IHC to Review Imposition of Excise Duty on Property Transfers Following DHA’s Challenge

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

The Defence Housing Authority (DHA) Islamabad has raised concerns about the legality of Table-III in the First Schedule of the Federal Excise Act 2005.

The parties involved in this case include the Federation of Pakistan, represented by the Secretary Revenue, the Chairman of the FBR, and the Commissioner of the Large Taxpayer Office in Islamabad.

DHA Islamabad, which serves as a local authority managing land transactions and providing various services for its residents, argued that the recent amendment imposing Excise Duty on property transfers did so without a corresponding change in the Act’s charging section. They contend that Excise Duty should be applicable solely to goods and services, asserting that property transfers do not meet this definition.

The DHA’s legal counsel argued that immovable property cannot be classified as goods, rendering Table-III invalid under the Act.

The IHC’s order stated: “Notice to the respondents. As the legality of a federal statute is being challenged, a notice under Order 27-A CPC will also be sent to the Attorney General for Pakistan.”