In a strong rebuke to routine government litigation, the Supreme Court has criticized tax authorities—particularly the Federal Board of Revenue (FBR)—for persistently filing appeals on legal questions that have already been conclusively settled by higher courts. The apex court warned that such conduct causes serious institutional damage and unnecessarily clogs the judicial system.
The observations came in a six-page judgment authored by Justice Miangul Hassan Aurangzeb, delivered by a three-member bench headed by Justice Naeem Akhtar Afghan. The court made it clear that the state must act as a responsible litigant, guided by fairness and restraint, rather than behaving like a habitual appellant that challenges every adverse order without proper legal scrutiny.
State Must Not Be a “Compulsive Appellant”
The Supreme Court noted that government departments, especially tax authorities, often pursue litigation mechanically—even when the law is settled and the outcome is entirely predictable. Such an approach, the court observed, undermines the credibility of state institutions and wastes scarce judicial resources.
To address this, the court directed the Chairman FBR to ensure that, before filing any future appeal, a proper assessment is carried out to determine whether the legal question involved has already been decided by the Supreme Court or the relevant High Courts.
Call for Independent Screening Committees
Going a step further, the judgment strongly recommended the formation of independent vetting or screening committees within the FBR. These committees would review proposed appeals and references before they are filed in court, ensuring that only legally sustainable cases proceed.
The court suggested that such committees may include:
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A retired judge of the superior judiciary
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A seasoned tax practitioner
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A senior serving or retired FBR officer with an unblemished service record
The purpose of these bodies, the court explained, is to promote objective legal evaluation, internal accountability, and timely decision-making within government departments.
Background of the Dispute
The case arose from an appeal filed by the Assistant Commissioner Inland Revenue, RTO Rawalpindi, against a Lahore High Court judgment dated March 10, 2025, which had ruled in favor of a private taxpayer, Umer Tariq Khan.
The dispute stemmed from a notice issued in November 2023 alleging inadmissible input tax of approximately Rs4 million. However, the tax assessment order was passed in March 2024—beyond the mandatory 120-day period prescribed under Section 11(5) of the Sales Tax Act, 1990.
The Lahore High Court struck down the assessment, relying on established Supreme Court precedents that declared the statutory time limit to be mandatory, rendering any delayed assessment invalid.
Supreme Court Dismisses Appeal on Settled Law
Despite the clear and settled legal position, the FBR challenged the LHC ruling before the Supreme Court. The appeal was dismissed at the outset.
The apex court expressed concern that government departments frequently pursue appeals even when binding precedents leave no room for debate—a practice that the Supreme Court has repeatedly deprecated in earlier judgments.
Courts Have Power to Deter Frivolous Litigation
The judgment reaffirmed that courts are fully empowered—both constitutionally and jurisprudentially—to curb frivolous government litigation. These powers include:
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Dismissing appeals at the threshold
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Identifying officers responsible for authorizing such litigation
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Imposing costs on government departments
The court stressed that meaningful internal checks and legal diligence are essential to prevent misuse of judicial time.
“Serious Institutional Harm” to the Justice System
The Supreme Court warned that routine filing of appeals on settled legal questions results in serious institutional harm, including:
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Accumulation of case backlogs
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Waste of judicial time
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Delays in criminal cases involving personal liberty
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Prolonged civil and constitutional disputes
Such practices, the court observed, undermine the constitutional promise of speedy and effective justice.
Department Failed to Support Its Claims
The court also found fault with the tax department’s claim that the delay in assessment was caused by repeated adjournments sought by the taxpayer. No documentary evidence or order sheets were placed on record to support this assertion, which was found to be incorrect even at the High Court level.
A Clear Warning to Government Departments
In its concluding remarks, the Supreme Court expressed regret that when the state itself disregards binding judicial precedents, it sends a negative signal to subordinate courts, tribunals, and litigants. The resulting litigation not only wastes public money on legal fees and administrative costs but also weakens public confidence in the rule of law.
The judgment serves as a firm reminder that government departments must respect settled legal principles, exercise restraint in litigation, and uphold their constitutional duty to act fairly and responsibly.