Federal Constitutional Court rules tax authorities can conduct raids without prior notice

The Federal Constitutional Court (FCC) has ruled that tax authorities are empowered to conduct searches and raids under Section 175 of the Income Tax Ordinance, 2001, even if no proceedings are pending against a taxpayer.

According to media reports, a three-member bench headed by Justice Aamer Farooq dismissed a petition filed by M/s Sceptre Pvt Ltd challenging a Sindh High Court decision of December 24, 2025, which had upheld a raid carried out by tax officials at the company’s premises.

The petitioner argued that Section 175 should only apply when formal proceedings are under way and that a notice issued under Section 176, which seeks documents and information, could not justify a search operation.

In the judgment authored by Justice Farooq, the court held that Section 175 authorises the commissioner or an authorised officer to act for the enforcement of any provision of the law. The court noted that the statute uses the term “enforcement,” which implies action in response to a breach, and does not limit its application to situations where proceedings are already pending.

The bench observed that the language of the provision is clear and does not require the existence of a prior case before the powers under Section 175 can be exercised.

Although the court did not fully agree with certain views expressed in the earlier Agha Steels case, it concluded that the petition was liable to be dismissed. It held that even if procedural requirements in earlier precedents were not strictly followed, the commissioner remained empowered to act under Section 175.

The court stated that the Sindh High Court’s decision did not suffer from any legal defect warranting interference.

Emphasising principles of statutory interpretation, the judgment said courts must rely on the ordinary and clear meaning of the words used by parliament and refrain from reading limitations into provisions that are not expressly stated.

The bench concluded that where the law explicitly grants tax officials “full and free access” to premises, accounts, documents or electronic records for enforcement purposes, courts cannot impose additional conditions such as the requirement of pending proceedings.