Key Takeaways
- The Lahore High Court has issued an interim order restraining the Federal Board of Revenue from making further tax recovery from PASSCO.
- PASSCO has challenged the assessment order and filed a petition under Section 134A of the Income Tax Ordinance, 2001.
- The court's decision aims to protect public resources and ensure the smooth functioning of a key national institution.
The Lahore High Court has issued an interim order restraining the Federal Board of Revenue (FBR) from making any further tax recovery from the Pakistan Agricultural Storage and Services Corporation (PASSCO), a state-owned entity.
The order was passed by a Division Bench and issued notices to the respondents for October 15, 2026.
Counsel for PASSCO, Ch. Anwaar-ul-Haq Arif, argued that the corporation had challenged an assessment order dated June 22, 2026, before the Commissioner (Appeals).
The appeal was dismissed on September 14, 2026, because PASSCO, as a government-owned entity, has a remedy of Alternative Dispute Resolution (ADR) under Section 134A of the Income Tax Ordinance, 2001.
PASSCO then filed a petition under Section 134A on September 25, 2026, which, according to Section 134A(7), stays recovery once the ADR Committee is constituted.
Counsel submitted that before the ADR petition was filed, the tax department had approved recovery under Section 140, leading to the recovery of part of the disputed amount from PASSCO’s bank accounts on the same day.
The petitioner argued that this recovery was contrary to the Supreme Court’s judgment in Pakistan LNG, which held that same-day recovery under Section 140 is impermissible.
Ch. Anwaar-ul-Haq Arif, Advocate, welcomed the order, stating that the Court’s intervention reflects the spirit of the law.
He said, 'Disputes between the state and its own entities are meant to be resolved through dialogue under the ADR mechanism, not through coercive recovery.'
The matter will be taken up again on October 15, 2026, to further address the concerns and ensure compliance with the law.
Disputes between the state and its own entities are meant to be resolved through dialogue under the ADR mechanism, not through coercive recovery.
Ch. Anwaar-ul-Haq Arif, Advocate, Counsel for PASSCO
