The Islamabad High Court (IHC) has enabled the recovery of approximately Rs506 billion in disputed tax revenue over the past year. The development comes after the court decided hundreds of long-pending tax and revenue cases. The details were shared in the IHC Annual Report 2025-26.
For years, large amounts of public money remained locked in litigation. Stay orders had prevented the Federal Board of Revenue (FBR) from recovering dues. Prolonged court delays slowed tax collection and affected fiscal stability.
The annual report highlights how unresolved tax disputes disrupted economic circulation. Billions of rupees remained tied up in court proceedings. This backlog placed pressure on the national revenue stream.
To address the issue, the IHC chief justice introduced key judicial and administrative reforms. These reforms followed policy directions of the National Judicial (Policy Making) Committee (NJPMC). The focus was on faster disposal of high-value tax cases.
Specialised Tax Benches Decide 788 Cases
A major reform step was the formation of specialised division benches. These benches were dedicated exclusively to tax and revenue matters. The goal was to ensure focused hearings and consistent legal interpretation.
Two specialised division benches were initially constituted. One bench included Justice Babar Sattar and Justice Sardar Ejaz Ishaq Khan. The second bench comprised Justice Muhammad Azam Khan and Justice Inaam Ameen Minhas. Later, Justice Saman Rafat Imtiaz also joined a tax bench alongside Justice Sattar.
Between April 1, 2025, and February 4, 2026, these benches decided 788 tax and revenue cases. The total disputed amount involved was Rs506.13 billion.
Bench-wise data shows that the bench led by Justice Muhammad Azam Khan and Justice Inaam Ameen Minhas decided 178 cases. These cases accounted for approximately Rs456.18 billion, the largest share of recovered revenue.
The benches headed by Justice Babar Sattar, along with Justice Sardar Ejaz Ishaq Khan and Justice Saman Rafat Imtiaz, collectively decided 610 cases. These cases involved more than Rs49.9 billion.
The disposal of these cases led to the lifting of stay orders. These orders had earlier blocked the FBR from collecting taxes. With the stays vacated, the FBR can now proceed with recovery.
The IHC noted that this intervention strengthened the national fiscal stream. It also supported broader economic objectives. The court described the initiative as a targeted, result-oriented case management strategy.
According to the report, judicial specialisation delivered tangible economic and institutional benefits in a short time. The reforms demonstrate how focused case management can unlock large-scale public revenue.
Broader Judicial Reforms Improve Efficiency
Beyond tax matters, the IHC introduced wider reforms to improve judicial efficiency. Over 3,000 bail applications were disposed of during the year. This was achieved through faster processing and improved coordination.
A dedicated police cell was established within court premises. The cell ensured rapid service of notices and timely production of records. This helped reduce procedural delays and speed up hearings.
The annual report states that these measures improved overall case management. The reforms are aimed at strengthening public trust in the justice system.
LHC Quashes PRA Sales Tax Case Against Fauji Wind Energy
In a separate development, the Lahore High Court (LHC) Rawalpindi Bench set aside a judgment of the Punjab Revenue Authority (PRA) appellate tribunal. The case involved a sales tax dispute with Fauji Wind Energy.
A Division Bench comprising Justice Jawad Hassan and Justice Mirza Viqas Rauf allowed the sales tax reference. The court quashed the show-cause notice, order-in-original, and the appellate tribunal’s order dated February 25, 2025.
Justice Jawad Hassan authored the judgment. He relied on earlier precedents, including Fauji Cement Company Limited vs Government of Punjab and Rahat Cafe, Rawalpindi vs Government of Punjab. The court held that the PRA had exceeded its statutory and territorial jurisdiction.
The dispute originated from a show-cause notice issued on June 15, 2016. The PRA alleged that Fauji Wind Energy failed to withhold Punjab Sales Tax on services received between July 1, 2014, and June 30, 2015. The payments exceeded Rs3.05 billion, with an alleged tax liability of Rs488 million.
The LHC ruled that the PRA lacked jurisdiction. The services were received and consumed in Sindh, where the company’s wind power operations are located. Therefore, Punjab authorities had no legal authority over the matter.
The ruling reinforces jurisdictional limits in inter-provincial tax matters. It also clarifies the legal framework governing sales tax on services across provinces.
