Rebuilding tax justice—V Building the National Tax Court

The first four parts of this series established the case for change. Pakistan’s tax tribunals were created to separate adjudication from collection, but their institutional independence remains incomplete. Appointment structures have invited constitutional challenge. Reserved judgments can outlive statutory deadlines. Weak assessments and mechanical State appeals continue to feed the litigation pipeline. Reform therefore cannot stop at more members, higher salaries, shorter deadlines or better software.1

The final question is structural: what should replace the present fragmented system? Our answer for more than fifteen years has been a National Tax Court. In the third edition of Towards Broad, Flat, Low-rate and Predictable Taxes, the proposal appears as a complete draft National Tax Court Bill, 2025. It envisages a nationwide specialist institution replacing the existing federal tax tribunals, with legal and technical expertise, its own staff, and an appellate structure designed to reduce rather than multiply tiers.2

That proposal should now be updated rather than copied mechanically. Pakistan’s constitutional landscape changed materially in 2025 with creation of the Federal Constitutional Court (FCC). In 2026, the Law and Justice Commission of Pakistan went further by proposing Article 212A for an International Commercial Court of Pakistan (ICCP), a specialised Federal Superior Court. Most significantly for this debate, proposed Article 212A(3) expressly permits Parliament to confer original or appellate jurisdiction over “taxation” and other economic and commercial matters.3

This creates a constitutional opportunity that did not exist when our earliest National Tax Court proposals were written. The Law and Justice Commission’s reasoning is instructive. Complex commercial disputes, it says, require specialised expertise, focused case management, consistency and speed. It considered special benches within existing High Courts but preferred an independent specialised court because that model would provide greater institutional focus, independence and coherent jurisprudence. The same logic applies, with even greater force, to federal taxation.4

Tax disputes are no longer simple arguments over arithmetic. Modern cases involve constitutional legislative competence, banking, transfer pricing, international taxation, treaties, accounting standards, customs valuation, digital transactions, withholding regimes, anti-avoidance rules and complex corporate structures. The institution deciding them must understand both public law and commercial reality.

The National Tax Court should be conceived as a constitutional judicial institution, not another executive tribunal. Its first principle must be independence. Judges should be selected through a constitutionally protected process rather than executive-dominated committees. Tenure and removal must carry judicial safeguards. The Court should control its registry, staff, budget and internal administration. Its expenditure should be charged upon the Federal Consolidated Fund, as proposed for the ICCP. Professional research officers, law clerks and judgment-writing support should be built into the institution from the beginning.5

The second principle must be consolidation. The Appellate Tribunal Inland Revenue and Customs Appellate Tribunal should not survive as parallel national institutions after creation of a National Tax Court. They should become specialised divisions within one court—an Inland Revenue Division and a Customs Division—with larger benches available whenever conflicting interpretations arise.

The third principle must be fewer appellate tiers. Pakistan cannot justify replacing two tribunals with a new court while leaving every existing layer intact. Our longstanding proposal has been a two-tier tax justice system: the first genuinely independent appeal should lie before the specialised national institution, followed only by a limited apex appeal on substantial questions of law.6

The present constitutional arrangement requires refinement of that route. Article 175E empowers the FCC to call for the record of any case pending before any court where it considers that a substantial question of law as to interpretation of the Constitution is involved. Proposed Article 212A, meanwhile, contemplates ordinary appeals from the ICCP to a specialised bench of the Supreme Court while expressly recognising the distinct position of both the FCC and the Supreme Court.7

A National Tax Court statute should draw the boundary clearly. Pure questions of interpretation of federal tax statutes should ordinarily move, by leave, to the Supreme Court where they involve a substantial question of law of public importance. Genuine constitutional questions—legislative competence, constitutional interpretation and fundamental-rights issues—must remain within the FCC’s constitutional domain. If this boundary is left vague, jurisdictional litigation will simply replace tax litigation.

The fourth principle should be national consistency. Federal tax law should not mean one thing in Karachi and another in Lahore for years while identical disputes move separately through different High Courts. A National Tax Court with all-Pakistan jurisdiction should have an automatic larger-bench mechanism. If two benches differ, the conflict should immediately move to a larger bench. Important recurring questions should receive priority because one authoritative ruling may settle hundreds of appeals.8

The fifth principle must be digital transparency. Every appeal should be electronically filed and assigned a permanent digital record. Hearing dates, adjournments, reserved judgments and pronouncement dates should be visible. Searchable judgments should be uploaded promptly. The Court should publish data on filing, disposal, age of cases, remands, reversal rates, reserved judgments and costs. Parts III and IV showed why neither delay nor avoidable litigation can be corrected without making institutional performance visible.9

The sixth principle is quality control at the entrance. A National Tax Court must not become an expensive warehouse for disputes produced by high-pitched assessments or automatic departmental appeals. The Independent Case Scrutiny Committees introduced in 2026 should become part of a permanent litigation-control architecture. No departmental appeal beyond the first judicial stage should proceed without a reasoned certification that the matter raises an unsettled or genuinely contestable legal issue.10

The same discipline must apply to taxpayers. Frivolous proceedings, tactical adjournments and abuse of process should attract realistic costs. Equality before law requires that neither the State nor the taxpayer be permitted to litigate without consequence.

