Islamabad, July 15, 2025 – The Supreme Court of Pakistan ruled that notices issued under Section 140 of the Income Tax Ordinance, 2001 cannot demand immediate tax recovery on the same day of issuance. Instead, such notices must specify a future date for compliance, ensuring due process and legal protection.
The Supreme Court’s decision came through a detailed nine-page judgment authored by Justice Ayesha Malik, dismissing the Federal Board of Revenue’s (FBR) appeal against a previous high court ruling. The Court emphasized that requiring tax recovery on the same day a notice is issued nullifies the purpose of setting a deadline and renders statutory safeguards meaningless.
“Yet another aspect of significance is the constitutional underpinning of Section 140,” the judgment observed, noting that this provision reflects not just statutory intent but also the broader constitutional guarantees enshrined in Article 10A (fair trial) and Article 14 (dignity of man).
The Supreme Court bench, led by Justice Munib Akhtar and comprising Justices Ayesha Malik and Shahid Waheed, examined whether a tax commissioner under FBR is authorized to demand immediate payment without giving the taxpayer any reasonable opportunity or date for compliance. The Court concluded that such coercive recovery tactics violate both the spirit and letter of the law.
The bench held that any notice issued under Section 140 must clearly mention a future date, allowing the taxpayer or any third party holding funds on their behalf to respond accordingly. Without such a date, the Supreme Court ruled, any recovery action becomes arbitrary and unjust.
Justice Shahid Waheed, in his concurring note, raised critical concerns about the intersection of tax collection and fundamental rights. “Does an efficient tax system justify overriding constitutional protections?” he asked, arguing that tax enforcement should not become a tool of authoritarian overreach.
In a powerful analogy, Justice Waheed compared ideal tax recovery to the work of a honeybee: efficient yet gentle. He stressed that recovery should follow three clearly defined stages—declaration of liability, assessment, and only then, lawful recovery—executed with full respect for the taxpayer’s dignity.
This ruling sets a strong precedent, reaffirming the Supreme Court’s commitment to upholding constitutional rights even in fiscal matters, and sends a message to tax authorities to adhere strictly to legal protocols.