SC Rules Against Instant Tax Recovery Demands

Islamabad, July 15, 2025, 04:23 PM PKT — The Supreme Court has delivered a landmark ruling, declaring that Section 140 of the Tax Ordinance, 2001, does not allow immediate coercive recovery without a specific due date in the notice, per a judgment by Justice Ayesha Malik, supported by a three-judge bench led by Justice Munib Akhtar, with Justice Shahid Waheed. The court stressed that parties holding taxpayer funds must receive a reasonable notice period before liability discharge, overturning Rule 210 C (3) of the Income Tax Recovery Rules, 2002, which clashed with Section 140’s requirements.

This ruling, stemming from cases involving Pakistan LNG Limited (Rs2,928,517,260 demand) and Serene Air Private Limited (Rs1,883,917,790 demand)—where same-day recovery notices followed amended tax assessments—upholds constitutional guarantees under Article 10A (due process) and Article 14 (dignity), ensuring tax recovery respects legal safeguards. Justice Shahid Waheed likened ideal recovery to a honeybee’s gentle nectar collection, urging transparency and fairness. Web context highlights tax enforcement debates, while posts found on X show relief—some praise rights protection, others question implementation. Critically, the narrative of “legal clarity” may mask enforcement gaps—web data points to past disputes, and X sentiment suggests distrust in consistent application, hinting at ongoing tensions.