Tax cases backlog

Pakistan’s tax litigation crisis is routinely described as a function of capacity constraints—too many cases, too few judges, inadequate infrastructure. This explanation, though convenient, is fundamentally misleading. The problem is not a shortage of resources. It lies in the design and incentives of the system itself. Nowhere is this more evident than in the performance of the Appellate Tribunal Inland Revenue (ATIR), which, despite institutional strengthening and salaries comparable to High Court judges, continues to struggle under an ever-expanding backlog. Data shared by the Chairman, Federal Board of Revenue (FBR), with the Prime Minister, as reported in the press, reveals that the total volume of disputed cases pending in courts and appellate tribunals has increased from Rs. 3. 76 trillion in 2024 to Rs. 5. 457 trillion—an increase of over 30 percent. A substantial portion—over Rs. 3. 3 trillion—is pending before ATIR alone, with more than twenty thousand cases awaiting adjudication. Despite enhanced salaries and periodic appointments, disposal consistently lags behind fresh inflows. Table I depicts the alarming scale of tax litigation backlog and the enormous amounts involved. ================================================================= Table I: Tax Litigation Backlog in Pakistan (April 2026) ================================================================= Forum Number of Cases Amount Involved (Rs) ================================================================= Supreme Court of Pakistan 3, 277 169 billion Islamabad High Court 1, 979 482 billion Lahore High Court 7, 490 963 billion Sindh High Court 2, 081 480 billion Peshawar High Court 241 27 billion Balochistan High Court 37 6 billion Total (Superior Courts) 11, 938 ~1. 96 trillion Appellate Tribunal Inland Revenue (ATIR) 21, 767+ 3. 33 trillion+ ================================================================= The gap between inflow and outflow continues to widen, indicating that the problem lies not in adjudicatory capacity alone but in the volume and nature of cases entering the system. This imbalance is neither accidental nor unavoidable—it is the direct consequence of a tax administration model that incentivises litigation rather than resolution. High-pitched assessments, often framed without regard to settled law, generate disputes at the first instance. When challenged, many of these fail at appellate stages. Instead of recalibrating its conduct, the FBR continues to file routine and often frivolous appeals. The result is a pipeline where cases enter faster than they can ever be decided. The institutional response has been predictable but ineffective: appoint more adjudicators, allocate more funds, and expand infrastructure. This approach treats symptoms while ignoring causes. Increasing adjudicatory capacity in a system that continuously generates avoidable litigation is akin to widening a drain without addressing the source of overflow. Operational deficiencies within ATIR (Table II) further compound the problem. There is no integrated dashboard for real-time tracking of case inflow, pendency and disposal. Virtual hearings remain largely absent. Case management is fragmented. More importantly, questions persist regarding specialised expertise in tax law, which directly affects the quality and consistency of decisions. ========================================================== Table II: Trend in ATIR Backlog ========================================================== Year Number of Cases Amount Involved (Rs) ========================================================== 2022 63, 655 1. 46 trillion 2024 Not disclosed 2. 235 trillion Latest (2026) 21, 767+ (active) 3. 33 trillion+ ========================================================== The situation in the superior courts is equally problematic. Across Pakistan’s High Courts, specialised benches with deep tax laws expertise rarely hear tax cases. Absence of dedicated tax benches results in inconsistent jurisprudence, prolonged hearings and increased appeals. To understand why this model fails, it is necessary to examine comparative systems (Table III). The contrast is stark. In the United Kingdom, even where backlog pressures arise, systems such as alternate dispute resolution (ADR) resolve the overwhelming majority of disputes within months, and refusal to engage in settlement may influence cost awards. In Canada, disputes are filtered early through administrative review and structured litigation, with cost recovery mechanisms ensuring discipline. In the European Union, formal dispute resolution frameworks aim at preventing disputes altogether by ensuring certainty and coordination. In all these systems, one principle remains constant: litigation carries consequences. Pakistan’s system operates on the opposite premise. Litigation is effectively cost-free for the state. Tax authorities can pursue appeals without financial accountability, even on issues already settled by higher courts. This absence of consequence is the central driver of backlog. The result is predictable. Matters travel through multiple forums over years, consuming judicial time and public resources. In contrast, in jurisdictions with effective cost regimes, parties are deterred from pursuing weak cases. Even in the UK, tribunal backlogs emerge only when receipts exceed disposals—a pattern that is closely monitored and corrected through procedural and policy adjustments. Pakistan has no such corrective mechanism. The broader ecosystem further entrenches inefficiency. Increased litigation sustains professional activity across the legal system. More cases mean more work for lawyers, more justification for expanding judicial capacity and greater institutional inertia. The system, therefore, has embedded incentives to perpetuate itself. The economic implications are severe. A tax regime characterised by uncertainty and prolonged dispute resolution discourages investment, reduces compliance and weakens revenue mobilisation. Pakistan’s low tax-to-GDP ratio cannot be understood without recognising the role of inefficient tax justice delivery. The solution lies not in expanding capacity but in correcting incentives. Assessment practices must be reformed. Additions based on aggressive interpretation should be discouraged through internal accountability, and performance metrics must shift towards sustainable revenue rather than inflated demands. An effective cost and pecuniary damages regime must be introduced. Courts and tribunals should impose realistic costs on frivolous litigation, including government departments. Without financial consequences, behaviour will not change. Institutional restructuring is essential. A National Tax Court under the supervision of the Supreme Court can reduce fragmentation and improve consistency. Appeals should be limited to substantial questions of law, certified by the National Tax Court, with provision for intra-court appeal. Specialisation must be enhanced. Dedicated tax benches in High Courts and technically competent tribunal members are essential for quality adjudication. Technology must be deployed. Digital case management systems, virtual hearings and real-time dashboards are not luxuries; they are prerequisites for efficiency. Finally, the system must shift towards certainty and fairness. International experience shows that dispute prevention is as important as dispute resolution; where taxpayers perceive fairness, litigation declines. Pakistan’s current approach—allocating more funds and appointing more judges—fails to address the root cause. It treats backlog as a capacity problem rather than an incentive problem. The persistence of trillions of rupees in pending litigation is not accidental. It is the outcome of a system designed without adequate accountability. Reform requires confronting this reality. The choice is clear. Pakistan can continue to expand a system that generates disputes, or it can redesign one that prevents them. Only the latter offers a sustainable path forward. Copyright Business Recorder, 2026

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