IHC Shuts Down CDA Over Unchecked Taxation, Governance Overreach

Court strikes blow to unaccountable rule, calls for refund of illegally collected taxes

ISLAMABAD, June 28 — In a significant ruling set to reshape municipal governance in the federal capital, the Islamabad High Court (IHC) has directed the federal government to dissolve the Capital Development Authority (CDA) and transfer its powers and assets to the Metropolitan Corporation Islamabad (MCI). The judgment highlights serious concerns about illegal taxation and lack of democratic accountability within the CDA.

The IHC verdict, authored by Justice Mohsin Akhtar Kayani, declares SRO 576(I)/2015 — which imposed Right of Way and Access Charges — as illegal, unconstitutional, and ultra vires. The court ordered the government to refund all amounts collected under this SRO and annul all actions taken pursuant to it.

“The SRO is declared illegal, ultra vires, without lawful authority or jurisdiction,” the ruling states. “All actions taken pursuant thereto are declared void and without legal effect.”

The judgment points to the CDA Ordinance’s diminishing relevance, stating that it was originally enacted for infrastructure development in a nascent capital. However, the Islamabad Local Government Act, a more recent and specific law, now provides the legal framework for municipal governance through elected representatives.

According to the court, the CDA’s imposition of taxes without approval from elected local authorities is a clear violation of the Constitution. The ruling emphasized that taxation is a legislative function reserved for democratically elected local governments, not unelected federal bodies.

The CDA’s controversial taxation policies — such as levying access fees on petrol pumps and housing societies — were singled out as arbitrary, revenue-driven measures lacking legal backing. The court labeled these as clear breaches of governance norms and transparency obligations.

In its directive, the IHC stressed that the transition of powers to MCI must ensure transparency, public accountability, and protection of citizen rights. This ruling paves the way for strengthening local government institutions in Islamabad, reinforcing the principle that public service delivery and urban planning must rest with elected municipal bodies, not unelected bureaucracies.

Legal analysts say this judgment sets a powerful precedent for eliminating parallel governance structures that operate without constitutional oversight. It also amplifies the call for municipal governance reforms in Pakistan, particularly the need to empower local governments under the Local Government Act.