The Lahore High Court has restrained the Federal Board of Revenue (FBR) from taking coercive action against Multan Electric Power Company (Mepco) over a disputed tax demand of Rs4.53 billion.
A two-member bench comprising Justice Jawad Hassan and Justice Abid Hussain Chattha issued the order while hearing a petition filed by Mepco challenging FBR orders issued on Aug 5 and Sept 7, 2026.
The tax authorities had demanded payment of Rs4.53 billion under Section 140(1) of the Income Tax Ordinance, 2001, relating to tax years 2018-2022 and 2023-2024.
Mepco’s counsel, Muhammad Ali Siddiqui, Fatima Safeer and S.M. Kumail Haider Naqvi, argued that the company had not avoided the mandatory Alternative Dispute Resolution (ADR) process.
The lawyers said the ADR committee had heard the matter but failed to reach a final decision on the key issue concerning the minimum tax rate applicable to the company.
Responding to the court’s concerns regarding the maintainability of the petition, Mepco’s counsel referred to Section 134A of the Income Tax Ordinance, which provides a specific mechanism for resolving tax disputes involving state-owned enterprises.
According to the counsel, the relevant committee is required to be constituted within 15 days. If the committee fails to decide the matter within the prescribed period, the law provides an appellate mechanism.
The court issued notices to the FBR and other respondents, directing them to submit their replies. The bench also sought assistance from the Attorney General for Pakistan on the legal issues involved.
Meanwhile, the court granted Mepco interim relief and restrained the FBR from taking coercive measures against the power utility until further proceedings on the petition.
