President Zardari Orders FBR to Honor Taxpayer-Favorable ADRC Ruling, Overruling FTO and FBR

President Asif Ali Zardari has instructed the Federal Board of Revenue (FBR) to abide by a decision made by an Alternate Dispute Resolution Committee (ADRC), overriding the opinions of the Federal Tax Ombudsman (FTO) and the FBR itself. This directive stems from FTO Order No. 1499/2026, which pertains to a corporation involved in exploration and production of equipment in Pakistan.

The corporation had contested the FBR's decision to disband an ADRC, which was established per court orders. According to tax analyst Khurram Shahzad Butt, the ADRC, presided over by a retired Lahore High Court judge, concluded its proceedings on December 23, 2025, and ruled in the corporation's favor, clearing the primary tax liability at the meeting attended by both parties.

The overseeing Sales Tax Operations secretary subsequently dissolved the committee on January 12, 2026, due to its inability to resolve the issue within the legal timeframe. The corporation was not provided prior notification or a chance to present its case. The FTO's initial order on February 20, 2026, did not address the ADRC's decision or mandate its execution; it merely mandated the FBR to establish a new ADRC and implement protective measures.

The corporation subsequently appealed, but the FTO dismissed the petition on April 6, 2026, arguing that the FBR had already petitioned the President against the FTO's order, which was later rejected. At a hearing on August 6, 2026, Zardari ruled that the ADRC's decision should be upheld as the FBR's objection to the FTO's findings had already been rejected.

The presidential order noted that the FBR had not formally challenged the ADRC's decision and that the proceedings were conducted with the agreement of both sides. Consequently, Zardari directed the FBR to apply the ADRC's decision made on December 23, 2025. This ruling may have broader implications for the ADRC mechanism, particularly by emphasizing that committees established under Supreme Court directions cannot be terminated after reaching a decision simply because the result is against one party.