ISLAMABAD: Law Minister Azam Nazir Tarar has advised newly appointed members of appellate tribunals handling billions of rupees in tax disputes to recuse themselves from cases involving potential conflicts of interest due to their past professional affiliations.
Speaking to The Express Tribune, Tarar emphasized that members should exercise the option of “not before me” when conflicts arise. The advice follows concerns over the impartiality of tribunal members appointed through a non-traditional selection process.
Instead of using the Federal Public Service Commission (FPSC), the government formed a three-member selection committee in January 2025 to appoint Inland Revenue appellate tribunal members. The committee includes Justice (Retired) Mushir Alam, Major General (Retired) Naveed Ahmad of the FPSC, and Asim Zulfiqar, senior partner at AF Ferguson chartered accountants.
On the committee’s recommendation, the federal cabinet has appointed 15 members between March and May. These members receive salaries equivalent to judges but lack judicial independence, according to senior Supreme Court lawyer Dr. Ikramul Haq.
He also questioned the competence and potential conflicts of interest among some appointees, suggesting the tribunal should operate under high courts or the Supreme Court rather than the executive branch.
Tarar defended the process, stating that the selection was outsourced to management consulting firm AT Kearney to ensure independence. He acknowledged concerns about members’ prior ties to tax advisory firms but expressed confidence in their professionalism and adherence to conflict-of-interest protocols.
Appellate tribunal members are appointed under Section 130 of the Income Tax Ordinance, 2001, which sets eligibility criteria including advocacy experience or professional accounting qualifications. The Prime Minister mandated the appointments primarily from the private sector to minimize conflicts of interest, addressing previous concerns about Federal Board of Revenue (FBR) influence on case outcomes despite administrative oversight by the Ministry of Law.
Approximately Rs4 trillion in tax revenues remain stuck at various stages of appeal, mostly before FBR commissioners and appellate tribunals. The FBR and Attorney General’s Office assured Prime Minister Shehbaz Sharif that Rs400 billion would be recovered by June, a key target also communicated to the International Monetary Fund (IMF).
However, no major breakthroughs have been achieved aside from progress on windfall tax cases.
An IMF report highlights active efforts by Pakistani authorities to resolve disputed cases, aiming to recover Rs367 billion of Rs770 billion under litigation. Pending cases include Rs43 billion before the Supreme Court, Rs217 billion in high courts, and Rs104 billion at the Appellate Tribunal Inland Revenue.
The report noted the Supreme Court had completed initial hearings with a final ruling expected by mid-April, potentially resolving Rs120 billion in related disputes. The IMF underscored that resolving these cases would reduce legal uncertainty and support future revenue collection.
The appointments of new tribunal members have faced legal challenges over transparency. The Islamabad High Court (IHC) issued an interim order stating all appointments would be subject to the outcome of a writ petition. The petition contends the appointment process was unadvertised, lacked transparency, and violated established procedures, prompting the IHC to summon the Law Ministry secretary, FPSC chairman, and Attorney General for hearings.
This ongoing controversy adds to concerns about governance and transparency in Pakistan’s tax adjudication system amid broader efforts to improve revenue recovery and fiscal management.
