Loss of taxpayers: Govt fails to make tax tribunals fully functional

17 of the 40 posts for judicial, accountant members vacant

ISLAMABAD: Harming interests of the taxpayers and the exchequer, the federal government has failed to make fully functional and independent the appellate tribunals of Inland Revenue – the first judicial forum available for appeal in case of a tax dispute.

Against the 40 sanctioned posts of judicial and accountant members of these tribunals in four cities, as many as 17 are currently vacant, resulting in piling up of thousands of cases. More than 33,000 cases have been pending before the tribunals, said sources in the Federal Board of Revenue (FBR).

This heightens the urgency to fill these posts particularly at a time when Prime Minister Shahid Khaqan Abbasi has sought help of Chief Justice of Pakistan (CJP) Mian Saqib Nisar to clear cases of the FBR pending before the apex court. The dysfunctional appellate tribunal benches suggest that the federal government is also not fulfilling its responsibility.



Due to delay in settling these cases, the country is deprived of a good chunk of its revenue. The delay also puts unnecessary burden on taxpayers, as cases linger for years.

“The maximum disputed tax cases are pending before the appellate tribunals but unfortunately the federal government is least bothered to strengthen this area,” said Dr Ikram ul Haq, advocate Supreme Court of Pakistan. “Instead of blaming the courts, the government should first focus on making these tribunals fully functional and truly independent,” he added.

According to the Income Ordinance of 2001, the federal government is the authority to appoint the members of the Appellate Tribunals. The Ministry of Law notifies these members. The accountant members are either taken from the FBR or from the chartered accountancy profession.

However, for the past many years, the FBR is not advertising the accountant member posts and filling these positions by sending its own officers. This has made the quasi-judicial forum largely subservient to the FBR top management, according to another independent lawyer.

The chairman of the Appellate Tribunal of Inland Revenue, Nazir Ahmad, is also retiring next week after serving for about ten years. According to the seniority principle decided under the Al-Jihad trust case, the senior most member can be appointed as the chairman of the Appellate Tribunal.

Only judicial members can be appointed as chairman of the Appellate Tribunal but in exceptional circumstances an accountant member can also be appointed as chairman.

Currently, Jawed Zakaria, who is a judicial member from Karachi, is the senior most member. However, sources said the federal government wanted to appoint a person as chairman Appellate Tribunal Inland Revenue who is considered close to the ruling Pakistan Muslim League-Nawaz (PML-N).

At present, the Peshawar tribunal is dysfunctional, as both the posts of judicial and accountant members are currently vacant. Out of six posts in Islamabad, one post of judicial member is vacant.

The maximum number of posts are currently vacant in Lahore where seven judicial member posts and four accountant member posts are vacant. In Karachi, two judicial members and one accountant member post are vacant.

The tax disputes cases are increasing due to ambiguity in law and lack of clear administrative guidelines. The aggressive assessments by the FBR to achieve tax targets by hook or by crook, audit objections, poor quality of assessment orders and non-penalisation of bad assessments are the other reasons for growing pendency.

It is generally perceived in the FBR that the ‘children of lesser god’ are sent as accountant members, a source in the legal wing of the FBR said. The Appellate Tribunal is first independent judicial forum under tax law but the forum is not truly independent.



Dr Ikram ul Haq suggested that in order to assure independence of the tribunals, the Law Ministry should give these tribunals under the supervision of the Supreme Court or the respective high courts.

The National Judicial Policy 2009 underlines separation of judiciary from executive as “the cornerstone of independence of judiciary”. The government’s constituted Tax Reforms Commission had also given recommendations to improve the working of these tribunals.

It had proposed that members for tax appellate tribunal should be recruited in the same manner as judges of high courts and if this is not possible because of some legal or constitutional bar, all members of the tribunal should be recruited through Federal Public Service Commission (FPSC).

The pay, perquisites and salary structure of the chairman, members and staff should be the same as of a judge of a high court, sessions court and staff of the lower judiciary respectively.