Govt plans scrutiny committee for FBR appeals as tax litigation cases exceed 85,000

The federal government is planning to introduce a scrutiny committee in Finance Bill 2026-27 to review appeals filed on behalf of the Federal Board of Revenue (FBR) in an effort to reduce frivolous tax litigation cases pending before courts and tribunals, The News reported.

The proposal emerged after a detailed report submitted by a task force on pending tax litigation headed by Shad Muhammad to Prime Minister Shehbaz Sharif and cabinet members.

According to the report, Pakistan’s tax system is facing a growing litigation crisis, with around 85,480 cases pending across Supreme Court, high courts and appellate tribunals as of April 2026.

The task force stated that around ₨278 billion in customs revenue remained blocked in active disputes, while the actual Inland Revenue exposure could not be accurately quantified due to inconsistencies between FBR records and court data.

The report stated that 1,322 cases were pending before Supreme Court, including 909 Inland Revenue cases and 414 Customs cases.

Another 17,410 cases were pending before high courts, comprising 11,995 Inland Revenue cases and 5,414 Customs cases.

The largest backlog remained at tribunal level, where 66,747 cases were pending, including 60,893 Inland Revenue cases and 5,884 Customs cases.

According to the task force, the current disposal rate of around 10,000 tribunal cases annually means the existing Inland Revenue backlog alone would take nearly six years to clear without accounting for new filings.

The report noted that almost half of customs-related high court cases were concentrated in Sindh High Court.

Prime Minister Shehbaz Sharif had constituted the task force to conduct a comprehensive review of FBR’s legal wings and recommend reforms aimed at improving litigation management and reducing unnecessary appeals.

Officials said FBR had also moved a summary for creation of a new post of Member Legal Reforms to oversee institutional restructuring and implementation of legal reforms.

The task force identified multiple structural and governance weaknesses within FBR’s legal system, including lack of coordination between policy, enforcement and operational wings, resulting in contradictory litigation positions before courts.

According to the report, FBR’s Legal Management System contained significant inconsistencies compared to court records, while no effective pre-appeal scrutiny mechanism existed to filter weak or repetitive appeals.

The report further stated that FBR continued filing appeals on legal questions already settled by superior courts and lacked a centralised databank of decided cases.

It also highlighted absence of accountability mechanisms for filing frivolous appeals and noted that legal advisors and officers were not evaluated on the basis of litigation outcomes.

The task force observed that Inland Revenue and Customs legal wings operated separately with independent hierarchies, while digital systems including IRIS, WeBoC and Legal Management System functioned in isolation without integration.

The report also pointed out that appellate tribunals lacked digital case management systems and stated that Alternate Dispute Resolution mechanisms under Customs Act and Income Tax Ordinance remained underutilised despite offering faster and less costly resolution of disputes.