Challenging an SRO in the High Court in 2026: Grounds, Procedure and the Auction VAT Ruling

Challenging SRO in High Court: the 2026 legal framework

Challenging SRO in High Court proceedings is how taxpayers, importers and regulated businesses in Bangladesh push back when a statutory regulatory order goes further than Parliament allowed. SROs are the working machinery of fiscal law. Every budget brings dozens of them, from the National Board of Revenue, the Ministry of Finance and other ministries, changing rates, exemptions, service codes and procedures. Most are lawful. Some are not. When an SRO imposes a tax the parent Act never authorised, reaches back in time, or picks out one group for worse treatment, Article 102 of the Constitution gives the High Court Division power to declare it without lawful authority.

This guide explains what an SRO is in law, the grounds on which the courts strike one down, the September 2026 High Court Division ruling on VAT on property bought at Artha Rin auctions, and the limits the Appellate Division has placed on these challenges. It also covers the alternative remedy rule, interim stays, evidence and the practical steps that decide whether a challenge succeeds.

Summary: An SRO is delegated legislation. It is valid only if it stays within the power the parent Act confers and within the Constitution, including Article 83, which bars any tax not levied by or under an Act of Parliament. The High Court Division can declare an SRO, or part of one, without lawful authority where it exceeds the Act, creates a new tax burden, operates retrospectively without authority, or is arbitrary or discriminatory. The Appellate Division has also made clear that exemptions may be lawfully withdrawn and that statutory appeals cannot simply be bypassed.

Key point: On 1 September 2026 the High Court Division declared without lawful authority the part of a VAT SRO that treated buyers of immovable property at Artha Rin auctions as "auction buyers of goods", holding that delegated legislation cannot create a new tax on property that Parliament has exempted.

At a glance

Swipe or scroll →

Table of Contents

What an SRO is and where its authority comes from

A statutory regulatory order is a notification published in the official Gazette under a power that an Act of Parliament delegates to the Government or to a body such as the National Board of Revenue. Article 152 of the Constitution defines "law" to include any order, rule, regulation, bye-law or notification having the force of law in Bangladesh, so a properly made SRO binds taxpayers and officials alike.[1] The force of an SRO is borrowed, not original. It comes from the parent Act, and it reaches only as far as that Act allows.

The three main fiscal statutes show how the delegation works. Under section 126 of the Value Added Tax and Supplementary Duty Act 2012 the Government may, by Gazette notification, exempt the import or supply of goods or services from VAT, supplementary duty or advance tax, and section 135 lets the Board make rules for the purposes of the Act and subject to its provisions.[2]

Section 76 of the Income Tax Act 2023 lets the Board grant or cancel tax exemptions by notification, and expressly provides that a retrospective tax exemption shall not be granted.[3] Section 25 of the Customs Act 2023 allows the Government, after consulting the Board and in the public interest, to exempt imported or exported goods from duties and taxes by notification.[4]

Why the constitutional frame matters

Two constitutional provisions sit over every fiscal SRO. Article 83 states that no tax shall be levied or collected except by or under the authority of an Act of Parliament.[1] An SRO that imposes a tax the Act does not authorise therefore fails twice: it exceeds the parent statute and it breaches the Constitution. Articles 27 and 31 add equality before the law and the right to be treated only in accordance with law, which supports challenges to arbitrary or discriminatory classifications. These provisions are the foundation of every case on challenging SRO in High Court proceedings.

Grounds for challenging SRO in High Court

The grounds overlap, and a strong petition usually pleads more than one. What follows reflects how the High Court Division and the Appellate Division have actually decided fiscal SRO cases.

The SRO goes beyond the parent Act

The most common and most successful ground in challenging SRO in High Court is simple excess of power. If the Act taxes supplies of goods and services and excludes transfers of immovable property, an SRO cannot bring land sales into the net by redefining a service code.

