LHC: Landmark Ruling on Search Warrants for Corporate Taxpayers


In a significant development, the Lahore High Court (LHC) has delivered a ruling on writ petitions related to search warrants against corporate taxpayers. According to the LHC, the Federal Board of Revenue (FBR) is restricted from issuing search warrants for corporate taxpayers unless there are pending sales tax proceedings with the department.

The LHC’s order, which encompasses writ petition No.80210/2022, addresses common questions of law and facts raised in both petitions. These constitutional petitions were filed on the grounds that there were no ongoing proceedings against the petitioners (Private Limited Companies) in both cases. Despite the absence of pending proceedings, search warrants were issued under section 40 of the Sales Tax Act, 1990, on November 10, 2022, and May 18, 2023, as mentioned in both constitutional petitions.

According to the LHC order, the petitioners contested the impugned orders primarily on the grounds that, in the absence of any pending proceedings, orders under section 40 of the Sales Tax Act cannot be justified.

The LHC’s order further states that when the respondent department committed to withdrawing search warrants issued under section 40 of the Act and returning the secured record/documents, no further grievances from the petitioners were left to be adjudicated. The petitions are consequently disposed of accordingly, as per the LHC order.

During the proceedings, the tax department assured the LHC that the search warrant under section 40 of the Act would be withdrawn, and any record/documents secured under this section would be returned to the petitioners. However, it was submitted that any other record obtained under section 38 of the Act or submitted voluntarily by the petitioners would be retained. This ruling marks a crucial development in the legal landscape concerning search warrants for corporate taxpayers, providing clarity and guidance for future cases.

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