The Islamabad High Court (IHC) has issued notices to the Federal Board of Revenue (FBR) and the Attorney General of Pakistan, seeking their comments on the imposition of Federal Excise Duty (FED) on the transfer or allotment of immovable properties by developers and builders.
The court’s decision came in response to a petition filed by Defence Housing Authority (DHA) Islamabad, which has challenged the legality of the duty under Table-III, First Schedule of the Federal Excise Act, 2005.
DHA Islamabad, a local authority involved in land sales and development, filed the petition against the Federation of Pakistan, represented by the Secretary Revenue, Chairman FBR, and Commissioner Inland Revenue of the Large Taxpayer Office, Islamabad. The petitioner contends that the recent imposition of excise duty on property transfers is beyond the scope of the Federal Excise Act.
The petition argued that the duty was imposed on property transactions through an amendment to Table-III of the Act, but no corresponding modification was made to the charging section of the Act, which governs the categories of goods and services subject to excise duty.
DHA Islamabad’s counsel highlighted that excise duty applies solely to goods and services, asserting that immovable property does not fall into either category.
The petitioner further claimed that the inclusion of property transfers under excise duty is legally questionable, arguing that such transactions do not fit the definition of “goods” within the framework of the Act. As a result, the petition challenges the vires (legal authority) of Table-III of the First Schedule.
In response to the petition, the Chief Justice of the IHC issued notices to the FBR and other respondents to submit their replies. Additionally, as the validity of a federal statute has been challenged, the court ordered a notice under Order 27-A of the Civil Procedure Code (CPC) to be sent to the Attorney General for Pakistan to represent the state in the matter.
