Why the Office of Commissioner Inland Revenue (Appeals) is Unconstitutional [Part 1]

Why the Office of Commissioner Inland Revenue (Appeals) is Unconstitutional [Part 1]

The separation of powers is a cornerstone of the Constitution of Pakistan, 1973.[1] It is one of the salient features of our Constitution and has been recognized by the High Courts as well as the Supreme Court. In the early days, the separation of the judiciary from the executive was not as pristine as the Constitution had envisioned, along with there being an absolute lack of effort from the legislature to that end. It took a series of assertive and robust decisions by the judiciary for the legislature and the executive to gradually come to terms with the constitutional boundary between state organs. However, the constitutional boundaries emanating from the doctrine of separation of powers require continuous oversight and protection, otherwise, in our quest for constitutional ideals, we may be heading one step forward and two steps back.

One facet of the federal tax laws of Pakistan makes a good case to secure such a constitutional boundary between the judiciary and the executive. The federal tax laws of Pakistan viz:

  • the Income Tax Ordinance (ITO) 2001,
  • the Sales Tax Act (STA) 1990, and
  • the Federal Excise Act (FEA) 2005 (which the author confines himself to),

envisage a 4-tier appellate hierarchy consisting of:

  1. the office of the Commissioner Inland Revenue (Appeals)[2],
  2. Appellate Tribunal Inland Revenue,[3]
  3. the High Courts, and
  4. the Supreme Court.

The first of the 4-tiers is the Commissioner (Appeals)[4] vested with the powers of adjudication of appeals filed by taxpayers. The parties (either the department or the taxpayer) dissatisfied with the order of the Commissioner (Appeals) may appeal to the Tribunal[5] which constitutes the second tier in this hierarchy.[6] Interestingly, the third tier, consisting of the High Courts,[7] does not have appellate jurisdiction as such because the said jurisdiction is advisory where questions of law arising from the proceedings before the Tribunal below are decided. The High Courts cannot address questions of fact no matter how crucial to the case. Finally, the Supreme Court being the final adjudicator under the Constitution also sits in appeal over questions of law decided by the High Courts.

Though the efficiency of this 4-tier adjudication process is highly debatable, it does not form the subject matter of the issue at hand. The author here only discusses the validity of the office of the Commissioner (Appeals) through a constitutional perspective in light of landmark judgments of the High Courts as well as the Supreme Court.

Commissioner Inland Revenue (Appeals)

  • Appointment, Eligibility and Transfer/Posting

An officer of the Inland Revenue Service (commonly at BPS-19 or BPS-20) is appointed to the office of the Commissioner (Appeals). The Commissioner (Appeals) is a designated ‘authority’ under federal tax laws[8] and inevitably comes under the administrative control of the Federal Board of Revenue (FBR) which may appoint as many Commissioners (Appeals) as it deems fit.[9] Currently, there are 16 Commissioners (Appeals) working across Pakistan.[10] But unlike other officers of Inland Revenue[11] under FBR (engaged in field work for assessment and recovery) who are subordinate to the Chief Commissioner and the Board, the Commissioner (Appeals) takes administrative orders directly from the Board in Islamabad.[12] There is no security of tenure and the Board may pick just about any officer of Inland Revenue (OIR) (whoever in the Board’s wisdom is eligible) and post as Commissioner (Appeals). After serving in this capacity, the incumbents are returned to the field work of assessment and recovery or promoted to the Board. The office, however, always remains functional. Hence, the law is designed in such a way that the Commissioner (Appeals) is part of the FBR which, like all other government departments, is under executive control. Be that as it may, the constitutional boundary between the executive and the judiciary begins to erode when the Commissioner (Appeals), being an officer of Inland Revenue under the FBR, adjudicates appeals as a court of first instance.

  • Admission of Appeal, Power to Stay and Judicial Proceedings

Federal tax laws provide that any taxpayer aggrieved by an order passed by an OIR may appeal to the Commissioner (Appeals) through a prescribed form along with payment of the prescribed fee within 30 days.[13] The Commissioner (Appeals) may, on application of the appellant in writing, condone a delay in late filing of an appeal. The Commissioner (Appeals) also issues notices of hearing to the appellant as well as the concerned OIR before deciding the appeal. The laws empower the Commissioner (Appeals) to stay the recovery of tax demanded, for a maximum period of 60 days in income tax appeals,[14] 30 days in sales tax appeals[15] and 30 days in federal excise appeals.[16]

The ITO 2001[17] further declares the proceedings before the Commissioner (Appeals) to be ‘judicial’ within the meaning of sections 193 and 228 of the Pakistan Penal Code, 1860 and for the purposes of section 196 of the said Code which makes the presentation of false and fabricated evidence an offence of perjury, etc. On the other hand, the proceedings under the STA 1990[18] are ‘quasi-judicial’.

