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---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---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---Legality---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 the law---Said concept is known as the doctrine of merger, which 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 merger doctrine is clear: there can only be one operative order addressing the same subject matter at any given moment---In light of said doctrine, it can be logically deduced that, 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; it stood wiped out---Thus, the petitioner -Revenue/Department remained unable to substantiate the validity of the notice under Section 140 of the Ordinance 2001, consequently, no disturbance in the acceptance of the taxpayer's (respondent's) writ petitions and dismissal of the petitioner's (Revenue's) Intra-Court appeals were made out---Appeals, filed by Department, were dismissed. 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---Date set in the notice, absence of---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 it being uploaded on the FBR's web portal, notice for immediate recovery from Bank was sought by the Department---Legality---Constitutional underpinning of Section 140 of the Income Tax Ordinance, 2001 ('the 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---Even in fiscal matters, recovery must be carried out in a manner that respects the individual's dignity and legal safeguards---Consequently, even where the law allows coercive recovery, it must be carried out in a way that preserves the dignity of the taxpayer---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 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 SCMR 227 SUPREME-COURT

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