ISLAMABAD: The Islamabad High Court (IHC) has suspended recovery notices issued by the Federal Board of Revenue (FBR) against three Independent Power Producers (IPPs) for the collection of Super Tax, citing failure to follow the procedure prescribed under the Income Tax Ordinance 2001.
The IPPs challenged the notices after recovery proceedings were initiated without providing the mandatory time period required under Section 137 of the ordinance. The companies informed the court that although the judgment of the Federal Constitutional Court regarding Super Tax is binding on the tax authorities, the FBR failed to comply with the required legal procedure.
According to case details, the Corporate Tax Office (CTO) Islamabad initiated recovery actions without first issuing a notice under Section 137, which is a mandatory step for recovering Super Tax imposed through orders under Section 4C of the ordinance. The companies argued that bypassing this step rendered the recovery proceedings legally flawed.
Earlier, deemed assessment orders of the companies had been amended under Section 122(5A) of the ordinance, increasing their taxable income and resulting in higher Super Tax liabilities.
The CTO subsequently attached the bank accounts of the companies by issuing notices under Sections 138 and 140 of the ordinance. However, the companies maintained that the authorities failed to issue the mandatory notice under Section 137, which allows taxpayers time to voluntarily deposit the determined tax liability.
The IPPs had earlier filed appeals before the Commissioner Inland Revenue (Appeals), but no stay order against the recovery proceedings was granted.
During the hearing, counsel for the petitioners clarified that they were not challenging the legality of Section 4C itself but contended that the statutory requirements of the law had not been fulfilled. The counsel argued that the tax authorities were legally bound to first issue a notice under Section 137 before initiating recovery under Section 138.
The petitioners further maintained that directly attaching bank accounts without complying with the legal procedure violated constitutional protections under Articles 4, 8, 9, 10A, 18, 23, 24, and 25 of the Constitution.
Taking note of the arguments, the IHC observed that the submissions presented by the petitioners’ counsel warranted consideration. The court issued notices to the respondents and ordered that the operation of the impugned recovery notices dated January 30 and 31, 2026, issued by CTO Islamabad, shall remain suspended until the next hearing.
The court also stated that the interim relief would automatically stand withdrawn if the petitioners fail to pursue the case in subsequent proceedings.
Story by Sohail Sarfaraz
