ATIR Islamabad orders transfer of tax appeals involving SOEs to ADRC

ISLAMABAD: In a major development in tax litigation, the Appellate Tribunal Inland Revenue (ATIR), Islamabad has ordered the transfer of a series of tax appeals involving state-owned enterprises (SOEs) to the Alternate Dispute Resolution Committee (ADRC).

The decision has been taken in accordance with the amended Section 134A of the Income Tax Ordinance, 2001.

The Finance Act, 2023 introduced a key change mandating all SOEs to pursue resolution of their tax disputes exclusively through the ADRC. However, the scope of this amendment gave rise to legal uncertainty—particularly regarding whether the requirement applied retroactively to disputes already pending before appellate forums.

The Federal Board of Revenue (FBR) took the position that Section 134A applied universally to all SOEs-related disputes, regardless of whether they had arisen before or after the enactment of the Finance Act, 2023. Conversely, SOEs maintained that the mandatory ADRC mechanism applied only to disputes initiated after the amendment and did not affect pending litigation.

The divergence of views led to an impasse before the ATIR. To resolve the issue, the department engaged its legal advisor, Advocate Osama Shahid, to argue its case for referring all pending SOE appeals to the ADRC. After two comprehensive hearings, the ATIR ruled in favour of the department, holding that all disputes—past and future—fall within the ambit of the amended Section 134A.

This ruling is expected to have a profound impact on the landscape of tax litigation, as it clears the path for hundreds of pending SOE tax appeals to be referred to the ADRC. Legal analysts suggest the decision will not only reduce the caseload of appellate forums but also accelerate the resolution of complex, high-revenue disputes.

Copyright Business Recorder, 2025