  • Final Adjudication

After examining the evidence and making necessary inquiries, the Commissioner (Appeals) is empowered to either:

  • confirm, or
  • modify, or
  • annul the order assailed by the appellant, or
  • pass other such order as the Commissioner (Appeals) thinks fit.[19]

For the sake of argument, the proposition that the Commissioner (Appeals) is not stricto sensu an appellate court and would constitute the final stage in the amendment of assessment and recovery proceedings, is nothing but fallacious and unsubstantiated by federal tax laws. The UK House of Lords in Whitney v Commissioners of Inland Revenue (1926) 10 TC 88 laid out the 3 stages in the imposition of a tax in the following manner:

“Now, there are three stages in the imposition of a tax: there is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, ex hypothesi, has already been fixed. But assessment particularizes the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay.”

Pakistan’s federal tax laws empower the OIR to amend the self-assessment of a person, assess the unpaid tax liability and recover the tax payable. This process ends with the OIR. Conversely, the role of Commissioner (Appeals) comes after. The Commissioner (Appeals) stands at a higher pedestal and is the one who can either confirm, modify or annul the orders of the OIR including staying the recovery of tax during pendency of appeals. From any angle, the legislature does not seem to have intended for the Commissioner (Appeals) to extend proceedings already concluded by the OIR during field work. This is further evinced by the fact that in the exercise of appellate functions, the Commissioner (Appeals) is not subject to the orders, instructions or directions of the Board, ordinarily binding on all other authorities under federal tax laws.[20] In addition, the limitation period (of 30 days) relating to appeals under federal tax laws also points to this direction, otherwise recovery of tax demanded would initiate and the order of OIR would attain finality. Lastly, the rationale behind providing this remedy of appeal only to the taxpayer (and not to the OIR) is that it is inconceivable to appeal against one’s own order.

The above passages hence conclude that the Commissioner (Appeals) is:

  • an appellate forum,
  • distinguished from assessment and recovery proceedings concluded by OIR,
  • exercising judicial power,
  • under the federal tax laws, and
  • presided over by an officer of FBR controlled by the federal government.


[To be continued in Part 2]



[1] “the Constitution”
[2] “the Commissioner Appeals”
[3] “the Tribunal”
[4] S. 127, Income Tax Ordinance, 2001 (“ITO 2001”); S. 45B, Sales Tax Act, 1990 (“STA 1990”) and S. 33, Federal Excise Act, 2005 (“FEA 2005”);
[5] S. 131, ITO 2001; S. 46, STA 1990; S. 34, FEA 2005;
[6] The Tribunal is established under S.130 of ITO 2001 and, simultaneously, vested with appellate jurisdiction under STA 1990 as well as FEA 2005;
[7] S. 133, ITO 2001; S. 47, STA 1990; S. 34A, FEA 2005;
[8] S. 207(1)(d), ITO 2001; S. 30(1)(c), STA 1990; S. 29(1)(c), FEA 2005
[9] S.208, the ITO 2001
[10] <https://www.fbr.gov.pk/field-offices/131167/796>
[11] “OIR”
[12] S.207(3-3A), ITO 2001; S. 30(2), STA 1990; S. 29(1A), FEA 2005
[13] S.127, ITO 2001; S. 45B, STA 1990; S. 34, FEA 2005
[14] S. 128(1A), ITO 2001
[15] S. 45B(1A), STA 1990
[16] S. 33(1A), FEA 2005
[17] S. 224, ITO 2001
[18] S. 72, STA 1990
[19] S.129, ITO 2001; S.45B, STA 1990; S.33, FEA 2005;
[20] S. 214(2), ITO 2001; S. 72, STA 1990; S. 42, FEA 2005


The views expressed in this article are those of the author and do not necessarily represent the views of CourtingTheLaw.com or any other organization with which he might be associated.

Abdul Haseeb Qazi

Author: Abdul Haseeb Qazi

The writer is a tax law practitioner. He represented Pakistan at the 60th Jessup White & Case International Rounds in Washington DC.