Constitution of ADRCs: Three SOEs directed to approach FBR

ISLAMABAD: Appellate Tribunal Inland Revenue, Islamabad has directed three leading State-Owned Enterprises (SOEs) to immediately approach Federal Board of Revenue (FBR) for the constitution of Alternative Dispute Resolution Committees (ADRCs) to resolve their tax related disputes.

These appeals, involving fiscal disputes between various State-Owned Enterprises (SOEs) and the State, have been instituted before the ATIR before July 1, 2024.

“For SOEs, participation in the ADRC mechanism is not an exercise in discretion but a statutory compulsion. The text of the law is couched in mandatory terms, leaving no interpretive ambiguity. An SOE is obligated to approach the FBR for the Constitution of an ADRC, and unlike its non-SOE counterpart, it does not possess the liberty to assess the desirability of this route.

More importantly, the statute mandates that SOEs must withdraw all pending appellate proceedings prior to the initiation of ADRC proceedings, ATIR directed the SOEs.

According to the order of the ATIR, the present appeals—being instituted by a state-owned enterprise — are no longer maintainable before this forum by operation of law. The remedy available to the appellants now lies exclusively within the domain of the ADRC constituted under Section 134A of the Income Tax Ordinance, 2001.

The concerns raised by the appellants regarding the Constitutionality of the framework, however legitimate they may be, fall outside the scope of our jurisdiction and must be addressed before the appropriate constitutional forum.

Accordingly, the subject appeals, filed both by the department and SOEs are disposed of without adjudication on merits.

The SOEs shall approach the Federal Board of Revenue for the constitution of an ADRC in accordance with law. The Department shall ensure expeditious facilitation in this regard, so that the objective of speedy and amicable dispute resolution—so central to the philosophy of the amended law—may be realised in letter and spirit, ATIR order added.

Copyright Business Recorder, 2025