- Five-member bench resumes hearing, questions taxation of provident funds, savings
- Justice Mandokhail presses whether National Assembly could pass a tax bill outside of annual budget cycle?
- FBR’s counsel insists Parliament empowered to impose levy, saying every institution is bound under Constitution
ISLAMABAD: The Supreme Court (SC) on Tuesday resumed hearings on petitions challenging the super tax, as the Federal Board of Revenue (FBR) defended Parliament’s authority to impose the levy.
A five-member constitutional bench headed by Justice Aminuddin Khan heard arguments from FBR counsel Hafiz Ehsan Khokhar, who maintained that Section 14 of the Finance Act had not been amended, “only its purpose altered.” He argued that the case did not raise questions of legislative competence, adding that taxpayers who had failed to file returns were now “seeking benefits” through litigation.
Justice Jamal Khan Mandokhail, however, pressed Khokhar on whether the National Assembly could pass a tax bill outside of the annual budget cycle. “Has the Constitution specifically granted Parliament this power?” he asked.
Khokhar cited precedent, including the 63-A Practice and Procedure case, and insisted that the Islamabad High Court (IHC) ruling striking down parts of the tax was “contradictory and not legally sustainable.” “Whether it is Parliament or the Supreme Court, every institution is bound under the Constitution,” Justice Mandokhail observed, stressing that High Courts were obliged to follow apex court judgments.
After Khokhar concluded, senior lawyer Ashtar Ausaf began his arguments. Later, the additional attorney general informed the bench that the attorney general would not make oral submissions but would instead file written arguments within two days. Counsel for the companies, Makhdoom Ali Khan, objected, saying he could not proceed until those written submissions were placed on record.
The FBR’s counsels, Shahnawaz Memon and Ashtar Ausaf, wrapped up their arguments, while petitioner’s lawyer Rashid Anwar is scheduled to begin his submissions tomorrow (Wednesday).
Earlier hearings
At Monday’s hearing, FBR counsel Asma Hameed acknowledged that provident funds had been granted partial relief under the law. Judges, however, questioned whether the super tax could legally be applied to such savings. Justice Hasan Azhar Rizvi observed, “If Rs100 is taxed on a fund now, in 25 years it could grow to Rs550—meaning retirement benefits would be lost.”
Judges earlier scrutinized deductions from provident funds, warning that taxing retirement savings could deprive widows and senior citizens of essential benefits. The bench also pointed out contradictions in the IHC verdict and sought clarity on the interplay between Sections 4C and 9 of the Income Tax Ordinance.
The bench repeatedly questioned the fairness and economic impact of the levy. Justice Muhammad Ali Mazhar noted that whether it was a cement bag or an LNG shipment, “the entire burden comes down on the common man,” while Justice Mandokhail cautioned that discouraging taxpayers risked pushing them out of the country.
Super Tax Imposition
The super tax is an additional levy on high-earning companies and sectors, including cement, steel, banks, and textiles, aimed at raising revenue for public welfare and economic stabilisation.
In the 2022–23 budget, the rate was set at up to 10 percent for incomes above Rs300 million. Industry groups have challenged the measure, arguing that it raises costs and undermines competitiveness.
