ISLAMABAD: A five-member Constitutional Bench of the Supreme Court, headed by Justice Aminuddin Khan, convened today to hear a critical case concerning the controversial super tax and its impact on businesses and individuals in the country.
The bench raised concerns regarding a contradiction within the Islamabad High Court’s (IHC) previous ruling. The Federal Board of Revenue’s (FBR) lawyer Asma Hamid pointed out that two paragraphs of the decision were contradictory. In one paragraph, the court had stated that tax would not be levied, while in another, it was stated that the tax would be imposed.
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“This contradiction in the ruling needs to be addressed,” said Hamid. Justice Hassan Azhar Rizvi expressed concern over the effects of the super tax on companies and individuals. “In super tax, you are taking tax from companies, but people are suffering,” he remarked. “What kind of policies is the government making that are causing hardships for people aged 60 and above?”
The court also sought clarification on certain aspects of the tax structure. Justice Muhammad Ali Mazhar raised questions regarding potential deductions from Provident Funds, particularly funds that benefit widows. “If the net beneficiaries are widows, can companies transfer the money to another account?” he asked, seeking clarity on whether such transfers are in compliance with tax laws.
Asma Hamid responded by stating that the legal point was under consideration, but she could not comment on the overall loss or benefit of the issue.
Further questions were raised about the application filed by the FBR and the show-cause notice that had led to the legal proceedings. Hamid confirmed that a show-cause notice had been issued, prompting the current application.
Justice Mazhar remarked, “This has become a case of looking for trouble,” in reference to the legal back-and-forth that had ensued during the hearing. The case also saw an interaction between Justice Jamal Khan Mandokhail and FBR’s lawyer. The lawyer mentioned that 20 applications from FBR were currently before the court, all related to the super tax issue. “Section 4C and 9 will be read together,” the FBR lawyer said, referring to key provisions of the tax code.
Justice Mazhar raised concerns about the purpose of reading these two sections together, asking whether they were separate from income tax provisions and whether an exception applied. Dr Ishtiaq, a member of the FBR, clarified that the discussion was centered around income, but the definitions provided in the relevant sections were not being overwritten.
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Justice Mandokhail questioned the basis of the tax rate, prompting FBR’s lawyer to explain that the tax rate was amended following the 1979 Ordinance and subsequent amendments.
After hours of deliberation, the bench decided to adjourn the hearing until 9:30 AM on Monday, signaling that further legal and factual clarifications would be required before a final decision could be made.