The Supreme Court on Tuesday declared the Federal Board of Revenue’s (FBR) tax recovery notices illegal, ruling that they violated the principles of law and justice by not providing adequate time for response.

The court emphasised that issuing such notices without giving proper notice or time was in direct contravention of legal and fair practices.

A three-member bench, led by Justice Muneeb Akhtar, issued the written verdict after hearing the case.

The decision stated that the actions of the Income Tax Commissioner — issuing decisions and recovery notices on the same day — were against the requirements of justice and fair play.

The court dismissed FBR’s intra-court appeals and annulled the tax recovery actions of Rs2.92 billion and Rs1.88 billion against two private companies.

These recovery notices had been issued on the very day of the appeal hearing, a practice that the court found to be unlawful.

The ruling further clarified that issuing notices under Section 140 for immediate payment by banks violated the intended spirit of the law.

The court stressed that a written decision by the tax officer must be properly communicated to the taxpayer before any recovery action can be initiated.

The court also explained that the term “by the date” implies giving reasonable time to the taxpayer, not demanding payment on the same day.

The court noted that the conduct of the commissioner of Inland Revenue was an abuse of power, similar to authoritarian control, and that the FBR had failed to substantiate its position.

The court ruled that the act of issuing recovery notices and withdrawing funds from banks was unlawful.

In its decision, the Supreme Court underscored the importance of maintaining a balance between tax recovery and the fundamental rights of citizens, calling for a fair and transparent process in all such matters.