Mian MUHAMMAD AKRAM vs FEDERATION OF PAKISTAN Ss — 2025 PTD 1670 LAHORE-HIGH-COURT-LAHORE

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Mian MUHAMMAD AKRAM VS FEDERATION OF PAKISTAN Ss. 126-a & 133 [as amended vide Tax Laws (amendment) act, 2024]---Constitution of Pakistan, arts. 199 & 201---Order passed by Tax authority, assailing of---appellate remedy, change in---Scope and effect---Proposals /guidelines---Petitioners challenged the amendment brought in the Income Tax Ordinance, 2001 ('the Ordinance, 2001'), through the Tax Laws (amendment) act, 2024, wherein certain modifications had been made to the appellate procedure provided under the Ordinance, 2001 ('the impugned amendment')---Validity---The Federal Board of Revenue (FBR), as a regulatory body, is to deal with all the tax related affairs of all fiscal laws in the country being vested with the main goal of tax collection in the country---But now the impugned amendment has placed an extraordinary burden upon High Court---appellate Tribunal Inland Revenue is to decide the appeal / matter within a specific timeframe while it is the utmost duty of the State to ensure inexpensive and expeditious justice while the impugned amendment of taking away jurisdiction of one appellate forum hits the mandate---Thus, foregoing circumstances unequivocally demonstrate that the impugned amendment is clogging the arteries of judicial system, obstructing the dispensation of justice and causing undue delays in other cases---Therefore, the High Court recommends that the alternate Dispute Resolution (aDR) under S. 134a of the Income Tax Ordinance, 2001 ('the Ordinance, 2001 '), be strengthened as Mediation and aDR, when effectively structured and timely invoked, can play a significant role in reducing the burden on appellate forums, ensuring expeditious resolution of tax disputes and maintaining the taxpayer's confidence in the system---It is recommended that the aDRC under S. 134a of the Ordinance be made more robust, autonomous and efficient by incorporating time-bound dispute resolution, enforcement mechanisms and the appointment of independent experts as mediators/arbitrators with relevant tax expertise---Similarly, regarding pecuniary jurisdiction of the tax reference, it is proposed that the Legislature should revisit the monetary thresholds for tax appeals and references, particularly under S. 133 of the Ordinance, 2001, so that only cases involving substantial legal questions or high financial stakes reach High Court---In view of the impugned amendment, which eliminated one appellate tier (i.e., aTIR), it is essential that either a reasonable appellate structure be reinstated or alternatively, the appellate Tribunal Inland Revenue (aTIR) be declared as the final forum for factual adjudication in cases involving routine or minor legal points---The present influx of Tax References to the High Court based on trivial or repetitive issues not only undermines judicial efficiency but also delays the resolution of more pressing legal controversies---Regarding capacity building of members of aTIR and judgment writing skills training, it is recommended that the Government, in consultation with the FBR and judicial academies, initiate mandatory judicial training for Commissioners (appeals) and aTIR Members on (i) Legal writing and reasoning; (ii) adjudicatory standards and practices; (iii) Recent jurisprudence on taxation and constitutional compliance; (iv) Ensuring adherence to fair trial principles---Such training programs should be continuous and designed to elevate the quality of adjudication at lower forums to reduce the need for frequent remand orders by the High Court---It is also suggested that appointments to aTIR be scrutinized through independent panels to ensure competence, impartiality and transparency---For ensuring access to justice and equity between taxpayers and the FBR it is proposed that the Legislature considers either reducing or waiving the prescribed court-fee for taxpayers falling under a certain income or turnover threshold or imposing nominal court fees on FBR to ensure parity and discourage frivolous litigation initiated by the revenue authority---However, said proposals would serve as a guiding reference under arts. 199 & 201 of the Constitution, with expectation that the concerned Ministries/Departments would meaningfully consider these suggestions while framing legislative or administrative policy in upcoming amendments to the Ordinance, 2001---Constitutional petitions were disposed of accordingly.

Mian MUHAMMAD AKRAM vs FEDERATION OF PAKISTAN Ss — 2025 PTD 1670 LAHORE-HIGH-COURT-LAHORE

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