The Lahore High Court (LHC) was informed on Monday that tax-related litigation at the Appellate Tribunal Inland Revenue (ATIR) had resulted in Rs2 trillion being tied up for several years.
In response to a petition challenging the Tax Laws (Amendment) Act, the law ministry stated that delays in case resolution were due to issues such as arbitrary bench formations, an insufficient number of benches, and slow case scheduling and disposal.
Justice Jawad Hassan of the LHC heard the petition, which questioned amendments to the appellate process outlined in the Income Tax Ordinance (ITO). The judge summoned a Federal Board of Revenue (FBR) representative on March 25 to clarify the changes.
During the proceedings, Justice Hassan noted that the ITO defined the pecuniary jurisdiction for appeals, but the contested amendment had removed one level of appeal. He pointed out that many tax cases reaching the LHC stemmed from FBR’s failure to properly reference legal provisions, conduct fair hearings, or issue well-reasoned decisions.
As a result, the court frequently had to remand cases back to commissioners (appeals) for reassessment, increasing its workload and contributing to the growing backlog of tax cases. Justice Hassan highlighted that the FBR, being exempt from court fees, could easily file tax references, while ordinary litigants were required to pay Rs50,000 per reference.
“This creates a clear disparity, denying Pakistani citizens equal access to justice and infringing on their fundamental rights under Articles 4, 10-A, and 37(d) of the Constitution,” Justice Hassan remarked.
He also emphasized that recent amendments to the ITO placed an excessive burden on the court, noting that there was only one division bench for tax cases in Bahawalpur, one in Multan, two in Rawalpindi, and three at the principal seat in Lahore.
“The court has repeatedly observed that commissioners’ orders often lack reasoning and suffer from serious deficiencies, leading to further litigation,” Justice Hassan stated.
However, the government defended the amendment, arguing that the changes were intended to reduce unnecessary or frivolous appeals, streamline the process, and ease the court’s burden.
