by In a landmark decision, the Appellate Tribunal Inland Revenue (ATIR) has declared that serving tax notices through the Federal Board of Revenue’s (FBR) IRIS system is illegal. This ruling has sent shockwaves across the tax administration system in Pakistan, as the FBR has increasingly relied on IRIS—its online tax portal—to issue notices, communicate with taxpayers, and conduct proceedings.
The decision raises critical questions about the legal validity of digital notices, taxpayer rights, and the future of e-governance in Pakistan’s taxation system. While the FBR has attempted to modernize tax operations through digitization, the tribunal’s ruling emphasizes the importance of legality, due process, and compliance with existing law.
What is IRIS?
The IRIS portal is FBR’s centralized online platform where taxpayers can file returns, register businesses, and receive communications from the tax department. Introduced to improve transparency and efficiency, it was designed to reduce physical interactions between taxpayers and FBR officials, thereby minimizing corruption and delays.
Through IRIS, taxpayers could file income tax returns, sales tax statements, and track notices or orders issued against them. However, this reliance on digital communication has now been challenged legally.
The Tribunal’s Ruling
According to the ATIR, the Income Tax Ordinance 2001 and relevant procedural laws do not permit serving of statutory notices solely through the IRIS system. The tribunal noted that the law requires proper service of notices via physical means—such as registered post, courier service, or personal delivery—to ensure taxpayers actually receive them.
The ruling stated that many taxpayers were unaware of notices uploaded to IRIS, resulting in ex parte decisions, penalties, and even recovery proceedings. Since not every taxpayer regularly checks the portal, the tribunal argued that such practice violates the principles of natural justice and fair hearing.
Why is the Decision Important?
This ruling is significant for several reasons:
- Taxpayer Rights – It protects taxpayers from being penalized for notices they never actually received.
- Due Process – Reinforces the legal requirement that tax notices must be served properly in a way that ensures receipt.
- Challenge to Digitalization – Questions FBR’s increasing reliance on digital systems without aligning them with legal frameworks.
- Precedent for Future Cases – Taxpayers can now contest penalties or proceedings if they were based solely on IRIS-issued notices.
Problems with Serving Notices via IRIS
While the idea of digitizing tax communication is progressive, its implementation faced multiple challenges:
- Lack of Awareness – Many small businesses and individuals do not check the IRIS portal regularly.
- Technical Issues – Glitches, downtime, and login problems often prevent timely access to uploaded notices.
- Digital Divide – Not all taxpayers, especially in rural areas, have reliable internet access or digital literacy.
- No Proof of Receipt – Uploading a notice to IRIS does not confirm that the taxpayer has seen or read it, unlike signed delivery in physical service.
These weaknesses highlight why the tribunal viewed the practice as legally flawed.
Reaction from Taxpayers
Taxpayers and tax consultants have widely welcomed the decision. Many professionals had long argued that IRIS notices were unfair, as taxpayers would often learn about them only after penalties or default assessments had been imposed.
For example, some individuals only discovered their cases after their bank accounts were frozen or properties attached—without ever having received a physical notice. This decision now gives them grounds to challenge such actions.
Impact on FBR
For the FBR, this ruling poses a major challenge. The board has invested heavily in digitization, promoting IRIS as the backbone of its tax administration reforms. If notices issued through IRIS are declared illegal, thousands of cases may need to be revisited.
Moreover, the FBR will have to immediately revise its notice-serving procedures, possibly reverting to physical service methods while working to update the law to accommodate digital notices legally.
Legal Reforms Needed
Experts suggest that instead of abandoning digitization, the government should amend relevant tax laws to recognize electronic service of notices as legally valid—but with safeguards. Some recommended reforms include:
- Dual Service Requirement – Notices should be served both via IRIS and physical means until taxpayers expressly consent to digital-only communication.
- Email and SMS Alerts – FBR should send automatic alerts to taxpayers whenever a notice is uploaded to IRIS.
- Legal Amendments – The Income Tax Ordinance should be updated to recognize e-notices as official service if receipt is confirmed.
- Digital Literacy Campaigns – Educating taxpayers about using IRIS regularly can bridge the gap in adoption.
Balancing Digitalization with Due Process
Digitization is undoubtedly the future of tax administration, as it improves efficiency, reduces paperwork, and limits corruption. However, digital systems cannot bypass constitutional rights and statutory requirements. The ATIR’s decision underscores that technology must serve the law—not replace it.
Taxpayers should not be penalized for technical barriers or lack of access to portals. Until the law is amended, FBR must ensure that notices are served in ways that guarantee actual delivery and receipt.
Final Thoughts
The Appellate Tribunal’s decision to declare serving tax notices via IRIS illegal marks a pivotal moment in Pakistan’s taxation landscape. While FBR’s intent to digitize operations is commendable, the ruling is a reminder that legal compliance and taxpayer rights cannot be compromised.
Moving forward, the government must strike a balance between digital reforms and statutory safeguards. Updating the law to recognize electronic notices—while ensuring transparency and fairness—will be crucial. Until then, taxpayers can breathe a sigh of relief, knowing that they cannot be penalized for notices they never physically received.
