Revamping of Alternate Dispute Resolution Mechanism 

Revamping of Alternate Dispute Resolution Mechanism: Finance Act 2023 to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2023, and to amend certain laws WHEREAS, it is expedient to make provisions to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2023, and to amend certain laws for the purposes hereinafter appearing;

Through the Finance Act, 2023, the mechanism of alternate dispute resolution has been revamped. Major highlights and departure points from previous regime are highlighted as under:

(a) Previously, the initial proposition for resolution of the dispute including an offer of tax payment required to be filed with application for dispute resolution could not be retracted by a taxpayer. Through Finance Act, 2023, now a taxpayer is only required to offer an initial proposition for resolution of the dispute including an offer of tax payment;

(b) The Board will appoint the committee within 15 days of receipt of application for dispute resolution instead of previous 45 days;

(c) The third member of the dispute resolution committee which previously was appointed through consensus between the Chief Commissioner and taxpayer nominated member from the panel has been replaced with a retired judge not below the rank of a 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;

(d) Previously, both taxpayer 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 taxpayer 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;

(e) Dispute resolution committee will decide the dispute within 45 days extendable by 15 days for reason to be recorded in writing. Previously, the dispute resolution committee was bound to decide the dispute within 120 days;

(0 Recovery of tax payable by the taxpayer in connection with the dispute will be deemed to be stayed from the constitution of the committee till decision or dissolution of 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 commissioner after 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 aggrieved person;

(h) 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 income tax and other taxes within such time as decided by the Committee.

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