Justice Delayed, Revenue Stuck Huzaima Bukhari & Dr. Ikramul Haq Pakistan's tax litigation crisis is routinely described as a function of capacity constraints-too many cases, too few judges, inadequate infrastructure. This explanation, though convenient, is fundamentally misleading. The problem is not a shortage of resources. It lies in the design and incentives of the system itself. Nowhere is this more evident than in the performance of the Appellate Tribunal Inland Revenue (ATIR), which, despite institutional strengthening and salaries comparable to High Court judges, continues to struggle under an ever-expanding backlog-Tax cases backlog, Business Recorder, April 24, 2026 A taxation system is ultimately judged not by the number of taxes it imposes but by the fairness with which disputes arising from those taxes are resolved. Pakistan's tax debate routinely focuses on revenue targets, IMF conditionalities, documentation drives and enforcement measures. Comparatively little attention is paid to the apparatus responsible for resolving tax disputes. This neglect has proved costly not only for taxpayers but also for the state itself. The right to challenge an unlawful assessment is a cornerstone of every civilised taxation system. Equally important is the state's right to collect lawfully imposed taxes without interminable litigation. A functioning adjudication framework, thus, protects both revenue interests and taxpayer rights. Pakistan's system currently fails on both counts. The Federal Board of Revenue (FBR) has accumulated thousands of pending tax disputes involving income tax, sales tax, federal excise and customs. Cases routinely travel from assessing officers to commissioners/collectors, appellate tribunals and superior courts over periods extending many years. By the time, disputes are finally resolved, economic conditions, business structures and even statutory provisions may have changed entirely. The costs are enormous. Data shared by the FBR Chairman with the Prime Minister, as reported in the press, reveals that the total volume of disputed cases pending in courts and appellate tribunals has increased from Rs. 3.76 trillion in 2024 to Rs. 5.457 trillion till April 2026-an increase of over 30 percent. A substantial portion-over Rs. 3.3 trillion-is pending before ATIR alone, with more than twenty thousand cases awaiting adjudication. Despite enhanced salaries and periodic appointments, disposal consistently lags behind fresh inflows. For taxpayers, prolonged litigation means uncertainty, blocked investment, legal expenses and disruption of commercial planning. For the state, delayed adjudication means delayed revenue, mounting arrears and growing distrust in tax administration. Neither side truly wins. This dysfunction did not emerge overnight. It is partly the consequence of increasingly complex tax laws, partly the result of administrative overreach and partly the inevitable outcome of an adjudication framework struggling under an ever-growing caseload. The problem becomes particularly acute when combined with the trends discussed in earlier articles of this series-Tax justice system at bay, MinuteMirror, April 20, 2026. Part III demonstrated how withholdingisation transformed taxation into a largely automated extraction mechanism. Part IV highlighted the persistence of untaxed and protected sectors. Part V examined fragmented sales taxation. Part VIII argued for a Taxpayers' Bill of Rights. The common thread connecting all these issues is institutional credibility. Taxpayers are more willing to comply voluntarily when they believe disputes will be resolved fairly, professionally and expeditiously. Conversely, confidence deteriorates when adjudication becomes unpredictable, inconsistent or excessively delayed. The current appellate structure often suffers from precisely these weaknesses. Tax litigation also reveals a deeper contradiction within Pakistan's fiscal policy. Successive governments frequently announce ambitious revenue targets while simultaneously creating legal uncertainty through hurried amendments, retrospective provisions and complex anti-avoidance measures. These provisions often generate years of litigation before their meaning is finally clarified by appellate forums. Revenue projections may benefit temporarily. The legal system pays the price later. A modern tax system requires a different philosophy. The objective should not be maximisation of assessments but maximisation of correct assessments. This distinction is critical. An inflated assessment that ultimately collapses before appellate forums contributes neither to revenue collection nor to taxpayer confidence. It merely increases litigation statistics and administrative costs. Many developed jurisdictions recognise this reality. Tax administrations are evaluated not only by collections but also by quality of assessments, dispute-resolution outcomes and voluntary compliance rates. Pakistan rarely measures these indicators. This is where the proposal for a National Tax Court assumes particular significance. The objective is not merely institutional restructuring but creation of a specialised adjudication forum capable of dealing with increasingly sophisticated tax disputes. Modern taxation involves transfer pricing, international transactions, digital commerce, constitutional questions, accounting