High Court Questions Legality of NBR S.R.O.s Imposing VAT on Judicial Auction of Immovable Property

On 9^th July, 2026, the High Court Division has issued a Rule questioning the legality of S.R.O.s framed by the National Board of Revenue (NBR) enabling imposition of Value Added Tax (VAT) on purchasers of immovable property sold through judicial auction. A Division Bench comprising Mr. Justice Sardar Md. Rashed Jahangir and Mr. Justice Kazi Waliul Islam issued the Rule in a writ matter arising out of an auction conducted under the Artha Rin Adalat Ain, 2003.

The Rule challenges the legality of a 2019 S.R.O., as amended by a 2025 S.R.O., defining “নিলামকৃত পণ্যের ক্রেতা” (purchaser of auctioned goods) for VAT purposes. It raises important questions regarding the consistency of the S.R.O.s with the Value Added Tax and Supplementary Duty Act, 2012, particularly Sections 2(60) and 26, read with Paragraph 7(ছ) of Part II of the First Schedule, which defines “goods” as only including movable property and expressly exempts the sale, transfer and registration of land (other than by land development and building construction companies) from VAT. It was further contended that delegated legislation, i.e. SROs of the NBR, cannot enlarge the scope of the parent statute so as to impose VAT on the judicial sale of mortgaged immovable property conducted under the Artha Rin Adalat Ain, 2003.

Mahbub & Company represented the auction purchasers in securing the Rule, raising important questions concerning the limits of delegated legislation and the scope of the VAT regime in relation to court-conducted auctions of immovable property. The outcome of the proceedings is expected to have a significant implication on imposition of VAT in auctions conducted under the Artha Rin Adalat Ain (Money Loan Court Act), while providing much-needed clarity on the extent of the NBR’s rule-making powers under the existing statutory framework.

Saqeb Mahbub, Partner and Sajid Hassan, Associate represented the clients on behalf of Mahbub & Company.