New committees led by retired judges will review tax litigation before references are filed in higher courts
ISLAMABAD: The Federal Board of Revenue (FBR) has formally notified rules for the establishment and functioning of Independent Case Scrutiny Committees, introducing a new mechanism to review tax litigation before references are filed in higher courts.
The FBR issued SRO 1165(I)/2026 on July 27, 2026, inserting Rule 231CB into the Income Tax Rules, 2002. The notification has been issued under Section 133A, read with Section 237 of the Income Tax Ordinance, 2001.
Under the newly notified rules, the committees will independently examine tax cases before recommendations are made to file references before the High Courts or petitions before the Supreme Court or the Federal Constitutional Court.
The initiative is aimed at strengthening litigation management, ensuring consistency in legal positions and reducing unnecessary tax disputes.
Three independent scrutiny committees established
The FBR has constituted three Independent Case Scrutiny Committees, each comprising:
• A retired judge of the Supreme Court, Federal Constitutional Court or a High Court as Chairman.
• An advocate with at least 15 years’ experience in tax and commercial litigation.
• A serving or retired Inland Revenue Service (IRS) officer of BS-20 or above.
Each committee has been assigned jurisdiction over designated Inland Revenue offices and territorial areas across Pakistan.
Committees assigned key litigation functions
Under the new rules, the committees will:
• Examine every eligible case before recommending whether a reference or petition should be filed.
• Periodically review pending references and petitions to determine whether litigation should continue.
• Maintain a database of settled legal issues and judicial precedents to promote consistency in future litigation.
• Identify systemic issues requiring legislative or administrative intervention and submit recommendations to the FBR.
The FBR expects the committees to improve the quality of litigation decisions while reducing avoidable appeals.
Strict timelines for case review
The rules require Commissioners to refer eligible cases to the relevant committee within 10 days of receiving an order from the Appellate Tribunal Inland Revenue (ATIR) or the High Court.
Each referral must include:
• Relevant case documents.
• Revenue implications.
• Questions of law involved.
• Applicable judicial precedents.
• Appellate orders.
• The Commissioner’s recommendations.
The committees will meet daily, either physically or through online sessions, and must finalise their recommendations within 15 days of receiving a case.
This period may only be extended where justified in writing and within the applicable statutory limitation period.
In urgent cases where limitation periods are close to expiring or significant revenue loss is anticipated, the Chairman may authorise the immediate filing of a reference or petition, subject to a post-facto review by the full committee within 30 days.
Transparency and governance measures
The notification also introduces governance and transparency requirements for the committees.
They will be required to publish anonymised annual summaries of their recommendations, excluding confidential taxpayer information, and maintain a searchable database of legal decisions to encourage consistency in future litigation.
Committee members will serve one-year terms, which may be extended based on satisfactory performance.
In addition, each committee must submit an annual report to the FBR by 31 March every year, detailing litigation outcomes, revenue implications and recurring legal issues identified during the review process.
The notification also prescribes remuneration for committee members, including monthly retainers and case-based payments. However, serving FBR Board members and the committee Secretary will not be entitled to additional remuneration except where permitted under the government’s existing reward and honorarium rules.
The introduction of the Independent Case Scrutiny Committees marks a significant reform in Pakistan’s tax litigation framework, with the FBR seeking to improve the quality of legal decision-making, reduce unnecessary court cases and promote greater consistency in the interpretation and application of tax laws.