Justice denied to justice buried

The Supreme Court of Pakistan during the last many days has dismissed a large number of leaves to appeal, mainly filed by the Federal Board of Revenue (FBR).

It has proved the oft-repeated assertion of critics that FBR, in most of the cases, files frivolous appeals and conveniently shifts blame on courts and tribunals that due to non-adjudication, revenues worth billions of rupees remain unrealized— struck for years.

FBR’s claim of inordinate delays in deciding tax matters by higher courts and tax tribunals is equally shared by taxpayers.

The evidence, however, shows that main fault lies with FBR. It not only burdens taxpayers with unnecessary litigation and huge cost but also wastes the time and resources of higher courts that could have been utilized for clearing ever-rising backlog in cases other than tax.

FBR officials take it as a matter of right to file appeal against every adverse order, whether or not, there is any justification!

Strangely, after holding numerous leaves to appeal as non-maintainable, due to involving factual controversies and lacking any question of law of public importance, the Supreme Court has not awarded cost to the taxpayers and/or imposed fine on FBR for filing frivolous appeals, as was in a case reported as Commissioner of Inland Revenue, Lahore v The Bank of Punjab (2022) 125 TAX 271 (S.C. Pak), passed by the former Chief Justice of Pakistan, Qazi Faez Isa, observing as under:

“We are constrained to observe that the income tax authorities unnecessarily wasted time, money and effort which could have been better utilised for more productive causes. They discarded the clear determinations by three forums and the EFU case precedent.

Such disdain and persistence without cause, does not engender confidence in taxpayers nor helps in establishing a system which treats them fairly and in accordance with the law. There is no reason to grant leave to appeal to the impugned orders and leave is refused. Resultantly, these appeals are dismissed with cost throughout“.

As expected, FBR failed to learn any lessons from this judgement. In fact, no action was taken for filing the above and many other such appeals and even in its aftermath, FBR has continued to approve filing of many appeals in Supreme Court, recommended by field officers, where binding judgements against FBR were in the field. This exposes the level of competence of field officers, and lack of administrative vigilance at FBR’s Headquarters, where Member Legal, supported by staff and many competent lawyers on its panel, looks after all litigation matters.

It is worth mentioning that Chief Justice of Pakistan (CJP), Mr. Justice Yahya Afridi, long before a meeting with a technical mission of International Monetary Fund (IMF) on February 10, 2025, constituted a committee in November 2024 to resolve long-standing tax cases. The committee in its report claims:

“…. around 6000 cases related to revenue are pending before the SCP involving potential revenue of billions of Pakistani Rupees (PKR). Likely, about 2000 cases are pending before Tribunals and Courts where the interim orders have been passed. The meeting was further apprised that a total of 108,366 cases involving PKR 4,457 billion are pending before the Superior Courts”.

Rejection of nearly 90% cases of FBR by Supreme Court and at other forums once again confirm that it lacks institutional framework to restrain officers from filing appeals in every case decided against them, notwithstanding any merit. This behavioural pattern of FBR is recurrent and persistent. It irritated the Supreme Court in the past as well.

In a reported case, Pakistan through Chairman of FB & Others v Hazrat Hussain and Others 118 TAX 260 (S.C. Pak), the following directions were issued, but as usual ignored by FBR:

“It is to be noted that appeals should not be filed as a matter of routine or because a decision has been rendered against the Department. Decisions should be taken on a reasonable basis. It is not advisable for government departments to waste public time and money by filing appeals routinely”.

FBR has been claiming for months that revenue of over four trillion rupees is stuck in tax cases pending before higher courts alone, and that these should be decided on priority basis. This is a legitimate demand of FBR but it must also acknowledge and make public the success rate of cases it files in Supreme Court, High Courts and tribunals. It alone will justify the huge cost of litigation; public funds incurred by FBR and heavy cost met by taxpayers to defend their cases, besides utilization of precious time of higher courts and tribunals to adjudicate exceptionally large number of tax cases.

The maxims ‘justice delayed is justice denied’ and ‘justice hurried is justice buried’ most aptly describe the essence and existing state of crisis prevailing in our outdated colonial-designed judicial system, which desperately needs all-out reforms at all levels. This is highlighted in various columns.

Unfortunately, the analysis of outmoded and obsolete colonial judicial system and agenda for its complete revamping, though discussed in detail in above and many other articles, as expected, received no attention from those who matter in the legal system and by the committee constituted by the CJP. The committee’s report, purportedly based on recommendations of stakeholders (sic), has failed to suggest any out-of-the-box solution for clearing this huge backlog and identify root causes for excessive tax litigation. The tragedy is that the beneficiaries of the existing rotten system, the main source of excessive litigation, fleece taxpayers in connivance with tax administrators, and some of them even sit on committees to further advance and cement their vested interests.

Resultantly, in the absence of result-oriented structural reforms and innovative solutions suggested in above-mentioned articles, pendency is increasing unabatedly at all levels—notwithstanding verbal commitments, empty debates and useless reports to liquidate (sic) the monstrous backlog.

Following is the case-study of two tax disputes [one very recent of 2024 and another of 2007] settled by Supreme Court, showing how much time was taken for their final settlement in the judicial system, causing irreparable agony to taxpayers, but no cost was awarded by the final adjudicator, Supreme Court of Pakistan. These cases also explode the myth that hefty salaries and numerous tax-free allowances, perquisites and benefits can make higher judiciary efficient and prompt in dispensation of justice!

