ISLAMABAD: The Islamabad High Court (IHC) enabled the recovery of about Rs506 billion in disputed tax revenue over the past year by deciding hundreds of long-pending tax and revenue cases and lifting stay orders that had blocked the Federal Board of Revenue (FBR) from collecting dues, according to the court’s Annual Report 2025-26.
The report highlights that prolonged litigation and judicial delays in tax matters have kept vast amounts of public revenue locked in courts, adversely affecting fiscal stability and economic circulation.
To address this critical challenge, the IHC chief justice introduced a series of strategic administrative and judicial reforms aligned with the policy directions of the National Judicial (Policy Making) Committee (NJPMC).
A central pillar of this reform agenda was the constitution of specialised division benches dedicated exclusively to tax and revenue cases — a step aimed at ensuring focused hearings, uniform legal interpretation and faster resolution of high-value disputes.
Two specialised division benches were formed for this purpose. One bench comprised Justice Babar Sattar and Justice Sardar Ejaz Ishaq Khan, while another included Justice Muhammad Azam Khan and Justice Inaam Ameen Minhas. Later, Justice Saman Rafat Imtiaz also served on a tax bench with Justice Sattar, further strengthening the court’s capacity to clear the backlog.
LHC strikes down PRA sales tax case against Fauji Wind Energy on jurisdiction grounds
Between April 1, 2025, and Feb 4, 2026, the specialised benches decided 788 tax and revenue cases, involving a total disputed amount of Rs506.13bn.
According to bench-wise data, the bench led by Justice Azam Khan and Justice Minhas decided 178 cases, accounting for the largest share of revenue — approximately Rs456.18bn.
The benches headed by Justice Babar Sattar, along with Justice Sardar Ejaz Ishaq Khan and Justice Saman Rafat Imtiaz, collectively decided 610 cases, involving more than Rs49.9bn.
The adjudication of these cases resulted in the vacation of stay orders that had previously prevented the FBR from enforcing tax recovery, thereby unlocking substantial funds that had remained tied up in litigation for years.
The high court noted that this intervention has significantly contributed to the early realisation of public revenue, strengthening the national fiscal stream and supporting broader economic objectives.
The annual report describes the initiative as a “targeted, result-oriented case management strategy”, demonstrating how judicial specialisation can produce “tangible economic and institutional benefits within a relatively short period”.
Beyond tax matters, the report outlines broader institutional reforms aimed at enhancing judicial efficiency. The court expedited the disposal of over 3,000 bail applications during the year, facilitated by the establishment of a dedicated police cell within court premises to ensure rapid service of notices and timely production of records.
Fauji Wind Energy sales tax dispute
Meanwhile, the Lahore High Court’s (LHC) Rawalpindi Bench set aside a judgement of the appellate tribunal of the Punjab Revenue Authority (PRA) in a sales tax dispute involving Fauji Wind Energy, declaring the proceedings illegal and without lawful jurisdiction.
A Division Bench comprising Justice Jawad Hassan and Justice Mirza Viqas Rauf allowed sales tax reference and quashed the show-cause notice, order-in-original, and the appellate tribunal’s order dated Feb 25, 2025.
Justice Jawad Hassan authored the judgement, relying on earlier precedents including Fauji Cement Company Limited vs Government of Punjab and Rahat Cafe, Rawalpindi vs Government of Punjab, holding that the PRA had exceeded its statutory and territorial authority.
The case stemmed from a show-cause notice issued on June 15, 2016, in which the PRA alleged that Fauji Wind Energy failed to withhold Punjab Sales Tax on services received during the period July 1, 2014, to June 30, 2015, involving payments exceeding Rs3.05bn and an alleged tax liability of Rs488 million.
The court ruled that the PRA lacked jurisdiction because the services were received and consumed in Sindh, where the company’s wind power operations are located, and not in Punjab.
Published in Dawn, February 12th, 2026
