Only ‘Legally Sound’ Tax Cases to Reach Higher Courts Under FBR’s New Scrutiny Plan

The Federal Board of Revenue (FBR) has proposed the creation of independent scrutiny committees to review tax cases before they are taken to the country’s higher courts, aiming to reduce unnecessary litigation and improve the quality of tax appeals.

Under a draft amendment to the Income Tax Rules, 2002, notified through S.R.O. 1138(I)/2026, the FBR plans to establish three Independent Case Scrutiny Committees with jurisdiction across different regions of the country. The proposal is intended to ensure that only legally sound cases involving significant legal questions or major revenue implications are pursued before the High Courts, the Supreme Court, or the Federal Constitutional Court.

Each committee will consist of a retired judge of the Supreme Court, Federal Constitutional Court, or a High Court as chairperson, a lawyer with at least 15 years of experience in tax and commercial litigation, and a serving or retired Inland Revenue officer in BS-20 or above.

The committees will examine whether tax cases should proceed to the higher judiciary and will also review pending appeals to determine if continuing litigation remains in the government’s interest. They will maintain a database of judicial precedents and settled legal issues to promote consistency in future tax litigation and identify areas requiring legislative or administrative reforms.

Under the proposed framework, commissioners will be required to submit cases to the committees within 10 days of receiving orders from the Appellate Tribunal Inland Revenue or a High Court. Each referral must include complete case details, proposed legal questions, revenue implications, relevant court precedents, and recommendations from the concerned commissioner.

The draft also introduces an emergency procedure for cases approaching statutory filing deadlines. In such situations, the committee chairperson may grant temporary approval for filing an appeal, subject to a full committee review within 30 days. The committee will have the authority to recommend withdrawing the case if it no longer justifies litigation.

To improve transparency, the committees will publish annual summaries of their recommendations without revealing taxpayer identities. Members will initially serve one year, with extensions based on performance. The FBR will also have the authority to remove members over conflicts of interest, misconduct, or breaches of confidentiality.

The proposal outlines a remuneration structure under which the chairperson will receive a monthly fee of Rs. 1.2 million plus Rs. 25,000 per case, subject to a maximum of 20 cases each month.

Advocate and retired Inland Revenue members will each receive Rs. 800,000 per month along with Rs. 12,500 per case. The committees will also submit annual performance reports to the FBR detailing cases reviewed, litigation outcomes, success rates, revenue implications, and recommendations to strengthen Pakistan’s tax litigation framework.