ISLAMABAD: The Supreme Court (SC) has ruled that new penalties cannot be imposed on tax cases that were finalised in the past, declaring such retrospective financial burdens unlawful.
A five-member larger bench issued the verdict, authored by Justice Aqeel Ahmed Abbasi.
The court held that a tax penalty is not a mere procedural action but an additional financial liability, and that no new penalty can be imposed on old cases without clear legal authority.
The bench ruled that tax matters that have already been concluded cannot be reopened to impose fresh obligations.
It also resolved a legal contradiction that had existed in earlier judicial rulings on the matter and dismissed the tax department’s appeal, explicitly barring the retrospective enforcement of tax penalties.
The verdict further clarified that if a bench of equal standing disagrees with this ruling in the future, the matter must be referred to a larger bench.
It stated that subsequent legislation cannot place a burden on old tax matters, and that a law cannot create new financial liability retroactively. Old tax assessments, the court said, cannot be subjected to the weight of newly introduced laws.
