Rebuilding tax justice—III When judgment itself becomes the problem

Part I of this series asked whether Pakistan should finally replace its fragmented tax appellate system with a National Tax Court. Part II asked the prior constitutional question: who controls the tax judge? The third question arises after the hearing has ended. How long should a citizen wait for judgment, and what happens when the institution that enforces statutory deadlines against taxpayers does not obey deadlines imposed upon itself?¹

This asymmetry goes to the heart of tax justice. A taxpayer who misses limitation may lose the right of appeal. A delayed payment attracts default surcharge. Failure to comply with a hearing schedule can expose a party to costs or recovery. When a tax appeal is heard and judgment does not follow, however, the economic dispute remains suspended: recovery risk survives, refunds may remain blocked, accounts stay uncertain and working capital can remain immobilised.

Parliament has attempted to impose discipline. Section 132 of the Income Tax Ordinance, 2001, substituted through the Tax Laws (Amendment) Act, 2024, commands that the Appellate Tribunal Inland Revenue (ATIR) shall decide an appeal within ninety days of filing. Appeals pending when the amendment commenced were given 180 days. If the period is exceeded, the Tribunal must seek condonation from the Minister for Law and Justice, and the extension cannot go beyond another ninety days.²

The same provision requires hearing and decision dates to be fixed in consultation with the parties. Adjournment is permitted only for compelling reasons recorded in writing and on payment of costs of not less than Rs. 50,000. The legislative message is unmistakable: tax litigation is not supposed to drift.

The subordinate rules tell a less satisfactory story. Rule 21(4) of the Appellate Tribunal Inland Revenue (Functions) Rules, 2023 provides that orders by a Bench “may” be passed within three months from conclusion of hearing; if that period is exceeded, the reasons are merely to be communicated to the Chairperson.³

The contradiction should be removed. The parent law says “shall decide”; the rule says an order “may” be passed. The statute counts from filing; the rule starts another clock after hearing. Most importantly, an internal explanation to the Chairperson supplies no remedy to the litigant whose matter has already been argued.

A subordinate rule cannot dilute the statute. Rule 21(4) should be amended. Once hearing concludes, judgment should ordinarily be pronounced within sixty days and, for exceptional reasons recorded before expiry of that period, no later than ninety days. The date of pronouncement should be announced when arguments close or notified immediately thereafter.

The problem is not peculiar to Pakistan. A recent Bombay High Court case shows what delay can do even inside a mature specialised tribunal. In Rajesh R. Hemrajani v Income Tax Appellate Tribunal, the taxpayer’s appeal was heard and reserved on July 1, 2025, but no judgment came. It was released, heard again before a different Bench on November 26, 2025, again left undecided, and released for a second time. A third hearing took place on May 13, 2026.⁴

Faced with the prospect of arguing the same appeal for a fourth time, the taxpayer approached the High Court. The Court recorded that its “judicial conscience is shocked”. It directed delivery of judgment within the prescribed period and ordered all Indian Income Tax Appellate Tribunal benches to follow Rule 34: ordinarily sixty days after hearing, with an exceptional outer limit of ninety days.⁵

The important point is not that Bombay High Court and Supreme Court of India (by upholding the High Court’s order) has solved tribunal delay. It has not. The lesson is institutional: once a case has been fully heard, the litigant should not bear the cost of a tribunal’s failure to convert hearing into judgment. Releasing the matter and starting again punishes the party for the institution’s own default.

Pakistan already possesses the governing principle. In Pakistan National Shipping Corporation v Nasir Kamal, the Federal Constitutional Court (FCC) of Pakistan relied on MFMY Industries Limited v Federation of Pakistan and reiterated that a reserved judgment should ordinarily be pronounced within ninety days. If complexity genuinely prevents this, rehearing may become necessary, but the matter should in any event be brought to conclusion within 120 days.⁶

The FCC recalled the deeper proposition from MFMY Industries: without a judgment there is no fruitful outcome of litigation. That principle has particular force in taxation.

A tax judgment does more than resolve a private dispute. It determines whether the State may lawfully retain or recover money, whether a refund is due, and often how the same statutory provision will be applied to hundreds of other taxpayers.

This brings us from delay to quality. Speed without legal discipline can be as damaging as delay. ATIR is not merely a disposal machine; it is a final fact-finding tribunal whose orders shape federal tax administration. Part I highlighted that better-paid members need the institutional machinery of a court: competent registries, legal researchers, reliable records and professional judgment-writing support. These are not luxuries. They are safeguards against inconsistent reasoning, overlooked precedent and avoidable remands.⁷

The doctrine of precedent is especially important in tax. Articles 189 and 201 of the Constitution give binding force to declarations of law by the superior courts within their constitutional spheres. The Law Reports Act, 1875 expressly includes the Income Tax Appellate Tribunal within its conception of courts or tribunals for reporting purposes. Our earlier work on stare decisis stressed that certainty and consistency are themselves elements of justice.⁸

Federal tax statutes create an additional difficulty. Different High Courts can reach different conclusions on identical federal provisions, while tribunal benches operate across Pakistan. Until the highest competent court resolves the conflict, taxpayers can face different legal outcomes depending upon territorial jurisdiction. A well-designed National Tax Court would reduce this fragmentation by creating an institutional mechanism for larger benches to resolve conflicting tax interpretations promptly.⁹

The immediate reforms need not wait for constitutional restructuring. Every reserved case should automatically appear on a public electronic register showing the date of hearing, date of reservation, scheduled date of pronouncement and current status. Alerts should issue internally after 45, 60 and 75 days. Any extension should be reasoned and communicated to both parties.

