IHC suspends FBR super tax recovery notices issued to three independent power producers 

The Islamabad High Court has suspended notices issued by the Federal Board of Revenue to three independent power producers for the recovery of super tax, citing failure to follow the procedure laid down in the Income Tax Ordinance, 2001, Business Recorder reported. 

The court issued the order while hearing petitions filed by the companies challenging recovery actions taken by the Corporate Tax Office Islamabad.

According to the petitions, the tax authorities initiated recovery proceedings without issuing the mandatory notice under Section 137 of the Income Tax Ordinance, which requires giving taxpayers time to deposit the assessed tax liability before enforcement measures are taken.

The companies informed the court that although the judgment of the Federal Constitutional Court regarding super tax is binding on the tax department, the authorities did not comply with the procedural requirements set out in the law.

The petitioners said the tax department amended their deemed assessment orders under Section 122(5A) of the ordinance, which increased their taxable income and resulted in higher super tax liability.

Following the amendments, the Corporate Tax Office Islamabad attached the companies’ bank accounts through notices issued under Sections 138 and 140 of the ordinance.

However, the companies argued that the tax authorities bypassed Section 137, which requires issuing a demand notice allowing the taxpayer to voluntarily pay the assessed amount before initiating recovery measures.

The petitioners also said they had filed appeals with the Commissioner Inland Revenue (Appeals), but no stay order against the recovery was granted.

In its order, the Islamabad High Court noted that the petitioners had not challenged the legality of Section 4C of the Income Tax Ordinance, under which super tax is imposed, but had instead questioned the procedure followed by the tax authorities.

The court observed that the arguments presented by the petitioners warranted consideration and issued notices to the tax authorities.

The operation of the recovery notices issued on January 30 and 31, 2026 by the Corporate Tax Office Islamabad will remain suspended until the next hearing, the court said.