Illegal tax refund probe: LHC disposes of FBR pleas against FIA

ISLAMABAD: Writ petitions filed by the Federal Board of Revenue (FBR) against the Federal Investigation Agency (FIA) for an inquiry into “illegal tax refunds” issued by the officers of LTO Lahore, have been disposed of by the Lahore High Court (LHC) and settled inter-departmental accountability and taxpayer confidentiality.

Justice Tariq Saleem Sheikh, firmly declined to exercise constitutional jurisdiction under Article 199, holding that disputes between attached departments of the Federal Government must first resolve through the consultative mechanism prescribed under Rule 8(2) of the Rules of Business, 1973, ultimately falling within the domain of the Prime Minister.Notably, the LHC emphasised that the dispute between FBR (Revenue Division) and FIA (Interior Division) is a classic inter-divisional conflict, constitutionally required to be resolved through ministerial consultation and, if needed, submission to the Prime Minister or Cabinet. Judicial intervention, the Court warned, should not convert into the “Federation litigating against itself.”

The case stemmed from Enquiry No E-77/2024, in which FIA officials issued multiple notices under the FIA Act, CrPC and AMLA, demanding production of five years’ confidential income and sales tax refund records of LTO Lahore. Despite repeated objections by FBR citing section 216 of the Income Tax Ordinance, 2001, the FIA went a step further and raided LTO Lahore on 23.07.2024, forcibly seizing records under a magistrate-issued search warrant.

While declining relief on procedural grounds, the LHJC made several critical observations that FIA Act does not enjoy overriding supremacy over fiscal statutes, unlike NAB laws.

Protection remains applicable unless offences under FIA’s own statutory mandate are clearly made out. Fishing expeditions into taxpayer data violate the legislative scheme of tax administration, it added.

Copyright Business Recorder, 2026