RECORDER REPORT

ISLAMABAD: Despite a categorical ruling by President Asif Ali Zardari directing implementation of an Alternate Dispute Resolution Committee’s (ADRC) decision in favour of an Islamabad based taxpayer, the Federal Board of Revenue (FBR) has yet to act, a silence like an open defiance of Presidential authority and a warning sign for the future of ADR in Pakistan’s tax regime.

The President’s order arose out of FTO order in C.No.1499/2026, filed by a corporate taxpayer of oil exploration and production sector. The taxpayer had contested FBR’s abrupt dissolution of an ADRC constituted under directions of the Supreme Court.

The ADRC, headed by a retired judge of the LHC, concluded proceedings on 23.12.2025, ruling in the taxpayer’s favour and discharging the principal tax liability in dispute, in the presence of the departmental team from Islamabad. It was only after the outcome went against the department that the Sales Tax Operations dissolved the Committee on 12.01.2026, citing failure to decide within the statutory period, without notice or hearing to the taxpayer.

When the FTO’s original order of 20.02.2026 stopped short of validating or directing implementation of the 23.12.2025 decision, and the review petition of 06.04.2026 was declared non-maintainable, the taxpayer approached the President directly. The President, accepting the taxpayer’s representation, held that once a consent-based forum like the ADRC decides an issue, it is “not possible for one of the parties to wriggle out of that decision,” and directed FBR to implement the ADRC’s decision forthwith.

Speaking to this correspondent, tax lawyer Waheed Shahzad Butt termed FBR’s continuing inaction “a textbook case of institutional defiance,” observing that a department which itself sought and constituted the ADRC mechanism under Supreme Court directions cannot be permitted to discard its own forum’s ruling merely because it lost. “The ADRC mechanism was meant to reduce litigation and restore taxpayer confidence. By sitting on a clear presidential directive, FBR is signalling that it will only honour ADR outcomes that favour the FBR that is not dispute resolution, that is selective compliance,” Waheed Butt said.

Continued non-implementation exposes FBR to contempt and mandamus proceedings, while further eroding the credibility of the ADRC framework that successive governments have promoted as an alternative to protracted tax litigation, Butt added.