LAHORE: Tax experts have objected to the sales tax department for passing orders after expiry of statutory time limits while treating the tax cases.
They are of the view that the departmental proceedings after the expiry become invalid because these time limits are mandatory. They asserted that the specific insertion of time periods through statutory amendments showed a clear legislative intent to make these timelines mandatory. The use of “shall,” they argued, indicated a mandatory requirement, particularly since no such time limit existed prior to 2000, and its later inclusion was deliberate.
The department, on the other hand, believes that the time limits are meant only to ensure speedy proceedings and should not invalidate lawful tax liabilities. Ironically, the department deals with all such time limits as directory, saying that in fiscal laws, especially, such time limits are aimed at efficient and timely tax collection. They contended that the time limits are intended to enforce administrative discipline, not to cancel tax liabilities entirely. According to the departmental sources, the absence of any explicit penalty for missing these deadlines supports their view that the time limits are not mandatory, rather than mandatory.
According to the department, the time limits prescribed for passing orders under sections 11(5), 11G, and the former section 36 of the Sales Tax Act are mandatory or merely directory and the use of the term ‘shall’ in these provisions does not impose a strict legal obligation to adhere to the specified timelines.
However, the tax circles are of the considered view that the language of sections 11(5), 11G(2), and section 74 suggests that both uses of ‘shall” in the provisions are mandatory, especially when combined with the words ‘in no case.’ They said that reading the timelines as directory would render critical parts of the statute meaningless. Section 74 does not give FBR unlimited power to extend time. Any extension must be based on objective and reasonable grounds to strike a fair balance between administrative discretion and legal certainty, helping prevent delays, abuse of power, and uncertainty in tax matters. Furthermore, they added that the 2024 amendments retaining the same time structure strongly confirmed Super Asia’s interpretation.
Copyright Business Recorder, 2025
