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. Arts. 10A & 14---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---Immediate coercive recovery---Constitutional rights of taxpayer---Scope. 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. The constitutional underpinning of Section 140 of the Income Tax Ordinance, 2001 is that the requirement of notice before recovery is not merely statutory but reflects the broader guarantees of due process and fair trial under Article 10A of the Constitution, as well as the right to dignity under Article 14 of the Constitution. Even in fiscal matters, recovery must be carried out in a manner that respects the individual's dignity and legal safeguards. Even where the law allows coercive recovery, such recovery must preserve the dignity of the taxpayer. Section 140 of the Income Tax Ordinance, 2001 does not permit immediate coercive recovery in absence of a date set in the notice. Section 140 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 the present cases, the notices issued under Section 140 sought immediate recovery, thereby blatantly violating the requirements of Section 140 of the Income Tax Ordinance, 2001 and were 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 SCMR 227 SUPREME-COURT

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