Commissioner Inland Revenue Granted Powers Equivalent to Civil Court for Tax Recovery

Commissioner Inland Revenue Granted Powers Equivalent to Civil Court for Tax Recovery

Karachi, November 4, 2023 – The Commissioner of Inland Revenue has been granted powers equivalent to a civil court to facilitate the recovery of taxes, including the seizure of properties and, when necessary, the arrest of taxpayers.

Sources within the Federal Board of Revenue (FBR) have confirmed that the tax laws confer substantial authority upon the Commissioner for tax recovery purposes. These powers have been established under Section 138 of the Income Tax Ordinance, 2001.

To retrieve outstanding tax payments from a taxpayer, the Commissioner may issue an official notice in the prescribed format, instructing the taxpayer to remit the specified amount within a designated timeframe.

If the taxpayer fails to remit the amount within the stipulated period or within any extended timeframe granted by the Commissioner, the Commissioner may employ one or more of the following methods for recovering the unpaid taxes:

Attachment and Sale of Property: The Commissioner can attach and subsequently sell the taxpayer’s movable or immovable property.

Appointment of a Receiver: A receiver may be appointed to oversee and manage the movable or immovable property belonging to the taxpayer.

Arrest and Detention: In cases of non-compliance, the Commissioner holds the authority to arrest the taxpayer and detain them in prison for a period not exceeding six months.

As Specified under Relevant Sections: The recovery methods listed under this section are specified under clauses (a), (ca), and (d) of sub-section (1) of section 48 of the Sales Tax Act, 1990.

For the purpose of tax recovery as outlined in sub-section (2), the Commissioner is vested with the same powers as a Civil Court, operating under the Code of Civil Procedure, 1908, would have when recovering any amount due under a court-issued decree.

Additionally, the FBR has the prerogative to formulate rules governing the procedures related to tax recovery under this section, along with other matters connected with or incidental to the execution of this provision.

This development reinforces the government’s commitment to enhancing tax collection and ensuring compliance with tax regulations. The Commissioner of Inland Revenue’s newfound powers under Section 138 are expected to play a pivotal role in streamlining the tax recovery process, offering more effective mechanisms for collecting outstanding taxes from taxpayers.