LHC bars FBR from coercive action against Mepco

The Lahore High Court has barred the Federal Board of Revenue from taking coercive measures against Multan Electric Power Company (Mepco) for recovering more than Rs4.53 billion in disputed back taxes, according to Dawn.

A two-judge bench, comprising Justice Jawad Hassan and Justice Abid Hussain Chattha, passed the order as interim relief on a petition filed by Mepco. The petition sought to set aside two FBR orders issued on Aug 5 and Sept 7, 2026. The orders had demanded payment under Section 140(1) of the Income Tax Ordinance, 2001, covering tax years 2018–2022 and 2023–2024.

TechJuice reported that Mepco's counsel: Muhammad Ali Siddiqui, Fatima Safeer and S.M. Kumail Haider Naqvi: argued before the court that the utility had not bypassed the mandatory Alternative Dispute Resolution process. They said the ADR committee had heard the case but had not conclusively resolved the central issue of which minimum tax rate should apply.

When the bench raised concerns about the petition's maintainability, the lawyers cited Section 134A of the ordinance. The provision lays down a separate mechanism for state-owned enterprises: a committee must be constituted within 15 days, and if it fails to reach a decision within that period, the law provides a specific appellate route. Mepco falls under this category as a state-owned power distribution company.

The bench issued notices to the FBR and other respondents, directing them to submit replies, and sought assistance from the attorney general for Pakistan. It also granted Mepco interim relief, barring the FBR from taking coercive measures against the power utility while the petition remains pending. The court did not decide the underlying tax demand; it only restrained recovery pending the outcome.