Lahore High Court Summons FBR’s Director General For Not Paying Court Fee for Tax References

The Lahore High Court (LHC) has shown extreme displeasure that the Federal Board of Revenue (FBR) is exempted from paying court fees for filing Tax References, but an ordinary citizen is paying Rs. 50,000 per reference, reflecting clear discrimination against the citizens of Pakistan. LHC’s Rawalpindi bench, when ruling on a case about removing the Commissioner Inland Revenue (Appeals) position under the 2024 Tax Laws Amendment Act, clearly stated that this change is significantly harming the court system. The court found that the amendment blocks the normal flow of justice and creates unnecessary delays in handling other cases. The court noted that the tax law normally sets up a three-step appeal process: first to the Commissioner (Appeals), then to the Appellate Tribunal, and finally to the High Court through a Tax Reference under Section 133. The new amendment removes the first appeal step. The court was surprised by the Ministry of Law and Justice’s response, which claimed that about Rs. 2 trillion in tax revenue is stuck in cases before the Appellate Tribunal due to problems like poorly formed benches, too few benches, and slow case handling. The Ministry argued that cutting one appeal level would make the process simpler and faster, reduce paperwork, and save money. They claimed these changes would discourage unnecessary appeals and reduce the system’s workload, according to the LHC’s summary of their response. LHC stated that FBR regulates all tax laws in Pakistan, with the main job of collecting taxes. However, the new amendment has put too much work on the court. Currently, there are very few tax benches available: only one in Bahawalpur, one in Multan, two in Rawalpindi, and three at the main court. The court has often pointed out that decisions made by Commissioners (Appeals) are usually poorly written, lack proper reasoning, and have serious problems, which leads to more court cases. Many cases come to the High Court because the FBR complains about (1) missing references to relevant laws, (2) no proper hearings, (3) carelessly written orders, and (4) failure to think carefully about cases. Because of these problems, the court often has to send cases back to the Commissioners for proper review. This wastes the court’s time, creates a backlog of tax cases, and slows down other cases. Given these issues, the court has ordered Dr. Ishtiaq A. Khan, Director General of FBR, to appear in court with a detailed explanation about why this amendment was introduced, including its background, purpose, and goals. He must also explain how this change is causing delays in the justice system and affecting people’s rights.