A case should not be released merely because the Bench did not write the judgment in time. Rehearing should be exceptional and supported by recorded reasons such as death, incapacity, retirement or unavoidable unavailability of a member. If rehearing becomes unavoidable, the matter should receive immediate priority rather than return to the ordinary queue.

ATIR should also publish an annual judicial-performance statement: cases filed and decided, age profile of pendency, reserved judgments outstanding beyond sixty and ninety days, remands, rehearings, reasons for delay and compliance with statutory timelines. Disposal numbers alone can reward haste. Judicial accountability must measure both timeliness and quality.

There is also an anomaly left by section 132 of the Income Tax Ordinance, 2001 itself. Part II argued that judicial independence could not coexist comfortably with executive control. The same logic applies to delay. A Minister for Law and Justice should not decide whether a judicial tribunal deserves condonation for failing to decide an individual appeal within time. That function should belong to an independent judicial head under a transparent, reasoned mechanism subject to review.¹⁰

Technology can make much of this automatic. Pakistan has spent heavily on digitising tax collection while tax adjudication still lacks a fully transparent national case-management system. E-filing, electronic records, virtual hearings, searchable judgments, automated precedent alerts and a reserved-judgment dashboard should be basic infrastructure for both ATIR and the Customs Appellate Tribunal.

These safeguards should ultimately be built into the National Tax Court discussed in Part I. The proposed Article 212A has reopened the possibility of constitutionally secured specialised federal adjudication. Any future court must be designed not simply to hear cases independently, but to decide them predictably, consistently and on time.¹¹

Justice is not complete when counsel sits down after arguments. The hearing is only the beginning of the judicial duty that matters most: a reasoned judgment delivered within a time the law, the taxpayer and the State can all rely upon.

A tax system that penalises every day of taxpayer default cannot treat judicial delay as an administrative inconvenience. Next part will discuss this point in some detail.

Endnotes

1. Huzaima Bukhari & Dr Ikramul Haq, Rebuilding tax justice—I: Time for National Tax Court; and Rebuilding tax justice—II: Who controls the tax judge, Minute Mirror, October 6-7, 2026.
2. Tax Laws (Amendment) Act, 2024, substituting section 132 of the Income Tax Ordinance, 200.
3. Appellate Tribunal Inland Revenue (Functions) Rules, 2023, SRO 1016(I)/2023, rule 21(4).
4. Rajesh R. Hemrajani v Income Tax Appellate Tribunal & another, Writ Petition (L) No. 10271 of 2026, Bombay High Court, July 31, 2026.
5. Ibid. The Bombay High Court directed all Income Tax Appellate Tribunal benches to follow Rule 34 and ordinarily pronounce judgment within sixty days, extendable for exceptional reasons up to ninety days. This order was endorsed by Indian Supreme Court.
6. Pakistan National Shipping Corporation v Nasir Kamal, C.P.L.A. No.1089-K of 2021, Federal Constitutional Court; relying on MFMY Industries Limited v Federation of Pakistan, 2015 SCMR 1550
7. Dr. Ikramul Haq, Delays in Tax Tribunal: Judgements Reserved, Forgotten And Reheard, The Friday Times, August 8, 2026; see also Huzaima Bukhari, Dr Ikramul Haq & Abdul Rauf Shakoori, Tax cases backlog, Business Recorder, April 24, 2026.
8. Pakistan Code, Law Reports Act, 1875; Huzaima Bukhari & Dr. Ikramul Haq, Law of binding precedents, The News on Sunday, September 26, 2021.
9. For the problem of conflicting High Court interpretations of federal tax statutes and the proposed unified appellate structure, see Huzaima Bukhari & Dr Ikramul Haq, Towards Broad, Flat, Low-rate and Predictable Taxes, Third Edition, PRIME Institute, November 2024.
10. Section 132 presently places condonation of ATIR delay with the Minister for Law and Justice. Part II of this series [Rebuilding tax justice—II] explains why executive control over judicial institutions raises constitutional concerns
11. Law and Justice Commission of Pakistan, Law Reform Report No. 142: Establishment of the International Commercial Court of Pakistan, 2026; proposed Article 212A expressly permits jurisdiction over taxation and other economic matters.

[To be continued]

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Huzaima Bukhari, lawyer and author, has been Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Senior Visiting Fellow of Pakistan Institute of Development Economics (PIDE). She also served Civil Services of Pakistan from 1984 to 2003.

Dr. Ikramul Haq, Advocate Supreme Court, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds an LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996.