Islamabad, February 11, 2025 – The Islamabad High Court (IHC) has nullified the appointment of the chairman of the Appellate Tribunal of Inland Revenue (ATIR) and instructed the authorities to appoint a new chairman under revised regulations.
Chief Justice Aamer Farooq, while delivering the verdict, directed that in the interim, an acting chairman should be designated from among the tribunal members as per the law. The decision came in response to a petition filed by the Sargodha Tax Bar Association, which challenged the appointment process.
The petitioners argued that the appointment of the ATIR chairman, made via a notification dated June 7, 2023, was irregular as the selected candidate was not the senior-most member. They contended that the appointment was executed under Rule 3(7) of the Appellate Tribunal Inland Revenue (Appointment of Chairperson and Members) Rules, 2020, which did not prioritize seniority. Furthermore, they cited a Lahore High Court (LHC) decision in Lahore Tax Bar Association v. Federation of Pakistan (2024 PTD 281), which had already declared these rules unconstitutional.
The petitioner’s counsel maintained that the prime minister exercised discretionary powers arbitrarily, failing to consider all eligible tribunal members. He further argued that even though the rules had been struck down, the principle of seniority should still be followed in judicial appointments, citing precedents such as Al-Jehad Trust v. Federation of Pakistan (PLD 1996 SC 324) and Ashraf Tiwana v. Pakistan and others (2013 SCMR 1159).
The Additional Attorney General countered that the petition was not maintainable as the Bar Association was not a registered entity. He defended the appointment, stating that all eligible members had been considered before the decision. Counsel for the chairman also supported the government’s stance, arguing that the prime minister had acted in accordance with his discretionary powers and that seniority was not a mandatory criterion under the rules.
However, the IHC noted that the LHC had already invalidated the 2020 appointment rules, rendering the chairman’s appointment legally untenable. The court also expressed concern over the delay in framing new rules despite a government commitment to do so within 30 days of the LHC ruling.
In its judgment, the IHC emphasized that while the prime minister holds discretion in such appointments, it must be exercised with transparency, fairness, and adherence to due process. The court observed that the appointment summary failed to demonstrate any justification for selecting the chairman over other eligible members.
Consequently, the court annulled the appointment and directed the federal government to expedite the formulation of new rules and appoint a new chairman accordingly. The ruling reinforces judicial oversight in administrative appointments and underscores the necessity of transparency in high-level judicial selections.
It is pertinent to mention that the stakeholders have raised serious reservations over the working of the ATIR, especially the integrity and the efficiency.
The Pakistan Tax Bar Association (PTBA) has expressed significant concerns regarding the Tax Laws (Amendment) Act, 2024, questioning its effectiveness in streamlining tax-related litigation and ensuring taxpayers’ rights.
In its letter addressed to Azam Nazeer Tarar, the Minister of Law and Justice, in November 2024, the PTBA highlighted several issues that have emerged since the law’s implementation six months ago. The organization claims that instead of addressing inefficiencies in the tax litigation process, the act has added further complications, particularly in the functioning of the ATIR.
PTBA’s letter raises several critical questions, casting doubt on whether the goals of the Tax Laws (Amendment) Act have been achieved. One of the primary questions relates to the effectiveness of tax adjudication processes post-enactment. The PTBA inquires about the number of cases that have been adjudicated, the decisions made in favor of taxpayers versus tax authorities, and the volume of cases remanded for re-adjudication. Furthermore, the PTBA points out the growing backlog of cases where judgments have been reserved but not issued, with no clear explanation provided.
The PTBA also draws attention to the underwhelming progress in recruiting ATIR members. Despite assurances, the ATIR’s branches across Karachi, Lahore, Islamabad, and Peshawar are operating below capacity. For example, in Karachi, only four members (three accountants and one judicial member) are present, though the sanctioned number is 12 (six accountant and six judicial members). This staffing shortage, according to PTBA, is causing delays, disrupting hearings, and impacting the quality of adjudication.
The court ruling further underscores the need for systematic reforms in the ATIR, ensuring a fair and merit-based appointment process. The concerns raised by stakeholders reflect a growing demand for transparency and efficiency in tax-related adjudication. Moving forward, the federal government must address these deficiencies to restore confidence in the ATIR and its decision-making processes.