A Constitutional Bank of the Supreme Court questioned Wednesday if the super taxes could be imposed on the already taxable income.
A five-member bank, headed by Judge Aminuddin Khan, listened to a set of pleas by challenging the imposition of super taxes by the Government of the Pakistan Muslim League (PML-N) in 2015.
“How can a super tax impose on a system that is already subject to tax?” Judge Jamal Khan Commandkhail asked.
The lawyer of the Farogh Naseem petitioners informed the court that once the income was evaluated, a super tax or surcharge could be applied. “For example, if an account opens in January 2021 and closed on December 31, 2021, a tax is still imposed six months later despite the fact that the taxpayer had already paid it.”
He added that the law caused the Super Tax applicable to income, but did not describe it as an additional tax anywhere. “Section 4C of the Income Tax Ordinance, the provision that the Super Tax in 2022 did not mention an additional tax, and a taxpayer can choose to pay under section 4 (General Income Tax) or Section 4C (SUPER TAX) of the Law,” he said.
Read: SC questions super taxes ‘Load on common man’
Judge Commandkhail pressed even more: “Where does this option come from?” Naseem replied that it was a general principle that a taxpayer could choose one of the two identical provisions under which to pay taxes.
The judge compared the issue with criminal law. “It is like when two sections apply to a crime: the punishment will be granted under the section that carries the minor penalty.”
“Exactly, the same principle applies here too. You cannot impose double taxes,” Naseem admitted.
Judge Commandkhail, pointing out the political background of Naseem, asked: “You have been a member of Parliament. Tell us, who writes this legislation?”
Read more: CB Gears Up for the case of the 26th amendment
“I did not write section 4c,” Naseem joked.
The bank also examined the deductions of the forecast funds, observing concerns about their impact on common citizens and beneficiaries.
The audience was postponed until Thursday, with Naseem that will continue its arguments.
The Supreme Court is running to conclude the matter before October 7, when the hearings on the challenges at the 26th constitutional amendment are scheduled to begin. Judge Aminuddin Khan has emphasized the urgency of concluding the arguments quickly.
Super taxes
Super taxes is an additional tax on high -income individuals, companies and industries, largely addressed to large corporations. In the Federal Budget 2022–23, the Government imposed up to 10% of Super Tax on the main sectors, including cement, steel, sugar, oil and gas, fertilizers, banks and textiles, citing the need to increase additional income for economic stabilization.
The requests that challenge the tax have been submitted to the Superior Court by individuals and organizations.
In a previous hearing, the Bank was informed by the Federal Income Board (FBR) that no one had challenged the verdict of the Superior Court of Lahore (LHC), maintaining the legality of the super tax tax under section 4C of the Income Tax Ordinance, 2001, while reducing its rate from 10% to 4% for 16 sectors, including banking and offer of petitioners to petitioners partial
Earlier this year, the Apex Court questioned whether the center could distribute the super fiscal income to the provinces, noting that although the tax has been extended since 2016, funds for the declared purpose had not been used.
FBR set up a defense of the powers of Parliament. The lawyer Hafiz Ehsan Khokhar said that although section 14 of the Finance Law had seen its purpose, its substance remained intact.
He rejected legislative overreach claims, citing case 63-A, but Judge Commandkhail pressed whether the Parliament could constitutionally approve a tax invoice outside the annual budget cycle. The judges also marked contradictions in the ruling of the Superior Court of Islamabad that had partially demolished the tax.
The bank at a subsequent audience resorted to the forecast funds, with the FBB Astma Hameed lawyer arguing that partial relief had already been provided. Judge Hasan Azhar Rizvi warned that taxing RS100 could mean RS550 lost for retirement decades later. The judges also asked how the Super Tax could be calculated when the profits were unknown.
Also read: SC grills ‘Unexpected Gain’ Logic In a Super Tax Case
Previously, on September 25, the Court expressed concern that the tax finally charged common citizens. “Either a cement bag or a LNG shipment, the entire load is reduced to the common man,” Judge Muhammad Ali Mazhar observed.
The judges examined the deductions of the forecasting funds and consulted whether the widows were among the final beneficiaries. The lawyer Astma Hameed argued that sections 4c and 9 of the ordinance should be read together, but the bank pressed why taxpayers were treated differently.
Previously, the bank examined the logic of “unexpected profits” of the government. Judge Rizvi asked if routine price increases (gasoline that increase from RS150 to RS200, or sugar in RS10) could be treated as extraordinary profits.
The lawyer Ahmed Jamal Sukhera said the tax pointed only to a few sectors and violated the constitutional safeguards. The judges also pointed out that state companies that make losses, such as PIA and Pakistan Steel Mills, were inexplicably included in the list of super taxes.
The procedures began on September 19, when they dominated broader issues of legislative procedure. Judge Commandkhail asked if parliamentarians really debated taxes before approved. The taxpayers’ lawyer argued that FBR’s role was just to raise taxes, not a design policy, which should ideally involve experts. Judge Rizvi questioned whether legislators simply stamped on invoices without considering their impact.
