The Civil Aviation Authority (CAA) has taken a long-standing tax dispute of over Rs50 billion to the Supreme Court, challenging the Federal Board of Revenue’s (FBR) claim over the aviation regulator’s tax liability.
This legal escalation comes despite an earlier directive from the Sindh High Court to resolve the inter-departmental matter through the federal government’s Alternative Dispute Resolution Committee (ADRC) or the federal cabinet.
According to a news report, the CAA filed a civil petition for leave to appeal, just days before the FBR expects a critical payment of Rs9.5 billion in advance income tax from the CAA, which is due by September 25.
The payment is essential for the FBR as it faces pressure to meet its monthly revenue target of Rs1.2 trillion. As of Monday, the FBR had collected Rs368 billion and must raise Rs828 billion over the rest of the month, an average of Rs60 billion per day.
The aviation regulator’s decision to move the matter to the Supreme Court underscores growing tensions between federal agencies over tax obligations. The CAA had previously contested the advance tax levy in the Sindh High Court, which advised that the matter should be resolved through the ADRC or the federal cabinet, under Rule 8 of the Rules of Business. However, the CAA rejected this approach, preferring a legal judgment from the Supreme Court.
The FBR maintains that the CAA, as a state-owned enterprise, is obligated to pay taxes under the Income Tax Ordinance of 2001, with an estimated annual liability ranging between Rs50 billion and Rs60 billion.
The CAA, on the other hand, argues that it should be exempt from these taxes due to its regulatory role and its bifurcation into two entities—the Pakistan Airports Authority (PAA) and the Pakistan Civil Aviation Authority (PCAA)—earlier this year.
Earlier this year, the FBR successfully recovered Rs29 billion from the CAA. However, the aviation regulator’s claim for an exemption continues to complicate the revenue collection process.
