In a significant ruling that strengthens taxpayer protections, the Supreme Court of Pakistan has once again made it clear that the Federal Board of Revenue (FBR) cannot act beyond the limits set by law. The Court has declared that tax orders issued after the expiry of the statutory deadline are illegal and unenforceable.
The Core Issue: Missed Deadlines
Under the Sales Tax Act, 1990, once a show-cause notice is served, the tax authority is legally bound to pass a final order within 120 days. This timeline is not a procedural formality it is a mandatory requirement.
In the case before the Court, the Regional Tax Office Rawalpindi issued a show-cause notice on November 15, 2023, alleging recovery of over Rs4 million in inadmissible input tax from a taxpayer. However, the Order-in-Original was passed on March 20, 2024, well beyond the prescribed 120-day period.
Both the Lahore High Court (Rawalpindi Bench) and the Supreme Court found this delay fatal to the FBR’s case.
Supreme Court’s Firm Stance
A three-member bench comprising Justice Mian Gul Hasan Aurangzeb, Justice Naeem Akhtar Afghan, and Justice Muhammad Shafi Siddiqui dismissed the FBR’s petition in C.P.L.A No. 1990/2025, refusing leave to appeal.
The Court emphasized that this legal question is no longer open to debate. Previous landmark judgments such as Collector Sales Tax vs. Super Asia, WAK Limited, and Abbasi Enterprises have already established that orders passed after the statutory period are void.
By invoking Article 189 of the Constitution, the bench reaffirmed that Supreme Court judgments are binding on all state institutions, including the FBR.
Concern Over Repetitive Litigation
The Court expressed dissatisfaction over the FBR’s practice of repeatedly filing appeals on issues that have already been settled. Such actions, the judges noted, unnecessarily burden the judicial system and result in a waste of public resources.
In a strong warning, the Court stated that future appeals on similar grounds may be dismissed at the initial stage, with costs imposed and accountability fixed on the officials responsible.
Call for Institutional Reform
To curb avoidable litigation, the Court advised the Chairman FBR to establish independent review committees before filing appeals. These committees should include retired judges, experienced tax professionals, and senior officers, ensuring that only legally sustainable cases reach the courts.
What This Means Going Forward
This judgment sends a clear message: statutory timelines must be respected. For taxpayers, it reinforces an important safeguard against delayed and unlawful tax actions. For the tax authorities, it underscores the need for efficiency, legal compliance, and responsible decision-making.
By upholding the rule of law and discouraging procedural abuse, the Supreme Court has once again reinforced that justice delayed by the authorities themselves cannot be justice enforced.