FBR Defies President Zardari’s Order in Tax Case

Despite President Asif Ali Zardari's directive, the Federal Board of Revenue (FBR) has failed to enforce a decision made by an Alternate Dispute Resolution Committee (ADRC) in favor of an Islamabad-based corporate taxpayer. The case centers around a dispute over the dissolution of an ADRC assembled under Supreme Court orders. The ADRC, presided over by a retired Lahore High Court judge, concluded its proceedings on December 23, 2025, and ruled in favor of the taxpayer, clearing the principal tax liability at issue.

The committee's decision was reached with the departmental team from Islamabad present. However, on January 12, 2026, the Sales Tax Operations abruptly dissolved the committee, claiming it did not conclude the matter within the prescribed timeframe. Crucially, the taxpayer was not informed of this decision or given the chance to present its defense, according to the report.

The President's initial order of February 20, 2026, neither approved nor mandated the implementation of the ADRC's ruling. A subsequent review petition filed on April 6, 2026, was dismissed as non-maintainable, leading the taxpayer to petition the President directly. The President, acknowledging the taxpayer's appeal, instructed the FBR to put the ADRC's decision into immediate effect, emphasizing that once an alternative dispute resolution forum like an ADRC makes a decision, one party cannot retract from its outcome.

Tax lawyer Waheed Shahzad Butt condemned the FBR's ongoing inaction, arguing that the department cannot dismiss the ADRC process once an unfavorable decision is handed down. He highlighted that the delay not only undermines the mechanism's purpose of reducing litigation but also erodes taxpayer confidence. Butt cautioned that the FBR's continued non-compliance could subject it to contempt and mandamus proceedings, further tarnishing trust in the ADRC framework as an alternative to protracted tax litigation.