COMMISSIONER INLAND REVENUE (LEGAL), ISLAMABAD vs PAKISTAN LNG LIMITED — 2026 SCMR 227 SUPREME-COURT

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COMMISSIONER INLAND REVENUE (LEGAL), ISLAMABAD VS PAKISTAN LNG LIMITED. Ss. 137(2) & 140---Income Tax Ordinance (XLIX of 2001)---Adverse order passed by the Commissioner Inland Revenue-Appeals---Immediate coercive recovery of tax from bank holding money on behalf of the taxpayer---Doctrine of merger---Scope. When an appeal is properly brought before a higher authority, and that authority either modifies, reverses, or upholds the order put in issue before it, the order from the lower authority merges with the decision from the higher authority, and it is the latter which subsists, remains operative and is capable of enforcement in the eyes of law. The doctrine of merger is rooted in the necessity to maintain order within the judicial process and to uphold the integrity of the justice delivery system. The rationale supporting the doctrine is that there can only be one operative order addressing the same subject matter at any given moment. In the present case, within a short span of time of about eight and half hours from the decision by the Commissioner Inland Revenue-Appeals and its uploading on the FBR web portal, notice for immediate recovery from Bank was sought by the Department on the same date as the notice. In view of the doctrine of merger, following the appellate order, the previous notice issued under Section 137(2) pursuant to the assessment order or amended assessment order had lost its significance and efficacy and stood wiped out. Therefore, the Revenue Department remained unable to substantiate the validity of the notice under Section 140 of the Income Tax Ordinance, 2001. Consequently, no disturbance in the acceptance of the taxpayer's writ petitions and dismissal of the Revenue Department's Intra-Court Appeals was made out. Appeals filed by the Department were dismissed.

COMMISSIONER INLAND REVENUE (LEGAL), ISLAMABAD vs PAKISTAN LNG LIMITED — 2026 SCMR 227 SUPREME-COURT

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