In Eastern Bank Ltd v Bangladesh, decided on 27 February 2024, the High Court Division examined SRO No 149-Ain/2020/110-Musak, which listed auctioneers and auction purchasers among those liable to VAT at source.[6] The Court held that the NBR's power to explain and issue orders could be exercised only within the scope of the Act, and that an explanation extending the auction-purchaser service code to immovable property went beyond the Act. It also held that a decree-holder bank selling mortgaged property through an Artha Rin Adalat was not an "auctioneer", following an earlier High Court Division decision in Writ Petition No 8232 of 2022.[6]

A new tax without parliamentary authority

Article 83 turns excess of power into a constitutional defect where the result is a fresh tax burden. Courts look at substance: an SRO that converts an exempt transaction into a taxable one, or adds a levy on top of tax already paid on the same value, is a new tax in all but name. An early example is the Teletalk SIM card case, in which a High Court Division bench in May 2006 declared illegal an SRO of 9 June 2005 requiring subscribers to pay an extra Tk 1,200 as VAT on each SIM card, on a public interest petition filed by six subscribers.[12]

Retrospective burdens

Delegated legislation is presumed to operate prospectively. The Appellate Division applied that principle in Government of Bangladesh v Ocean Containers Ltd on 25 May 2022. The NBR had used SRO No 354-Ain/99, dated 2 December 1999, to add container terminals to the list of physical infrastructure facilities eligible for a tax holiday, with effect from publication. The High Court Division had struck down the prospective-effect clause, but the Appellate Division reversed it: the SRO took effect from its date, and the company could not claim the exemption for the earlier period.[8]

For anyone challenging SRO in High Court on this ground, the lesson cuts both ways. A taxpayer cannot use the presumption to make a beneficial SRO retrospective, and the revenue cannot use an SRO to impose a burden on past transactions without clear statutory authority.

Arbitrary or discriminatory classification

An SRO that singles out a group without rational basis can offend Articles 27 and 31. The courts give fiscal policy wide latitude, however, and the Appellate Division has said that withdrawal of tax benefits is not open to judicial interference unless there is clear evidence of arbitrariness or bad faith.[9] A discrimination ground therefore needs evidence: comparators, the policy rationale offered, and why the line drawn bears no relation to it.

Interference with accrued rights at the point of assessment

Timing rules in the parent Act can defeat a later SRO. In Commissioner of Customs v Abul Khair Steel Mills Ltd, decided on 17 January 2023, the importer had opened its letter of credit and filed an in-bond bill of entry before later notifications removed its goods from a valuation facility and fixed a tariff value. The Appellate Division held that the value and rate of duty are those prevailing when the in-bond bill of entry is presented, and that later redeterminations do not affect them.[10]

Importers should note, however, that section 31 of the Customs Act 2023 now expressly includes duty payable on withdrawal of an exemption whether before or after the conclusion of a sales contract or the opening of a letter of credit.[4] Opening a credit alone no longer freezes an exemption.

The 2026 ruling on VAT on auction property

The most significant recent decision on challenging SRO in High Court proceedings concerns judicial auctions of mortgaged property. A borrower defaulted on a working capital loan, the bank obtained a decree in the Artha Rin Adalat, and the mortgaged property was sold at auction under section 33(1) of the Artha Rin Adalat Ain 2003. The highest bidders paid the full price of Tk 24 crore. The court then ordered them to deposit 15% VAT on the auction price, plus stamp duty.[5]

The buyers filed a writ petition, and a High Court Division bench issued a Rule on 8 April and stayed the direction. On 1 September 2026 a bench of Justice Sardar Rashed Jahangir and Justice Ziaul Haque made the Rule absolute. It declared the Adalat's direction to pay 15% VAT at source without lawful authority, and declared without lawful authority the part of the SRO that included buyers of immovable property within the term "auction buyer of goods".[5]

The reasoning is the heart of the case. Where Parliament has kept the sale or transfer of property outside VAT, subordinate or delegated legislation cannot create a new tax liability on that property.[5] That builds on Eastern Bank, where the High Court Division had already found the NBR's extension of the auction-purchaser code to immovable property beyond the Act but had not needed to strike it down because the bank was not a purchaser.[6]

Counsel told the press that buyers at judicial auctions of immovable property would no longer have to pay the 15% VAT and that the ruling would affect such auctions across the country.[5] The Government may seek leave to appeal, so auction buyers should check the position before paying and preserve their objections in writing.

What the courts will not do

Successful cases on challenging SRO in High Court are built on legal excess, not on disagreement with policy. Three Appellate Division decisions mark the boundaries.

Exemptions are privileges and can be withdrawn

In Government of Bangladesh v City Edible Oil Ltd, decided on 3 March 2025, companies in economic zones had been granted ten-year income tax exemptions by SRO No 81 of 2019. A later SRO, No 104 of 2020, excluded goods such as edible oil, sugar and cement. The High Court Division had ruled for the companies. The Appellate Division allowed the Government's appeal and held that exemptions granted under the Income Tax Ordinance 1984 were conditional, discretionary and subject to lawful withdrawal, and that promissory estoppel cannot limit sovereign fiscal discretion unless a statutory guarantee exists.[9] Investors who want certainty must look for statutory or contractual protection, not policy statements.

