ISLAMABAD: The Lahore High Court (LHC) has set aside a show-cause notice issued by the Punjab Revenue Authority (PRA) to Fauji Cement Company Limited, ruling that the notice was issued without proper legal backing.

Justice Jawad Hassan delivered the verdict in response to a writ petition challenging the legality of the notice, which was dated Sept 6, 2024, and issued under Section 52 of the Punjab Sales Tax on Services Act, 2012.

The petitioner, represented by Hafiz Muhammad Idrees and other legal counsels, argued that the PRA had incorrectly invoked Section 52, which deals with tax recovery, whereas the correct provision for such notice should have been Section 14, which governs withholding agents.

During the proceedings, the court examined the difference between Section 52, which pertains to recovering unpaid taxes, and Section 14, which outlines special procedures for tax withholding.

The judgement cited legal precedent from the case Rahat Cafe, Rawalpindi vs. Government of Punjab, where the LHC ruled that tax liabilities must be assessed following due legal process.

Justice Hassan ruled that the PRA failed to fulfil mandatory legal prerequisites before issuing the notice under Section 52(1), making it legally invalid.

The court also referred to previous judgements, including Reliance Commodities (Private) Ltd. vs. Federation of Pakistan, and Chenab Flour and General Mills vs. Federation of Pakistan, which established legal principles regarding the issuance of show-cause notices.

Highlighting the constitutional principles of fair trial and due process under Article 10-A, the court ruled that any action affecting the rights of citizens must be carried out in strict accordance with the law. It further stated that PRA should have proceeded under Sections 14 and 14A of the Act instead of invoking Section 52 directly.

The judgement directed the PRA’s additional commissioner in Rawalpindi to treat the petition as a representation by the company and reconsider the matter within four weeks, ensuring due legal process and a proper hearing.

Published in Dawn, March 11th, 2025