The seventh principle should be transition without chaos. Pending cases cannot simply be moved overnight from ATIR, the Customs Tribunal and High Courts into a new structure. Parliament should enact a phased transfer scheme, preserve proceedings already substantially heard, prioritise old cases and identify classes of repetitive disputes suitable for disposal through binding lead cases, settlement or alternative dispute resolution.

There is also a choice Parliament must make honestly. One route is to establish a dedicated National Tax Court under its own constitutional provision. The other is to use proposed Article 212A and create a specialised taxation division within the ICCP. Either can work if independence, expertise, national jurisdiction and a shortened appellate chain are preserved.

What should not be done is to create both institutions with overlapping tax jurisdiction. Pakistan does not need a new jurisdictional dispute between two specialised federal courts. The Constitution and enabling legislation must identify one final specialised home for federal tax adjudication.

The case for reform is ultimately larger than revenue. A tax system affects property, investment, savings, employment and the relationship between citizen and State. The authority to impose tax is among the most coercive powers of government. Its exercise therefore demands an equally credible institution for correcting error.

The purpose of a National Tax Court is not to help taxpayers defeat lawful demands. Nor is it to help FBR recover disputed amounts more quickly. Its purpose is to determine, independently and finally, what the law requires.

That distinction matters. Revenue authorities often describe trillions of rupees in litigation as “stuck revenue”. Some of it may indeed be lawfully due. Some of it may be unsustainable assessment. Until an independent court decides, it is a disputed claim—not State money trapped by the taxpayer.

Pakistan began the journey in 1941 when it accepted that collection and adjudication should not remain in the same hands. Eighty-five years later, the journey remains unfinished.

Parts I to IV showed why. Independence without institutional autonomy is fragile. A hearing without timely judgment is incomplete justice. Litigation without consequences encourages repetition. Fragmented appellate forums produce delay and inconsistent law.

The concluding reform is not cosmetic. Merge the tribunals. Remove executive dependence. Professionalise the registry and research service. Digitise the process. Filter frivolous appeals. Create national consistency. Give constitutional questions to the FCC, substantial non-constitutional tax questions to the Supreme Court through a disciplined leave mechanism, and make the National Tax Court the authoritative specialist forum in between.11

Pakistan does not need another tax reform committee to rediscover these problems. It needs Parliament to build the institution that should have followed naturally from the principle accepted in 1941: the collector must never be the final judge of the tax it demands.

Endnotes

1. Rebuilding tax justice—I: Time for National Tax Court; Rebuilding tax justice—II: Who controls the tax judge; Rebuilding tax justice—III: When judgment itself becomes the problem; and Rebuilding tax justice—IV: When State litigates without consequence, Minute Mirror, October 2026.

2. Huzaima Bukhari & Dr Ikramul Haq, Towards Broad, Flat, Low-rate and Predictable Taxes, Third Edition, PRIME Institute, November 2024, Appendix E.

3. Constitution (Twenty-Seventh Amendment) Act, 2025, creating the Federal Constitutional Court: official Gazette text. Law and Justice Commission of Pakistan, Law Reform Report No. 142: Establishment of the International Commercial Court of Pakistan, 2026.

4. Law Reform Report No. 142, paras dealing with specialised adjudication, case management, consistency and the Commission’s preference for an independent specialised Federal Superior Court over specialised High Court benches: full report.

5. Proposed Article 212A(4)-(15) provides for appointment under Article 175A, removal safeguards, High Court-level remuneration, staff rules and expenditure charged on the Federal Consolidated Fund: Law Reform Report No. 142.

6. For the longstanding two-tier proposal, see Huzaima Bukhari & Dr Ikramul Haq, Need for national tax court—I and Need for national tax court—II, Business Recorder, May 6-7, 2011.

7. Article 175E(5), Constitution of Pakistan, as inserted by the Twenty-Seventh Amendment, authorises the FCC to call for the record of a case involving a substantial question of constitutional interpretation: official constitutional text. Proposed Article 212A(20)-(22) separately provides for Supreme Court appeals from the ICCP: Law Reform Report No. 142.

8. On conflicting High Court interpretations of federal tax laws and the need for one national specialist forum, see Towards Broad, Flat, Low-rate and Predictable Taxes, Third Edition.

9. For proposals on reserved-judgment tracking, digital case management and institutional accountability, see Delays in Tax Tribunal: Judgements Reserved, Forgotten And Reheard, The Friday Times, August 8, 2026.

10. On unnecessary State appeals and the 2026 litigation-control reforms, see Tax cases backlog, Business Recorder, April 24, 2026, and FBR’s Budget 2026-27 Salient Features.

11. Huzaima Bukhari & Dr. Ikramul Haq, High Salaries, Long Delays: Why Pakistan Needs To Rethink Tax Justice, The Scoop, October 6, 2026.

[Concluded]

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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.