The Sindh High Court (SHC) has declared a Federal Board of Revenue (FBR) office order appointing officers to monitor a private business as null and void, ruling that the tax authority’s monitoring powers are subject to legal safeguards and cannot be exercised without proper justification.
During the hearing, the court observed that while the Sales Tax Act empowers the FBR to appoint officers for monitoring purposes, the authority is not unlimited and must be exercised in accordance with the conditions prescribed under the law.
The petitioner challenged the office order, arguing that FBR officials had been deployed at the business premises following an unlawful raid. The petitioner’s counsel maintained that the monitoring order violated both the Sales Tax Act and legal principles established by the Supreme Court.
The lawyer further argued that any monitoring order must clearly specify the reasons for its issuance and define the period during which monitoring will remain in effect. According to the petitioner, the FBR had issued a general order covering seven different business entities without providing individual reasons or a specified duration for the monitoring exercise.
Representing the FBR, the department’s counsel argued that the Sales Tax Act authorises the tax authority to appoint monitoring officers and does not require it to provide detailed reasons or time limits in every case.
However, the Sindh High Court held that although monitoring measures may be used to prevent tax evasion and fraud, such actions must remain within the limits of the law and be implemented for a reasonable period.
The court noted that the FBR failed to satisfactorily explain both the purpose and duration of the monitoring arrangement in the present case. It further observed that statutory safeguards exist to prevent the misuse of monitoring powers and concluded that the impugned office order suffered from legal defects.
As a result, the SHC declared the FBR’s monitoring order null and void, reinforcing the requirement that tax enforcement measures comply with due legal process.