COMMISSIONER INLAND REVENUE (LEGAL), ISLAMABAD vs PAKISTAN LNG LIMITED — 2026 PTD 192 SUPREME-COURT

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COMMISSIONER INLAND REVENUE (LEGAL), ISLAMABAD VS PAKISTAN LNG LIMITED. S. 140---Adverse order passed by the Department---Recovery of tax from third parties holding money on behalf of the taxpayer---Date set in the notice, absence of---Immediate coercive recovery---Conduct of Department---Within a short span of time (of about eight and half hours) from the decision by the Commissioner Inland Revenue-Appeals and it being uploaded on the FBR's web portal, notice for immediate recovery from Bank was sought by the Department---Legality---In both instances, there was no meaningful interval between the appellate decision and the initiation of coercive recovery, thereby depriving the third party, from whom the money was to be recovered, of adequate notice---Hence, the Commissioner's conduct in both instances effectively nullified the very purpose of serving notice, which the statute holds as a precondition to coercive action in terms of Section 140 of the Ordinance, 2001---The conduct of the Commissioner in the present cases, therefore, falls short of the statutory requirement of Section 140 of the Ordinance, 2001---Tax recovery is not meant to be a 'grab and go' process---Even coercive recovery measures must follow a proper and fair procedure---Tax authorities should not act as penalizing agencies, but as institutions of the State tasked with facilitating compliance through clarity, transparency, and procedural propriety---The legitimacy of a tax system in large depends on whether taxpayers are able to understand not only that they are liable, but also the consequences for not discharging their liability---The rule of law demands that compliance be made and enforcement be exercised within a framework that guarantees legal certainty which is a cornerstone of any legitimate tax regime---Legal certainty requires not just that taxpayers know they owe tax, but that they are clearly informed of when, how, and on what basis recovery will be pursued---Section 140 gives effect to said requirement by obligating the Commissioner to set out a date for payment, an act that marks the beginning of a legal timeline and protects the taxpayer from arbitrary or immediate enforcement---The statutory framework governing taxation is premised on fairness, notice and the right to reasonable notice---Coercive recovery is bound by law and rules and must work within this framework---By bypassing the statutory requirement to set a payment date, the Commissioner's action undermines the very structure and intent of Section 140 of the Ordinance, 2001 and undermines the principle of legal certainty embedded within the scheme of law---Therefore, in view of the statutory framework and applicable Rules, Section 140 of the Ordinance, 2001 does not permit immediate coercive recovery in the absence of a date set in the notice---Section 140 of the Ordinance, 2001 expressly provides that the party holding money on behalf of the taxpayer must be afforded a notice with a due date to discharge its liability---In both present cases, the notices issued under Section 140 of the Ordinance, 2001 seek immediate recovery, thereby blatantly violating the requirements of Section 140 of the Ordinance, 2001, which is illegal---No case for interference was made out---As leave had already been granted, the Civil petitions were converted into appeals and dismissed.

COMMISSIONER INLAND REVENUE (LEGAL), ISLAMABAD vs PAKISTAN LNG LIMITED — 2026 PTD 192 SUPREME-COURT

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