The Islamabad High Court (IHC) has issued notices to the Federal Board of Revenue (FBR) and the Attorney General of Pakistan, requesting their comments on the imposition of Federal Excise Duty (FED) on the transfer or allotment of immovable properties by developers and builders.

The Defence Housing Authority (DHA) Islamabad has filed a legal challenge against the validity of Table-III, First Schedule of the Federal Excise Act 2005. The respondents in this case include the Federation of Pakistan, represented by the Secretary of Revenue, the Chairman of the Federal Board of Revenue, and the Commissioner of Inland Revenue at the Large Taxpayer Office in Islamabad.

The FED on the allotment or transfer of commercial properties has been contested by the DHA, a local authority involved in the sale and purchase of land, which also performs various functions for the residents within its jurisdiction.

In writ petition, number 2672 of 2024, the Chief Justice of the IHC noted that the petitioner argued the recent amendment imposes an Excise Duty on the transfer or allotment of properties by developers and bidders. The petitioner further contended that no corresponding amendment was made to the charging section of the Federal Excise Act, 2005, which is necessary for such a levy. They argued that the Excise Duty is applicable to goods and services, and the transfer of immovable property does not fall under these categories.

The counsel for the petitioner highlighted that immovable property does not qualify as goods, rendering Table-III of the Act beyond its legal authority.

The IHC order stated, “Notice to the respondents. Since the vires of a Federal Statute have been challenged, notice under Order 27-A CPC shall also be issued to the Attorney General for Pakistan.”