Tax department fails to recover tax from bank accounts of taxpayer

LAHORE: The Tax department has failed to recover the tax assessed from bank accounts of taxpayer without issuance of fresh notice after dismissal of appeal, said sources.

According to details, a thermal generation company had declared loss in his tax return. The department issued a show-cause notice to amend the assessment. It was followed by an opportunity of hearing from the taxpayer who failed to satisfy the department.

Accordingly, the department passed an amendment order determining the tax liability against the taxpayer and issued a notice for the payment of the same. The taxpayer filed an appeal and succeeded in obtaining a stay order against the recovery of the disputed amount.

During the subsistence of the stay order, the department issued notice for the payment of tax and recovered the amount from the bank accounts of the taxpayer within hours soon after dismissal of his appeal from the relevant forum.

The taxpayer challenged the recovery on the ground that not only a fresh notice was required to be issued by the department after dismissal of his appeal but also a reasonable time, being not less than seven days, was to be allowed to him to avail the remedy of appeal before the appellate tribunal.

But the department was of the view that the interim relief granted to the taxpayer had neither suspended the order-in-original nor was there any injunction against issuance of the notice, which was properly issued in accordance with law.

It further maintained that the determined tax liability existed when a stay order was granted. Therefore, recovery of the amount was subject to the outcome of the appeal. The department further stressed that the requirement of a fresh notice may be warranted in cases where tax liability was modified and the law does not envisage repeated issuance of notice under the relevant provisions of the law.

However, the competent forum maintained that the taxpayer is needed to be notified of the timeframe within which he is required to discharge his tax liability, failing which could only let the State resort to the exercise of coercive power to enforce recovery.

A recovery of dispute tax liability within two hours of the dismissal of the appeal was declared as unfair practice on the part of the department unless a fresh notice with a reasonable timeframe was given to the taxpayer.

Copyright Business Recorder, 2024