The final settlement of a tax case [The Commissioner Inland Revenue, Large Taxpayers Office Lahore & another v Mayfair Spinning Mills Ltd and others 2025 SCMR 1] by the Supreme Court on 02.10.2024 after keeping it pending for nearly 22 years of granting leave to appeal on 29-05-2002 along with suspending the order by Lahore High Court of 04-12-2001, against an unjust order passed by the adjudicating officer on 15-09-1998, is a classic example of justice delayed is justice denied.

The party in the above case received credit of input tax of Rs. 30.69 million after waiting for 26 years, incurring heavy cost of litigation and losing time value of money! It received no compensation for funds blocked in litigation for 26 years under the existing law (tax codes favour the State by charging default surcharge for non-payment of delayed payment, but no compensation in such like cases) or even award of cost of litigation throughout, by the Apex Court!

The second case is Assistant Collector of Central Excise & Land Customs v Mst. Siddiqan Afzal & Others 2008 PTR 34. This is a classic case of inefficiency and apathy on the part of the Customs wing of FBR and inordinate delay in dispensation of justice in Pakistan. After considering the legal and factual position the Supreme Court held:

“Show cause notice to owner was issued after fifteen years of seizure of gold and eight years after coming into force of the Customs Act, 1969, gold now become liable to be returned to owner after two months of coming into force of Customs Act, 1969 as no notice was issued within the time prescribed”.

For the act of blatant maladministration in the above case, in any civilized society, the tax department would have been taken to task by asking to pay substantial pecuniary damages to the family. The accused passed away during litigation and his widow was unnecessarily and compulsively dragged in a long-drawn legal battle, which must have not only been costly but also agonizing for her in terms of the time consumed.

The above exposes the efficacy of our tax judicial system. One wonders, if it can really be called a “justice system”, where proceedings started in 1963 were ultimately settled in 2007, in 44 years!

In the first case, a patently wrong interpretation of section 8 of the Sales Tax Act, 1990 got corrected in 26 years! However, no pecuniary damages were awarded, giving free hand to tax officials to keep on harassing and penalizing taxpayers, where their unholy demands are not fulfilled.

Now, in view of a “hue and cry” from FBR and wrong claims of having “plausible cases” of billions, the higher courts in many cases involving interpretation of various provisions of tax codes, and even where fundamental rights guaranteed under the Constitution of Islamic Republic of Pakistan are violated, are rejecting leaves to appeal and constitutional petitions in a summary manner—again a classic paradigm of justice hurried is justice buried, under “quick disposal syndrome”!

Judicial reforms’ principal aim should be elimination of unnecessary litigation and facilitating smooth running of affairs between the State and its citizens. Once both learn to act within the four corners of law, there would be a drastic decrease in litigation.

It is extremely painful that presently the federal and provincial governments are the main litigants. They usurp the rights of people and then drag the poor citizens/taxpayers in courts. Unfortunately, unlike treatment meted out to other litigants, they conveniently escape damages for their wrongdoings. Take the case of adjournments. While others are being heavily fined, they get away by filing repetitive adjournments, which are eagerly entertained.

We all know the reasons for the prevalent morbid state of governance in Pakistan at all levels and in all government departments, but nobody wants to address and fix them. Judicial reforms do not stipulate asking for more judges and funds, but eliminating unnecessary litigation and its quick disposal.

A case in point is the United Kingdom [from where we have borrowed our tax laws]. The number of income tax filers alone in 2023 was around 39 million against an adult population of 68.3 million, whereas tax appeals reaching the final court, Supreme Court of United Kingdom, in a year number less than 10!

In Pakistan every year over 70,000 appeals/references/writ petitions are filed against orders/actions of tax authorities, whereas total number of income taxpayers has yet not reached even the seven million mark, against a population of around 120 million between the ages of 18-60 in 2024. Litigants have to wait for years to obtain orders. On the contrary, in civilized countries, very few cases go up to higher courts.

Our legislators and judges must read the annual reports and accounts of Supreme Court of United Kingdom and their other courts statistics to learn how they have achieved remarkable results in dispensation of justice! The success of justice system in the United Kingdom and elsewhere lies in tremendous public satisfaction and faith in institutions.

Public credibility of the tax system and good governance by fiscal administration are the hallmarks of thye United Kingdom’s overall governance model, aimed at serving the people. Unlike FBR, they cannot even think of unnecessarily dragging taxpayers in courts for fear of heavy cost, damages and fine.

In Pakistan, the unscrupulous taxpayers and their crafty advisers also exploit the system by filing frivolous appeals to avoid or delay bona fide tax payments/demands. The courts must impose heavy fine and cost on FBR and such taxpayers for filing seemingly trivial appeals. The same powers should be given to tax tribunals as well, once they too enjoy public credibility.

One hopes that the Chief Justice of Pakistan during his tenure, with the help of all his fellow judges, will strive to work closely with other state institutions to remove the root cause of excessive litigation, delays in dispensing of justice and stringent laws for imposing pecuniary damages against frivolous litigation and recovering of cost.

The main aim of judicial reforms should be prompt justice for all and ending unnecessary litigation. For achieving this goal, all three pillars of the State—Legislature, Executive and Judiciary—will have to work together proactively and within the four corners of the Constitution of Pakistan.

Copyright Business Recorder, 2025