The Lahore High Court (LHC) was informed on Monday that tax cases worth Rs2 trillion have been tied up in litigation at the Appellate Tribunal Inland Revenue (ATIR) for several years. In response to a petition challenging the Tax Laws (Amendment) Act, the law ministry attributed the backlog to bench shortages, delays in case scheduling, and irregular bench formations.
Justice Jawad Hassan presided over the petition, which disputes amendments to the appellate procedure under the Income Tax Ordinance (ITO). During the proceedings, the judge observed that the changes had effectively removed a level of appeal, raising concerns about access to justice. Summoning a Federal Board of Revenue (FBR) representative on March 25, the court sought clarification on the amendments.
Justice Hassan highlighted that a large number of tax cases before the LHC stemmed from procedural lapses within the FBR, including inadequate legal references, improper hearings, and haphazardly issued decisions. These flaws frequently led the court to remand cases for fresh adjudication, increasing the backlog of pending tax references.
He noted that the FBR faced no financial constraint in filing appeals, as it was exempt from court fees, while ordinary litigants were required to pay Rs50,000 per reference. This, he said, created a disparity in access to justice, potentially violating constitutional rights under Articles 4, 10-A, and 37(d).
The amendments, he added, had placed an additional burden on the LHC, which currently has only one division bench for tax references in Bahawalpur, one in Multan, two in Rawalpindi, and three at its principal seat in Lahore. Justice Hassan also criticized the quality of decisions issued by commissioners (appeals), stating that they often lacked reasoning, were poorly structured, and contributed to excessive litigation.
Defending the amendment, government representatives argued that the revised provisions were designed to reduce unnecessary appeals and streamline tax dispute resolution. However, the court maintained that the reforms must not come at the expense of due process and judicial fairness.
