far as the income tax disputes are concerned. In the ADR mechanism, it is important to motivate both the parties involved in disputes to actively participate in the resolution process. The NBR may not have done enough in this area. There could be other deficiencies in the approach of the tax administration. One such deficiency is the selection of facilitators for the negotiation process.
Under the provisions of the law concerned, facilitators are selected by the tax commissioners to plead for the businessmen involved in VAT disputes. The facilitators are, in most cases, members of the tax cadre. The businesses find this provision discriminating and feel that they should have the freedom to select their own facilitators for the ADR process. The arguments are apparently valid. If needed, the government should amend the law concerned and allow the businesses to employ their own men at the negotiating table. Besides, another factor largely blamed for the very unsatisfactory litigation process has been the appointment of incompetent legal hands by the NBR to pursue its tax cases in the courts. The Board should have its own panel of efficient lawyers having adequate knowledge in tax and corporate issues.