standards and complex commercial arrangements. Such matters require specialised expertise rather than generalised adjudication. A properly constituted National Tax Court could address many existing weaknesses. Specialised benches, uniform procedures, technology-driven case management and time-bound disposal of appeals would significantly improve certainty for taxpayers and revenue authorities alike. Pakistan's failure in this area is particularly regrettable because the Law and Justice Commission of Pakistan examined a comprehensive proposal for a specialised National Tax Court decades ago. The proposal recognised that increasingly complex tax disputes required adjudication by judges possessing expertise in taxation, accounting, commercial law and public finance. Unfortunately, institutional resistance within Pakistan's judicial structure effectively killed this reform initiative. The result was predictable. Tax litigation continued expanding, appellate delays multiplied and taxpayers as well as revenue authorities remained trapped in a cumbersome system incapable of delivering timely justice. The contrast with successful federations is striking. Canada has long operated a specialised Tax Court that deals exclusively with federal tax disputes and has become an integral component of an efficient and predictable revenue system. Other mature federations have similarly recognised that tax jurisprudence is too specialised and economically significant to remain submerged within ordinary litigation. Pakistan chose the opposite path and continues paying the price through uncertainty, delays and mounting litigation. The benefits of specialised adjudication extend far beyond litigation itself. Faster and more predictable adjudication encourages investment because businesses can assess risks more accurately. It reduces opportunities for discretionary enforcement because legal principles become clearer. It improves administrative discipline because assessments are subjected to meaningful scrutiny. Most importantly, it strengthens trust. Trust remains the missing ingredient in Pakistan's taxation system. The relationship between taxpayer and state has become increasingly adversarial. Tax authorities often view taxpayers as potential evaders. Taxpayers frequently view authorities as primarily interested in extraction. A credible adjudication framework can help restore balance. Equally important is accountability within the tax administration itself. Taxpayers face penalties, default surcharges and enforcement actions for non-compliance. Comparable consequences rarely exist where arbitrary assessments or administrative misconduct cause significant harm to taxpayers. This asymmetry undermines confidence. Administrative accountability should form part of any serious tax reform agenda. Assessments repeatedly overturned on legal grounds should trigger institutional review. Training, professional development and quality control should become central features of tax administration. Technology can further support these objectives. Digital filing, automated case tracking, virtual hearings and publicly accessible jurisprudence can dramatically reduce delays and improve transparency. Several jurisdictions have successfully integrated such mechanisms into their tax adjudication systems. Pakistan possesses the technological capacity to do the same. The challenge is not technical. It is institutional. A broader lesson emerges from the country's fiscal experience during the last decade. Revenue targets alone cannot create a sustainable tax system. Nor can enforcement powers, withholding taxes or indirect levies. Durable compliance ultimately depends upon legitimacy, fairness and confidence in institutions. That confidence requires effective remedies when disputes arise. The right to challenge the state is not an obstacle to taxation. It is one of the foundations of lawful taxation. Budget 2027 presents an opportunity to move beyond the traditional obsession with rates and targets. A comprehensive reform agenda should include establishment of a National Tax Court, time-bound disposal of tax appeals, enhanced administrative accountability, specialised judicial capacity and modern dispute-resolution mechanisms. Such reforms would benefit taxpayers and government alike. A state that can assess taxes fairly, adjudicate disputes promptly and enforce decisions consistently possesses a far stronger fiscal foundation than one dependent upon coercion and prolonged litigation. Justice delayed is not merely justice denied. In taxation, justice delayed frequently becomes revenue stuck up and/or denied as well. [To be concluded] _____________________________________________ Huzaima Bukhari, lawyer and author, is an Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Senior Visiting Fellow of Pakistan Institute of Development Economics (PIDE) Dr. Ikramul Haq, Advocate Supreme Court, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996.
The Tax Proposals Budget 2027 series: Tax Proposals Budget 2027-I · Tax Proposals Budget 2027-II · Tax Proposals Budget 2027-III · Tax Proposals Budget 2027-IV · Tax Proposals Budget 2027-V · Tax Proposals Budget 2027-VI · Tax Proposals Budget 2027-VII · Tax Proposals Budget 2027-VIII · Tax Proposals Budget 2027-X · Tax Proposals Budget 2027-XI · Tax Proposals Budget 2027-XII
