Rs4.457tr in tax revenue stuck as over 108,000 cases pending in courts: report

ISLAMABAD: Billions in tax revenue stuck as over 108,000 cases, involving 4,457 billion rupees, remain pending in higher courts across Pakistan, severely impacting the country’s revenue collection and economic stability.

The revelation came following a Supreme Court meeting held on November 7, 2024, under the chairmanship of Chief Justice of Pakistan Yahya Afridi, where officials from the Federal Board of Revenue (FBR) and the Ministry of Finance detailed the growing backlog of revenue-related litigation.

According to official sources, 6,000 tax cases alone are pending before the Supreme Court of Pakistan, involving billions of rupees in potential recoveries.

Similarly, around 2,000 cases remain stuck at different tribunals and courts, where stay orders have delayed resolution for years. The inability to settle these cases promptly has not only created legal bottlenecks but also obstructed tax collection efforts, causing significant financial losses to the national exchequer.

In response to this alarming situation, the Supreme Court formed a special committee to review the matter, identify obstacles, and propose solutions for the swift resolution of tax-related disputes.

The committee includes Registrar of the Supreme Court, Saleem Khan, Asim Zulfiqar, Sher Shah Khan (Governance and Public Sector Specialist), Ishtiaq Ahmed Khan (DG Law, FBR), and tax expert Imtiaz Ahmed Khan, who was appointed as the committee coordinator.

The committee was tasked with examining why revenue cases are piling up and suggesting institutional mechanisms to expedite their resolution. As part of its efforts, it conducted extensive consultations with key stakeholders, including the FBR, Supreme Court Bar Association, Punjab Tax Bar Association, Federation of Pakistan Chambers of Commerce and Industry (FPCCI), and other business and industry representatives.

Officials at the meeting pointed out that one of the major reasons for this backlog is the lack of dedicated revenue benches in higher courts. The absence of an alternative dispute resolution (ADR) mechanism at the FBR, and provincial revenue departments has further compounded the problem, forcing businesses and tax authorities to resort to prolonged litigation.

Additionally, officials noted that unnecessary appeals by revenue authorities—often filed to avoid accountability or shift responsibility—are burdening the courts. Many appeals are lodged even when decisions have been made at two or more judicial levels, further prolonging litigation and increasing costs for both taxpayers and the government.

To address these issues, the committee has made several key recommendations, including the establishment of dedicated revenue benches in the Supreme Court and high courts to focus exclusively on tax-related cases; implementation of a binding Alternative Dispute Resolution (ADR) mechanism at FBR to resolve tax disputes outside of court; restricting revenue authorities from appealing cases where decisions have already been made at two judicial levels; ensuring strict adherence to case disposal timelines to prevent unnecessary delays; creating a centralised case law database so that courts and tribunals can quickly dispose of similar cases based on established legal precedents; utilizing technology to streamline case management, ensuring that cases with similar legal questions are heard together.

The committee’s findings highlight the urgent need for judicial and administrative reforms to prevent tax litigation from dragging on for years. The continued pendency of revenue cases not only delays justice but also hinders economic growth by keeping billions of rupees in limbo.

To facilitate stakeholder input, a WhatsApp group was also created where business leaders, tax officials, and legal experts were invited to share their suggestions.

The committee is expected to present its final report soon, outlining specific steps to unblock the revenue pipeline and ensure that the justice system functions more efficiently.

With Pakistan’s economy already struggling with fiscal deficits and low tax collection rates, experts warn that failing to resolve these cases swiftly could further strain the country’s financial health.

The Supreme Court’s intervention, alongside systemic legal reforms, is seen as the only viable path to ensuring tax justice and financial stability in the country.