The Corporate Tax Office (CTO) Islamabad has allegedly defied an unchallenged order of Federal Tax Ombudsman (FTO) Zafar-ul-Haq Hijazi, brazenly undermining Pakistan’s Alternative Dispute Resolution Committee (ADRC) framework and trampling upon Prime Minister Shehbaz Sharif’s vision of out-of-court tax dispute resolution.
In a calculated act of institutional misconduct, the disputed tax demand that the ADRC process was designed to resolve has allegedly been covertly recovered through the deliberate denial of lawful refunds owed to the aggrieved taxpayer, exposing what sources describe as a deeply entrenched culture of impunity within the FBR’s field formations.
The FTO exists to shield taxpayers from precisely this kind of administrative excess. When its unchallenged orders are treated as optional correspondence by CTO Islamabad, the FTO is effectively rendered a paper tiger. Its institutional credibility, painstakingly built over the years, risks being publicly undermined by the very officers it was created to check.
Sources said that in a development exposing serious irregularities within the CTO, a refund officer allegedly adjusted lawful income tax refunds covering tax years 2018 through 2021 against a sales tax demand that is disputed, legally unenforceable, and currently pending resolution before an ADRC forum under an order passed by FTO Zafar Hijazi.
This single act of alleged institutional recklessness has simultaneously violated four binding legal obligations: a Supreme Court judgment, an Islamabad High Court ruling, an FBR policy circular, and a direct order of the FTO.
When contacted, the director of the company, Shehryar Ansari, said the issue was not bureaucratic negligence but a deliberate act.
“This is not bureaucratic negligence. This is deliberate, calculated sabotage. The FTO passed binding and enforceable orders separately under the income tax and sales tax regimes, but CTO Islamabad ignored them contemptuously and without explanation,” Ansari said.
He added that the Supreme Court, in case 2025 SCP 267, categorically prohibits FBR officers from arbitrarily recovering taxes without due legal process.
“CTO orders stand in open defiance of that constitutional mandate. The ruling was not overlooked or misread — it was effectively discarded. Crucially, a demand pending before an ADRC is legally unenforceable during those proceedings. Adjusting a refund against such a demand is void ab initio — a legal nullity. Yet the CTO did it anyway,” he said.
Ansari further said the issue extended beyond a single company’s refund.
“This case is bigger than one company’s refund. It is a direct assault on two of Pakistan’s most critical tax reform pillars. Prime Minister Shehbaz Sharif’s ADRC mechanism rests on one non-negotiable premise: when a dispute enters the ADRC forum, coercive state action must stop,” he said.
“The moment FBR officers begin adjusting refunds against demands pending before ADRC, they send a chilling message to every taxpayer in Pakistan — that the ADRC is merely theatre. Investors, businesses and taxpayers watching this case will conclude that ADRC protection means nothing if a refund officer can override it with a Section 170(4) order,” Ansari added.
The Chairman FBR, Member IR-Legal, and Member IR-Operations have all been formally copied on the matter.
“The question they must answer is urgent and uncomfortable: how many other taxpayers, without access to Supreme Court representation, have silently absorbed the same institutional treatment?” Ansari said.
