Supreme Court Panel Recommends ADR System to Resolve Tax Disputes Faster

A Supreme Court-commissioned committee has proposed the introduction of an Alternative Dispute Resolution (ADR) mechanism within the Federal Board of Revenue (FBR) and provincial tax authorities to accelerate tax dispute settlements and ease the burden on the judiciary. The Express Tribune reported that the panel, which includes Supreme Court Registrar Saleem Khan alongside legal and tax experts, has recommended that ADR rulings be deemed final, preventing revenue authorities from filing appeals that contribute to unnecessary litigation.

The urgency of this reform stems from an alarming backlog of tax-related cases, which not only obstructs revenue collection but also places excessive strain on the judicial system. During a high-level meeting chaired by Chief Justice Yahya Afridi on November 7, 2024, officials revealed that over 108,366 revenue-related cases, with a combined value of Rs4,457 billion, remain unresolved in the country’s high courts. Additionally, 6,000 cases are still pending in the Supreme Court, while 2,000 remain stuck in various tribunals and lower courts due to prolonged stay orders, delaying critical financial recoveries.

In response to this crisis, the government tasked the committee with analyzing existing challenges and recommending legal and procedural reforms. Before finalizing its proposal, the committee engaged in consultations with key stakeholders, including the Supreme Court Bar Association, the Punjab Tax Bar Association, and leading business groups. Among the major recommendations is the establishment of a dedicated ADR unit within the FBR to facilitate mediation, conciliation, and negotiated settlements in tax disputes. The panel has also advised creating an ADR oversight unit under the Supreme Court to ensure consistency in dispute resolution processes across governmental institutions.

To further expedite tax-related rulings, the committee has recommended the formation of specialized benches within the Supreme Court and high courts that would exclusively handle revenue cases, ensuring a more streamlined and efficient judicial process. It has also proposed consolidating similar tax cases under a single bench to avoid fragmented hearings that contribute to delays. Additionally, the panel has emphasized the importance of appointing qualified officers in appellate tribunals and introducing a performance evaluation system to assess their efficiency. Another key suggestion involves enforcing strict timelines for resolving stay orders in tax cases to prevent unnecessary extensions and prolonged litigation.

The Supreme Court has been urged to increase the number of judges dedicated to handling tax matters while implementing improvements in case management and court procedures. The committee believes that if these reforms are adopted, they could significantly reduce the backlog of tax disputes, enhance judicial efficiency, and improve the overall tax litigation framework in Pakistan