ISLAMABAD: The Islamabad High Court on Wednesday suspended the collection of property tax from residents of the federal capital, providing interim relief to taxpayers challenging the levy imposed by the Metropolitan Corporation Islamabad (MCI).
A single bench of the IHC issued the order during the first hearing of a writ petition filed by Muhammad Munir Ahmed Chaudhary and Ahmed Hasan Rana, who also appeared as counsel for petitioner No. 1.
The petitioners challenged Gazette Notification No. 404(1)-4/2024, dated March 14, 2024, and a subsequent property tax bill of Rs846,398 issued to them on April 24, 2026. The matter has now become a test case for thousands of property owners across the capital facing similar tax demands.
During the proceedings, counsel for the petitioners argued that the imposition of property tax through the impugned notification was in direct violation of the Islamabad Capital Territory Local Government Act, 2015, and the Urban Immovable Property Tax Act, 1958.
Court grants interim relief to taxpayers, issues notices to MCI, CDA and federal authorities
It was contended that the Metropolitan Corporation was not empowered to levy property tax on the annual value of buildings and lands under Section 89(1) of the 2015 Act. The counsel further submitted that the notification had been unlawfully issued by an administrator in violation of Section 75(e) of the Act, which requires such fiscal measures to be initiated only by an elected local government body, not an appointed administrator.
The counsel also argued that the notification could not be sustained as it lacked the specific authorisation required under Section 3 of the 1958 Act. According to the petitioners, the respondents had exceeded their legal authority by issuing the impugned notification without following the mandatory procedure prescribed under the law.
The counsel maintained that the tax demand was not only illegal but also arbitrary, as it had been imposed without proper assessment and without affording taxpayers an opportunity to be heard.
In support of their arguments, the petitioners relied on two key Supreme Court judgments. The first was Haji Faqir Hussain and seven others versus Secretary, Provincial Board of Revenue, NWFP, Peshawar, and 15 others, in which the Supreme Court had categorically held that property tax could not be imposed merely on the basis of a notification issued by the Local Government Department without a specific notification under Section 3 of the 1958 Act.
The counsel argued that the facts of the present case were squarely covered by this judgment.
After hearing the preliminary arguments, the court found that the petitioners had made out a prima facie case for interim relief. The bench observed that the legal questions raised by the petitioners required thorough examination and that the balance of convenience tilted in favour of granting protection to taxpayers until the matter was finally adjudicated.
Consequently, the court issued notices to all respondents, including the Metropolitan Corporation of Islamabad, its Directorate of Revenue, the Capital Development Authority, and the Federation of Pakistan through the secretaries of the Interior and Cabinet divisions.
The bench suspended the operation of the impugned property tax bills until the next date of hearing and adjourned the case for four weeks. This means that taxpayers who have received similar bills will not be required to make payments until the court takes up the matter again.
Published in Dawn, June 18th, 2026