Rs50,000 court fee per reference: Taxpayers likely to get big relief

ISLAMABAD: The federal government is considering ending a major violation of Constitution of Pakistan committed by the Federal Board of Revenue (FBR) and end discrimination and injustice of the FBR to the small and medium taxpayers by ending discriminatory Rs50,000 court fee per reference to be paid by taxpayers for filing reference in high courts against FBR.

Lahore High Court (Rawalpindi Bench) has strongly recommended waiver of prescribed court fee for small taxpayers as current income tax scheme has exempted Federal Board of Revenue (FBR) from paying court fees while an ordinary taxpayer is required to pay Rs.50,000 per reference.

In case W.P. No.2420 of 2024 (Mian Muhammad Akram Versus Federation of Pakistan etc), major policy recommendations have been made by LHC judge Jawad Hassan in favor of taxpayers to end this major discrimination to the small taxpayers.

LHC takes exception to FBR’s court fee waiver

LHC is shocked, “ It is pertinent to highlight that the FBR faces no financial barrier in filing Tax References, as it is exempt from paying court fees, whereas an ordinary litigant is required to pay Rs.50,000 per reference as fee.

This results in a clear discrimination against the citizens of Pakistan, depriving them of equal access to justice, which will infringe the fundamental rights of public guaranteed under Articles 4, 10-A and 37(d) of the Constitution,” LHC said.

The LHC ordered that the said scheme creates an unequal playing field between the regulator and the regulated. Moreover, it disproportionately discourages small and medium enterprises from pursuing their legitimate grievances in Court.

It is therefore proposed that the legislature consider either reducing or waiving the prescribed court fee for taxpayers falling under a certain income or turnover threshold or imposing nominal court fees on FBR to ensure parity and discourage frivolous litigation initiated by the revenue authority.

Dr. Ishtiaq Ahmad Khan, Director General Law, FBR, present in the Court, submitted that impugned amendment is under review and these judicial observations will be placed before the appropriate forums for consideration and incorporation.

In light of the above proposals, these writ petitions stand disposed of. However, this order shall serve as a guiding reference under Articles 199 and 201 of the Constitution. It is expected that the concerned Ministries, including the Ministry of Law and Justice and the Federal Board of Revenue, will meaningfully consider these suggestions while framing legislative or administrative policy in upcoming amendments to the Income Tax Ordinance.

Section 130 governs the composition and appointment of members of the ATIR. Although it sets minimum qualifications, practical shortcomings in adjudication continue to surface.

This Court has consistently observed in various cases that the orders passed by Commissioners (Appeals) and even some members of the ATIR suffer from inadequate reasoning; failure to cite or interpret relevant legal provisions; non-compliance of Sections 127 to 129 of the Ordinance; absence of a judicious application of mind; and procedural violations of Article 10-A of the Constitution.

Therefore, it is recommended that the Government, in consultation with the FBR and judicial academies, initiate mandatory judicial training for Commissioners (Appeals) and ATIR Members on legal writing and reasoning; adjudicatory standards and practices; recent jurisprudence on taxation and constitutional compliance; ensuring adherence to fair trial principles.

Such training programs should be continuous and designed to elevate the quality of adjudication at lower forums to reduce the need for frequent remand orders by the High Court. It is also suggested that appointments to ATIR be scrutinized through independent panels to ensure competence, impartiality and transparency, LHC order added.

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