The Sales Tax Rules, 2006 (updated for tax year 2026) lay down a detailed legal mechanism for the Federal Board of Revenue (FBR) to recover defaulted sales tax through attachment and sale of immovable property. These rules aim to ensure transparency, due process, and protection of rights for defaulters, purchasers, and other affected parties.
This interactive guide explains Rules 112 to 131 in simple language, helping taxpayers, practitioners, and investors understand how the recovery process works in Pakistan.
Step-by-Step Recovery Process
🔹 Step 1: Attachment of Immovable Property (Rule 112)
The recovery process begins when the Recovery Officer issues an attachment order against the defaulter’s immovable property. This order:
• Prohibits transfer or creation of any charge on the property
• Bars all persons from benefiting from such transfer or charge
📌 Purpose: To secure the property until government dues are recovered.
🔹 Step 2: Service of Attachment Order (Rule 113)
A copy of the attachment order is served on the defaulter, following the same procedure prescribed for service of notices under the Sales Tax Rules.
🔹 Step 3: Proclamation of Attachment (Rule 114)
To ensure public awareness:
• A copy of the attachment order is affixed on or near the property, and
• Another copy is displayed on the notice board of the Recovery Officer’s office.
🔹 Step 4: Order for Sale of Property (Rule 115)
If government dues remain unpaid and are not otherwise recoverable, the Recovery Officer may:
• Direct the sale of the attached property (fully or partially), and
• Issue a proclamation of sale in the prescribed manner.
🔹 Step 5: Contents of Sale Proclamation (Rule 116)
The proclamation of sale must clearly mention:
• 📍 Location of the property
• 💰 Assessed revenue or rent (if any)
• 🏛️ Government dues for which recovery is ordered
The Recovery Officer may also include any other material information relevant for prospective buyers.
🔹 Step 6: Waiting Period Before Sale (Rule 117)
No sale can take place before 30 days from the date the sale proclamation is affixed, unless the defaulter provides written consent.
⏳ This period allows the defaulter a final opportunity to settle dues.
🔹 Step 7: Mode of Sale (Rule 118)
The property is sold through:
• Public auction, or
• Tender process
All sales are subject to confirmation by the Recovery Officer.
🔹 Step 8: Deposit and Payment by Purchaser (Rules 119–121)
• 25% of the bid amount must be deposited immediately after the auction
• Remaining amount must be paid within 15 days
❗ Failure to pay results in:
• Re-sale of the property
• Forfeiture or adjustment of deposit
• Recovery of loss and expenses from the defaulting purchaser
🔹 Step 9: Authority to Bid (Rule 122)
All bidders must declare whether they are bidding:
• On their own behalf, or
• As an agent for someone else (authority must be deposited)
Unauthorized bids are liable to rejection.
🔹 Step 10: Applications to Set Aside Sale (Rules 123–125)
Within 30 days of sale, applications may be filed to set aside the sale on grounds such as:
• Payment of dues with surcharge and penalty
• Non-service of proclamation
• Material irregularity in sale proceedings
• Defaulter having no saleable interest
📌 Certain applications require full deposit of recoverable dues.
🔹 Step 11: Confirmation or Cancellation of Sale (Rule 126)
• If no valid application is made, the Recovery Officer confirms the sale
• If an application is allowed, the sale is set aside after due notice
Once confirmed, the sale becomes absolute.
🔹 Step 12: Return of Purchase Money (Rule 127)
If a sale is set aside, the purchaser is entitled to:
• Refund of deposited amount
• Refund of any penalty paid
🔹 Step 13: Issuance of Sale Certificate (Rule 128)
After confirmation, the Recovery Officer issues a Sale Certificate, stating:
• Description of property sold
• Name of purchaser
• Date when sale became absolute
📄 This certificate is crucial for transfer of ownership.
🔹 Step 14: Postponement of Sale (Rule 129)
At the defaulter’s request, the Recovery Officer may postpone the sale to allow recovery through:
• Mortgage
• Lease
• Private sale
⚠ Proceeds must be paid directly to the Recovery Officer, and the transaction requires confirmation.
🔹 Step 15: Fresh Proclamation for Re-sale (Rule 130)
If re-sale becomes necessary due to default, a fresh proclamation must be issued before conducting the re-sale.
🔹 Step 16: Preference to Co-owner (Rule 131)
If the property is jointly owned and bids are equal:
• The co-owner’s bid takes precedence over others.
Key Takeaways
• The FBR recovery mechanism follows strict legal safeguards
• Defaulters are given multiple opportunities to clear dues
• Purchasers are protected through confirmation and refund provisions
• Transparency is ensured via public proclamations and auctions
Frequently Asked Questions (FAQs)
Q1: Can a sale be stopped after proclamation?
Yes, if the defaulter pays dues or successfully applies to set aside the sale within the prescribed time.
Q2: Is a sale certificate mandatory?
Yes, ownership transfers only after issuance of a sale certificate.
Q3: Can FBR sell only part of the property?
Yes, only the portion necessary to satisfy government dues may be sold.
This guide is based on the Sales Tax Rules, 2006 as updated for tax year 2026, and is intended for informational purposes only.