Rebuilding tax justice—II Who controls the tax ...

Summary

• Finance Act 2024 similarly recast section 194 of the Customs Act, 1969 so that members are appointed by the Federal Government in the number, manner and on conditions prescribed by rules.
• The 2024 appointment framework has itself now been challenged before the Sindh High Court.9 In August 2026, the Sindh High Court admitted a petition questioning section 194 and the Customs Appellate Tribunal appointment rules on precisely this ground: whether appointments to a body exercising judicial power can constitutionally remain dominated by the executive without mandatory and meaningful judicial consultation.
• Finance Act, 2024, substituting section 194 of the Customs Act, 1969; for the pending constitutional challenge see Sindh High Court admits petition challenging Customs Tribunal appointments, August 25, 2026.

AI Generated Summary

The first part of this series traced an institution born from a simple principle: those responsible for collecting tax should not exercise final control over adjudicating disputes arising from that collection. The Income Tax Appellate Tribunal was created in 1941 precisely to put an independent body between taxpayer and collector.¹

Eighty-five years later, Pakistan has preserved the name of specialised adjudication while repeatedly weakening the principle that justified it. The issue is not whether every member of the Appellate Tribunal Inland Revenue (ATIR) or Customs Appellate Tribunal acts independently. Many have served these institutions with distinction. Institutional independence cannot depend upon personal courage. It must exist even when an individual adjudicator has none.

That is why the constitutional question is structural. Who appoints the tax judge? Who controls tenure? Who can initiate removal? Who regulates service conditions? Who controls the registry, budget and staff? From which department do technical members come, and where do they expect to return after completing their tribunal assignment?

Those questions determine independence more reliably than ceremonial descriptions of a tribunal as ‘quasi-judicial’. Article 175(3) of the Constitution commands separation of the judiciary from the executive. Long before Article 10A expressly guaranteed fair trial and due process, the Supreme Court had recognised access to an independent and impartial adjudicatory forum as an essential element of the rule of law. In Government of Balochistan v Azizullah Memon (PLD 1993 SC 31), separation of judiciary from executive was described as the cornerstone of judicial independence.²

The National Judicial Policy 2009 translated that constitutional principle into an institutional direction: special courts and tribunals under executive administrative control should be placed under judicial control and supervision, with appointments and postings made through the judiciary.³

Tax tribunals somehow remained caught between these principles and executive convenience. The problem became especially visible in 2019. The Tax Laws (Second Amendment) Ordinance, 2019 substituted section 130 of the Income Tax Ordinance, 2001 and section 194 of the Customs Act, 1969. Members were to be appointed in the numbers and manner prescribed by the Prime Minister, while constitution, functioning of benches and procedure could also be regulated through rules prescribed by him.⁴

We described this at the time as subverting tax tribunals. A body entrusted with deciding disputes between citizen and State cannot acquire real independence when its institutional design remains substantially at the disposal of one branch of that State.⁵

The 2020 rules attempted some correction by requiring consultation with the Chief Justice of Pakistan in tribunal appointments. Then came another redesign. Through the Tax Laws (Amendment) Act, 2024, section 130 was recast. The distinction between Judicial and Accountant Members was fundamentally altered, and members were again to be appointed by the Federal Government under rules made by it.

The ATIR (Appointments, Terms and Conditions of Service) Rules, 2024 created a three-member Selection Committee: a retired Supreme Court judge nominated by the Chief Justice of Pakistan, a member of the Public Service Commission, and a person of eminence and integrity nominated by the Prime Minister.⁶

At first sight, this appears balanced. Numerically, it is not. The Judiciary nominates one member. Two members originate outside the judicial branch. The rules simultaneously permit specified Inland Revenue officers to be appointed on the recommendation of the Chairman, Federal Board of Revenue (FBR). Members may also be removed for inefficiency or misconduct on the recommendation of a performance-review committee prescribed within this framework.⁷