FTO takes notice of FBR’s move aimed at dissolving ADRC

ISLAMABAD: The Federal Tax Ombudsman (FTO) has taken notice of Federal Board of Revenue’s (FBR) move of dissolving an Alternative Dispute Resolution Committee (ADRC), which notified tax dispute decision in favour of the corporate taxpayer.

The decision of the ADRC was not implemented after senior tax officials reportedly disregarded and nullified a concluded ADRC decision issued by its members, including a former judge of the Lahore High Court.

The committee was dissolved after the ADRC announced a favourable decision for the taxpayer. The matter reached the Federal Tax Ombudsman (FTO) when a long-standing compliant taxpayer filed a complaint accusing officers of the FBR/CTO Islamabad of deliberate manipulation and misrepresentation in the ADRC matter as a tax dispute decision that had already been finalized in the taxpayer’s favour.

READ MORE: FBR’s refusal to disclose ADRC info raises questions

After reviewing the complaint, FTO Zafar Ul Haq Hijazi has ordered a formal investigation into allegations of systematic maladministration of justice, abuse of authority, and illegal dissolution of ADRC committees after they had completed their mandate.

When contacted tax lawyer Waheed Shahzad Butt who is representing the taxpayer told Business Recorder that the ADRC constituted under the Sales Tax Act on the directions of the Supreme Court of Pakistan, heard the tax dispute, completed proceedings, and dictated and announced its decision in the presence of officials of CTO Islamabad but no action has been taken by the FBR/CTO.

Two ADRC members, including the ADRC Chairman, former Judge of LHC, subsequently issued a written order, discharging the disputed tax liability of the company.

However, three weeks after the decision, the Secretary (STO) issued letters, asserting contrary to facts that the ADRCs had “failed to decide the dispute” and purported to dissolve the committees.

The complaint terms this move a “blatant and fraudulent attempt to nullify a lawful ADRC decision that had already been rendered.”

The complaint alleges that FBR officials engaged in colourable exercise of authority to overturn an unfavourable decision.

Mis-representation of facts to dissolve ADRCs post-decision, this is also a violation of Supreme Court directives encouraging out-of-court tax dispute resolution.

FTO has taken cognizance of these allegations and is set to probe whether FBR officials engaged in a premeditated strategy to sabotage ADRC outcomes that do not favour the revenue authorities. Calling the matter a “tip of the iceberg,” Waheed Butt warns that repeated administrative interference in ADRC functions will render the mechanism meaningless and erode taxpayer confidence in the rule of law.

The FTO’s investigation is expected to set a precedent for how administrative overreach and manipulation of statutory tax dispute forums are handled in Pakistan. Case may become a benchmark for restoring taxpayer confidence in ADR mechanisms and ensuring accountability of tax officials alleged to have acted in excess of their lawful authority, Waheed added.

Copyright Business Recorder, 2026