Support to ADRC mechanism: FBR moves President against FTO’s order, Senate panel told

ISLAMABAD: Senate Standing Committee on Finance has been informed that the Federal Board of Revenue (FBR) has filed a representation with the President against the order of the Federal Tax Ombudsman (FTO), which supported resolution of tax disputes through Alternative Dispute Resolution Committee (ADRC) mechanism.

The Federal Board of Revenue (FBR) has been accused of deliberately defeating the spirit and intent of the law by sabotaging the Alternative Dispute Resolution Committee (ADRC) mechanism, a flagship initiative of Prime Minister to resolve tax disputes out of court, preserve exchequer resources, and spare taxpayers from the agony of prolonged litigation.

A detailed brief placed before the Senate Standing Committee on Finance has laid bare a disturbing pattern of procedural obstruction, administrative negligence, and wilful non-compliance that has rendered the ADRC process ineffective in the case of ADOS Pakistan Limited.

The details revealed that the ADOS Pakistan Limited, a registered taxpayer, filed applications before FBR seeking appointment of ADRCs under Section 47A of the Sales Tax Act, 1990, to resolve disputes pertaining to sales tax liabilities. Rather than embracing this lawful request in the spirit of the government’s own policy.

The FBR appointed an ADRC on 31.10.2025, comprising Mr. Justice (R) Shahid Jamil Khan (Former Judge, Lahore High Court) as Chairperson, the CCIR, CTO, Islamabad as Member, and Shahzad Qazi, Chartered Accountant, as Member. ADRC was legally required to decide the dispute within 45 days of appointment, extendable by a further 15 days upon reasons recorded in writing.

ADRC was dissolved by FBR vide orders dated 12.01.2026. FTO in its findings issued on 20.02.2026 in C. No. 1499/ISB/ST/2026, identified the critical procedural failures that led to this collapse. The record of proceedings was incomplete and disputed.

Participation of notified members was contested. Whether by neglect or design, the outcome served only one purpose, the perpetuation of litigation that the Prime Minister’s own vision sought to end.

To prevent recurrence of such institutional failure and to honour the Supreme Court’s directions, the FTO issued the recommendations. The FBR may constitute a fresh ADRC with the consent of the Complainant, ensuring independence and absence of apparent conflict of interest.

FBR must frame and notify detailed SOPs governing ADRC proceedings, covering formal notices and cause lists, quorum and participation requirements, written recording of extensions, mandatory conflict of interest disclosures, and formal signing and dispatch of decisions; FBR must ensure secretarial support and proper record-keeping through the jurisdictional Chief Commissioner.

The FBR told the Senate Committee, being aggrieved by the FTO’s decision, a representation is being filed before the President of Pakistan. Approval for filing has been granted by the Member-IR (Operations), FBR, and the last date for filing is 20.03.2026. This further step confirms that the matter is far from resolved and that FBR’s conduct continues to invite review at the highest levels of the State.

Prime Minister Shahbaz Sharif’s government has consistently championed the cause of out-of-court tax dispute resolution as a means of easing the burden on taxpayers, unclogging the court system, and conserving the finite resources of the national exchequer.

The ADRC mechanism was designed with precisely this vision in mind, to create a forum where disputes could be resolved quickly, fairly, and without the colossal expense of protracted litigation. FBR’s conduct in the ADOS Pakistan Limited case is a direct affront to this vision.

At every stage, from the initial rejection of ADRC applications, to the failure to maintain proper records during ADRC proceedings, to the ultimate collapse of the committee without a decision, the FBR has acted not as a servant of the State’s stated policy, but as an obstacle to it.

The precious resources of the national exchequer that could have been saved through a timely, structured resolution have instead been committed to futile litigation before the Islamabad High Court and the Supreme Court of Pakistan.

It is deeply troubling that an institution of the stature of FBR, entrusted with the responsibility of revenue collection and tax administration should demonstrate such conspicuous indifference to the binding directions of the Supreme Court and the clear policy mandate of the elected government.

When an apex revenue authority defeats the very mechanisms designed to foster trust between the taxpayer and the State, it does not merely harm the litigant before it, it erodes the legitimacy of the entire tax system.

The Senate Committee, the FTO, and ultimately the Prime Minister’s office must take serious cognizance of FBR’s repeated failure to honor its own legal obligations and the government’s avowed policy. Accountability is not optional. The spirit of the law, the guarantee of a fair, expeditious, and accessible resolution mechanism must be preserved. The FBR must be compelled to comply.

Copyright Business Recorder, 2026