ISLAMABAD: The Islamabad High Court (IHC) has issued a landmark ruling condemning what it termed “institutionalised manipulation” within the Federal Board of Revenue (FBR) and directed its chairman to take “necessary action” against officers involved in hindering tax collection under the guise of statutes.

In a detailed 41-page judgment authored in the Huawei Technologies Pakistan Ltd case, a two-judge bench led comprising Justice Arbab Mohammad Tahir and Justice Raja Inaam Ameen Minhas declared the FBR’s attempt to extend a time-barred audit as unlawful, arbitrary, and procedurally void, while singling out the tax authority’s systemic failure to comply with statutory discipline.

The judgment asserted that “the present matter is either a classic case of institutionalised manipulation or simply negligence or incompetency.”

It went further to note that such acts by public officials “inflict greater injury upon the public exchequer than the conduct of an evading taxpayer.”

The bench pointedly ordered the court registrar to forward a certified copy of the judgment to the chairman FBR for appropriate disciplinary and administrative action in view of the findings in the order detailing alleged institutional impropriety.

The case pertained to audit proceedings for tax year 2019 relating to Huawei Technologies Pakistan Ltd, whose audit was initiated in May 2022. Under the Income Tax Ordinance 2001, the statutory outer limit for completing such audit-related actions was six years — expiring on Dec 31, 2024.

On Jan 16, the FBR issued a “condonation letter” under Section 214-A of the ordinance, granting itself a six-month extension to finalise the audit. Huawei challenged this as illegal, arguing the timeline had already lapsed.

In its defence, the FBR contended that it had the general power to condone delays. However, the court found the department’s conduct revealed deeper procedural and ethical lapses amounting to deliberate manipulation of facts and law.

Published in Dawn, December 25th, 2025