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. R. 210C(3)---Income Tax Ordinance (XLIX of 2001), S. 140---Adverse order passed by the Department---Recovery of tax from third parties holding money on behalf of the taxpayer---Timeframe---Reasonability---Scope---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 on the same date as the notice---Department in support of the argument of immediate recovery relied upon Rule 210C(3) of Income Tax Rules, 2002 ('the Rules, 2002') which provides that recovery can be effected on the same day that notice under Section 140 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') is issued---Held: Rule 210C(3) of the Rules, 2002 is contrary to the requirements of Section 140 of the Ordinance, 2001---Section 140 of the Ordinance, 2001 requires the Commissioner to set a date in the notice for recovery purposes, hence, the requirement of the Rules, 2002 for immediate recovery is against the scheme of Section 140 of the Ordinance, 2001---Reliance on Rule 210C, as urged by the petitioners/Department, would allow the Commissioner to bypass the statutory requirement and initiate immediate recovery, a course of action that not only contravenes the text of the Ordinance, 2001 but also undermines its purpose---The Rules, 2002 are subordinate or delegated legislation, framed under a statute, and therefore, subservient to the statute itself and must yield where there is any inconsistency---Thus, the clear and unambiguous reading of Section 140 of the Ordinance, 2001 is that the Commissioner shall issue notice in writing to pay the amount stated in the notice by the date set out in the notice---The language of Section 140 of the Ordinance, 2001 does not envisage immediate or mechanical recovery rather the provision contemplates that the Commissioner will issue notice and will give a reasonable timeframe for the purpose of recovery---Possibly a seven day notice can be considered reasonable, however, the reasonableness of the timeframe given can be considered on a case to case basis depending on the circumstances and the facts of the case, given that although the legislative intent is to provide for a date, it has not given a statutory notice period before which recovery can be effected---Said requirement of setting a date for payment of the tax duly places the burden on the Commissioner for substantive compliance and is not a procedural formality---A notice that seeks recovery on the same date as its issuance would defeat the very objective of setting out a date and would render the legal safeguard meaningless---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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