PESHAWAR: The Peshawar High Court (PHC) on Wednesday expressed concern over the recovery of funds from Bus Rapid Transit (BRT) accounts on account of income tax, observing that the Federal Board of Revenue (FBR) has apparently acted contrary to directives of the Supreme Court by initiating recovery immediately after issuing a notice.
A two-member bench comprising Justice Syed Arshad Ali and Justice Inamullah Khan made the observations while hearing a petition filed by BRT authorities challenging the deductions from its accounts.
The court remarked that such actions could potentially amount to contempt of court and issued notices to the FBR and other respondents, directing them to submit their replies. Advocates on behalf of the petitioner argued that the FBR transferred Rs200 million from the BRT pooled account on June 16 and later deducted additional funds on June 29.
The petitioners contended that the money belonged to commuters and had been collected through the Zu Card and single-ticket systems, making it a public trust rather than funds available for arbitrary recovery.
The counsels pleaded that the FBR neither issued an assessment order under Section 122 of the Income Tax Ordinance, 2001, nor provided a lawful opportunity for the petitioner to respond before taking action. They maintained that the BRT had already paid its taxes for the 2025 tax year, which had been accepted by the tax authorities.
The lawyers argued that the FBR issued a notice and proceeded with recovery the very next day, depriving the petitioner of a reasonable opportunity to present its case. They warned that continued recoveries could disrupt BRT operations and adversely affect hundreds of thousands of daily commuters.
During the hearing, Justice Syed Arshad Ali observed that the Supreme Court has already settled the legal position, making it mandatory to grant taxpayers a reasonable time after the issuance of a notice before any recovery action.
The judge remarked that the FBR seemed unwilling to spare even public-sector institutions from such measures.Representing the tax authorities, Additional Commissioner Inland Revenue Tariq Dawar argued that Section 140 of the Income Tax Ordinance permitted immediate recovery following the issuance of a notice.
However, the court observed that the Supreme Court has already declared such an interpretation unlawful and emphasised the requirement of providing a reasonable time to the taxpayer before any recovery process.
Assistant Attorney General Rahat Ali Nehqi appeared on behalf of the federal government.After preliminary arguments, the bench issued notices to the FBR and other respondents, sought detailed replies and adjourned further proceedings until July 28.
