IHC vacates stay in ZTBL tax case, clearing way for FBR recovery

ISLAMABAD: The Islamabad High Court has withdrawn its earlier stay order in a tax matter involving Zarai Taraqiati Bank Limited, allowing the Federal Board of Revenue to move ahead with recovery proceedings amounting to billions of rupees.

A division bench comprising Justice Arbab Muhammad Tahir and Justice Khadim Hussain Soomro set aside the relief that had previously been granted by an IHC single bench against an FBR tax recovery notice issued on March 12, 2026.

In its ruling, the court said the writ petition filed by ZTBL stood disposed of in accordance with the law after the enforcement of the Tax Amendment Act 2026. The bench observed that petitions of this nature had become ineffective under the amended legal framework and that no further proceedings could continue before the high court in such matters.

The judgment said the amended law contains clear provisions under which hearings in similar cases cannot proceed. As a result, the stay order issued on March 17, 2026, at the bank’s request was also vacated.

ZTBL had moved the high court after the promulgation of the Tax Amendment Act 2026, challenging the FBR’s recovery notice and seeking interim relief. The court had earlier suspended the recovery process through a stay order.

Later, the FBR filed an application seeking dismissal of that stay, arguing that the amended law had made such petitions non-maintainable. The court accepted the tax authority’s position and lifted the stay.

Effect of the ruling

With the stay no longer in place, the FBR can now proceed with recovery of the tax amount from the bank. The court, however, said ZTBL may approach the relevant forum in accordance with the law if it chooses to do so.

The ruling also makes clear that no further hearing can take place before the Islamabad High Court in this case following the promulgation of the new law.

ZTBL, formerly known as the Agricultural Development Bank of Pakistan, is a state-owned agricultural development bank headquartered in Islamabad. It was established in 1961 as ADBP and was renamed Zarai Taraqiati Bank Limited in 2002. The bank was later incorporated as a public limited company in 2002 under the Companies Ordinance 1984.

The latest order effectively removes the legal barrier that had temporarily prevented the FBR from pursuing the recovery notice issued to the bank earlier this year.