Budget speeches are not law

In Government of Bangladesh v Pragati Insurance Ltd, decided on 30 May 2022, insurers relied on the Finance Minister's 2018 budget speech admitting that VAT on insurance agent commission caused double taxation, and on SRO No 167-Ain/2018/790-Musak withdrawing that VAT. The Appellate Division held that a budget speech is a financial proposal, not an enactment, and that the 2018 SRO, having no express retrospective effect, could not wipe out earlier demands.[7]

Statutory adjudication should not be bypassed lightly

The same Pragati Insurance judgment held that where a demand-cum-show-cause notice had started adjudication and the VAT Act provided an appeal, the writ petitions were not maintainable at that stage.[7] That leads to the most important tactical question in any SRO case.

The alternative remedy rule and the vires exception

Article 102(2) allows the High Court Division to grant certiorari or mandamus only if satisfied that no other equally efficacious remedy is provided by law.[1] Fiscal statutes provide layered remedies. Under the VAT Act 2012, an appeal lies to the Commissioner (Appeal) and then to the Customs, Excise and VAT Appellate Tribunal, generally within 90 days and on payment of a pre-deposit of part of the tax demanded, with a further appeal to the High Court Division on questions of law.[2]

Those remedies are adequate for disputes about facts, classification and quantum. They are not adequate where the complaint is that the SRO itself is void. An appellate officer or tribunal applies the SRO as written. It cannot declare delegated legislation without lawful authority. That is why a vires challenge is the clearest case for challenging SRO in High Court directly.

The High Court Division has also confirmed that the alternative remedy rule yields where an authority acts wholly without jurisdiction. In Bengal Mines Development Corporation Ltd v Commissioner of Customs, Excise and VAT, decided on 11 December 2023, a Dhaka commissionerate had demanded VAT for a unit that SRO No 194-Ain/2012/652-Musak placed under the Chattogram commissionerate. Rejecting the argument that the petitioner should have appealed, the Court held that where illegality is apparent on the face of the record and the authority has acted without jurisdiction, the writ forum is not barred, and it quashed that part of the demand.[11]

The practical rule is this. Where the attack is on the SRO itself, or the officer had no jurisdiction at all, file a writ. Where the SRO is valid but wrongly applied, use the statutory appeal and keep its deadlines, or plead both with care. Our guide to VAT writ petitions and guide to income tax writ petitions explain how this plays out in each regime.

How the procedure works

A challenge to an SRO is brought as a writ petition in the special original jurisdiction of the High Court Division. The general mechanics are set out in our guide to writ petitions in Bangladesh. The steps below reflect how an SRO case is usually prepared and run.

Swipe or scroll →

Interim stays and the Attorney General

Most petitioners need a stay of the demand or of the SRO's operation as it applies to them. Under Article 102(4), where an interim order is likely to harm the public interest, the Court may not make it unless the Attorney General has had reasonable notice and an opportunity to be heard.[1] In revenue matters the State routinely opposes stays, so the petition should explain why the balance favours relief, offer security where appropriate, and seek a stay limited to the petitioner rather than suspension of the SRO for everyone.

Who may apply

The petitioner must be a person aggrieved: an importer, supplier or taxpayer facing a demand under the SRO, or one whose exemption or rate is directly affected. Trade associations can support or join a challenge, and public interest standing is available in cases of wide impact, as the Teletalk subscribers showed.[12] A company with an actual demand is usually the strongest petitioner for challenging SRO in High Court, because the Court sees a concrete grievance.

Appeal to the Appellate Division

Article 103 gives the Appellate Division jurisdiction over High Court Division judgments.[1] In fiscal SRO cases the Government regularly seeks leave, and three of the decisions discussed here were reversals of High Court Division judgments.[7] [8] [9] A petitioner should plan for that stage from the outset, keeping the record clean and the legal grounds tightly framed.

Comparing the leading grounds

The table below summarises how the main grounds for challenging SRO in High Court proceedings have fared in recent decisions. On a phone, scroll it sideways.

