Islamabad: The Supreme Court of Pakistan has ruled that tax orders issued by the Federal Board of Revenue (FBR) after the expiry of the statutory time limit are unlawful, reinforcing strict compliance with the Sales Tax Act, 1990.
In its detailed judgment, the apex court held that once a show-cause notice is issued, the tax authority must pass an order within 120 days. Any order made beyond this legally prescribed period becomes void and unenforceable.
The verdict was delivered by a three-member bench comprising Justice Mian Gul Hasan Aurangzeb, Justice Naeem Akhtar Afghan, and Justice Muhammad Shafi Siddiqui, which dismissed the FBR’s petition in C.P.L.A No. 1990/2025. The petition challenged a Lahore High Court (Rawalpindi Bench) ruling dated March 10, 2025.
The case arose after 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 Umar Tariq Khan. However, the Order-in-Original was passed on March 20, 2024, beyond the mandatory 120-day limit.
The Supreme Court noted that the matter has already been settled in earlier landmark judgments, including Collector Sales Tax vs. Super Asia, WAK Limited, and Abbasi Enterprises, which clearly establish that delayed tax orders have no legal effect.
Invoking Article 189 of the Constitution, the court emphasized that such judgments are binding on all state institutions, including the FBR. The bench expressed concern over repeated appeals on settled legal issues, terming the practice regrettable and a waste of public resources.
The court cautioned that future appeals on similar grounds may be dismissed at the outset with costs imposed and responsibility fixed on concerned officials. It also advised the Chairman FBR to constitute independent review committees—comprising retired judges, senior tax professionals, and experienced officers—before filing appeals to reduce unnecessary litigation.
Ultimately, the Supreme Court refused leave to appeal and upheld the earlier judgment, dismissing the FBR’s petition in full.
