A higher appellate forum has ruled that the Federal Board of Revenue (FBR) illegally recovered billions of rupees from taxpayers without following due process.
The forum found that FBR’s actions, which included the unlawful attachment of bank accounts and recovery of advance tax under Section 147 of the Income Tax Ordinance, violated legal procedures.
The taxpayers, who had moved the forum in protest, argued that FBR had issued notices claiming unpaid advance tax despite having filed their own estimated tax liabilities, which showed no due advance tax. They contended that the FBR failed to issue mandatory notices under Sections 137 and 138 before directly attaching their bank accounts and recovering the amounts.
The FBR, however, argued that once the deadline for advance tax payment passed, it was entitled to recover the overdue amount under Section 140 without further notices. But the forum disagreed, stating that FBR’s recovery actions were illegal because the necessary notices were not issued before taking recovery measures.
The ruling emphasized that the recovery could not be carried out under Section 140 without first serving the required notices under Sections 137 and 138, especially when the tax returns indicated a refund due rather than a liability. The court’s decision has set a precedent for due process in the recovery of taxes, highlighting the importance of adhering to legal requirements before taking coercive actions.