Building the evidence

Cases on challenging SRO in High Court are won on documents. The petition should annex the full Gazette text of the SRO and any amending SROs, the relevant sections of the parent Act and its schedules, the demand or order under challenge, and every representation made to the NBR or ministry. Where the argument is that a transaction is outside the charging provision, show precisely where the Act excludes or exempts it, as the auction buyers did with the treatment of immovable property.[5] [6]

Where the argument is retrospectivity, build a clear timeline: contract dates, letter of credit, bill of entry, supply and invoice dates, and the date of Gazette publication. Where the argument is discrimination, gather comparators and the stated policy rationale. Avoid relying on budget speeches, press statements or NBR clarifications as if they were law. The Appellate Division has rejected that approach.[7]

Common mistakes to avoid

• Letting appeal deadlines lapse: if the writ fails on maintainability, a missed 90-day appeal window may leave no remedy at all.
• Attacking policy, not power: courts will not second-guess rates or exemptions that the Act allows the Government to set.
• Asking for too much interim relief: a request to suspend an SRO nationwide invites resistance; a stay confined to the petitioner's demand is more realistic.
• Delay: a challenge filed long after the SRO began affecting the petitioner faces an argument of acquiescence.
• Ignoring the parent Act's own rules: provisions such as section 76(4) of the Income Tax Act 2023 and section 31 of the Customs Act 2023 can decide the case on their own.[3] [4]

Challenging SRO in High Court: what to watch in 2026 and 2027

Three issues will shape SRO litigation over the coming year. First, the September 2026 auction ruling will be tested in practice and, quite possibly, on appeal; until the Appellate Division speaks, it is the leading authority on VAT and judicial sales of immovable property.[5] Second, City Edible Oil makes it harder to rely on long-dated exemptions granted by notification, which matters for investors in economic zones and hi-tech parks.[9]

Third, the Finance Act 2026 and the SROs issued with it will generate the usual wave of disputes over service codes, minimum values and rates. The right time to assess a challenge is when the SRO is published, not when the demand arrives. For related reading, see our analysis of VAT law changes in Bangladesh and the Customs Act 2023.

TRW acts for importers, manufacturers, banks and auction purchasers in challenging SRO in High Court writ proceedings and in the statutory appeals that run alongside them. Our constitutional and writ litigation practice works with our tax disputes team to decide quickly which forum fits the problem.

Frequently asked questions

What is an SRO in Bangladesh?

A statutory regulatory order is a Gazette notification issued under power delegated by an Act of Parliament, such as the VAT Act 2012, the Income Tax Act 2023 or the Customs Act 2023. It has the force of law only within the limits of the parent Act.[1] [2]

Can the High Court Division strike down an SRO?

Yes. Under Article 102 it can declare an SRO, or the offending part of it, to have been made without lawful authority and of no legal effect, as it did in September 2026 with the provision on VAT for auction buyers of immovable property.[1] [5]

What are the main grounds for challenging an SRO?

Excess of the power in the parent Act, imposing a tax without parliamentary authority contrary to Article 83, unauthorised retrospective effect, and arbitrary or discriminatory classification contrary to Articles 27 and 31.[1]

Do I have to appeal to the Commissioner (Appeal) or the Tribunal first?

Not where you challenge the validity of the SRO itself or the officer acted wholly without jurisdiction. Where the dispute is about facts or the application of a valid SRO, the courts expect the statutory appeal to be used.[7] [11]

Can an SRO impose tax retrospectively?

Delegated legislation is presumed to be prospective, and the Appellate Division has applied that presumption to fiscal SROs. The Income Tax Act 2023 also bars retrospective tax exemptions.[3] [8]

Can the Government withdraw a tax exemption granted by SRO before it expires?

Generally yes. In City Edible Oil (2025) the Appellate Division held that exemptions granted by notification are conditional and discretionary, and that promissory estoppel does not bind fiscal discretion without a statutory guarantee.[9]

Do buyers at Artha Rin auctions still have to pay VAT on immovable property?

Under the High Court Division's September 2026 ruling, the part of the SRO that treated buyers of immovable property as auction buyers of goods is without lawful authority. Check whether an appeal or stay has been granted before paying.[5]

Can I get a stay of an SRO while my writ is pending?

Yes, the Court can stay a demand or the operation of an SRO as it affects the petitioner. Where the stay may harm the public interest, the Attorney General must first be given notice and a hearing under Article 102(4).[1]

Does a budget speech or NBR clarification change the law?

No. The Appellate Division has held that a budget speech is a financial proposal, not an enactment, and that only the Act and validly issued notifications bind.[7]

Who can file a writ against an SRO?

A person aggrieved, usually the taxpayer or importer directly affected. Public interest petitions are possible where the impact is wide, as in the 2006 Teletalk SIM card VAT case.[12]