Immovable property tax: DHA moves IHC against FED imposition

ISLAMABAD: Islamabad High Court (IHC) has summoned the Federal Board of Revenue (FBR) and the Attorney General of Pakistan in a plea filed by the Defence Housing Authority (DHA) challenging the legality of Table-III, First Schedule of the Federal Excise Act 2005.

IHC has issued notice to FBR and the Attorney General, seeking their comments on the imposition of Federal Excise Duty (FED) on the transfer or allotment of immovable properties by developers and builders.

DHA in its petition made the Federation of Pakistan through the Secretary of Revenue; Chairman Federal Board of Revenue and Commissioner Inland Revenue, Large Taxpayer Office, Islamabad the respondents.

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

DHA Islamabad, a real-state group, contends that the recent imposition of excise duty on property transfers is beyond the scope of the Federal Excise Act.

The petition further argued that through an amendment to Table-III of the Federal Excise Act, 2005, the duty was imposed on property transactions. However, no corresponding change was made to the charging section of the Act, which governs the categories of goods and services subject to excise duty.

DHA’s counsel pointed out that immovable property does not fall within the domain of Table-III, which solely applies to goods and services.

The petitioner further claimed that the inclusion of property transfers under excise duty is legally questionable, arguing that such transactions do not fit the definition of “goods” within the framework of the Act. As a result, the petition challenges the vires (legal authority) of Table III of the First Schedule.