Tax Authorities Can Raid Without Notice or Case: Federal Constitutional Court

The Federal Constitutional Court ( FCC) has ruled that tax authorities can carry out raids and searches under Section 175 of the Income Tax Ordinance 2001 even when no formal proceedings are underway against a taxpayer.

A three-member bench led by Justice Aamer Farooq dismissed a petition filed by M/s Sceptre Pvt Ltd, challenging a Sindh High Court decision that had upheld a tax raid conducted on its premises in December 2025.

The petitioner had argued that such actions should only be permitted during active proceedings and that a notice issued under Section 176 could not justify a raid. However, the court rejected this view, holding that Section 175 grants broad powers to tax officials to enforce the law.

In its judgment, authored by Justice Farooq, the court emphasized that the law uses the word “enforcement,” which inherently implies the existence of a breach. This, the court noted, allows authorities to act independently of any ongoing proceedings.

While the bench expressed reservations about earlier precedent in the Agha Steels case, it maintained that the tax commissioner or any authorized officer retains the authority to conduct inspections, including without prior notice, to ensure compliance with the law.

The judgment reaffirmed that where legislative language is clear, courts are not permitted to dilute or reinterpret it. Applying this principle, the court concluded that Section 175 allows tax officials “at all times and without prior notice” to access premises, records, and digital data for enforcement purposes.