The Peshawar High Court (PHC) on Wednesday expressed strong displeasure over the Federal Board of Revenue's (FBR) hasty recovery of income tax from Peshawar Bus Rapid Transit (BRT) accounts, observing that the action appeared to violate clear Supreme Court directives and could amount to contempt of court.
Court Hearing and Remarks
A two-member bench comprising Justice Syed Arshad Ali and Justice Inamullah Khan heard a petition filed by BRT against the deductions. The court issued notices to the FBR and other respondents, seeking their replies, and adjourned further proceedings until July 28. During the hearing, Justice Syed Arshad Ali remarked that the FBR had seemingly acted in violation of Supreme Court orders by initiating recovery immediately after issuing a notice. "This is a clear breach of judicial orders and such actions can even lead to contempt proceedings," the judge observed.
Petitioner's Arguments
The petitioners' counsel, Barristers Nasir Mahmood and Shuja, told the court that the FBR had transferred Rs20 crore from the BRT pool account on June 16 and an additional amount on June 29. They described the recovered funds as public money collected through the "Zo Card" and single-ticket system. The lawyers argued that the FBR neither issued a proper assessment order under Section 122 of the Income Tax Ordinance 2001 nor provided adequate notice. They pointed out that BRT had already paid its taxes for the year 2025, which the FBR had duly received. "The FBR issued a notice one day and recovered the money the very next day, leaving no reasonable opportunity for the petitioner to present its case," the counsel contended. They warned that such actions could disrupt the BRT system and cause immense hardship to hundreds of thousands of daily commuters.
Supreme Court's Precedent
Justice Arshad Ali noted that the Supreme Court had already laid down a clear principle requiring tax authorities to grant a reasonable time to the taxpayer after issuing a notice before proceeding with recovery. "Issuing a notice one day and recovering the next is against the Supreme Court's judgment," he said, adding that the FBR was not sparing even government institutions.
FBR's Defense and Court's Response
Appearing for the FBR, Additional Commissioner Inland Revenue Tariq Dawar argued that recovery could be made immediately under Section 140 of the Ordinance after issuance of notice. However, the court rejected this interpretation, stating that the Supreme Court had already declared such a practice unlawful and that granting reasonable time was mandatory. Assistant Attorney General Rahat Ali Nahqi represented the federal government. The court directed the FBR and other parties to submit their replies and fixed the matter for further hearing on July 28.
