Firms operating in more than one province: FCC reserves verdict on pleas relating to SWWF Act’s applicability

ISLAMABAD: The Federal Constitutional Court (FCC) reserved its verdict on petitions concerning the applicability of the Sindh Workers Welfare Fund Act, 2014, to establishments operating in more than one province.

A two-member bench, headed by Chief Justice Aminuddin Khan, on Wednesday heard petitions challenging a Sindh High Court (SHC) judgment that held that trans-provincial establishments were governed by the federal Workers Welfare Fund Ordinance, 1971, in light of a decision of the Council of Common Interests (CCI).

Shabbir Shah and Zeeshan Adhi, appearing on behalf of the Sindh Revenue Board (SRB) and the Sindh Workers Welfare Board, contended that the High Court had relied on the CCI’s decision without adjudicating upon the constitutional validity of the provincial law.

They also relied on the SHC’s earlier judgment in the Shafiquddin Moinee case concerning the Workers’ Profit Participation Fund (WPPF). They submitted that the judgment recognised that, following the 18th Amendment, the respective provincial laws would apply to workers of trans-provincial establishments employed within each province.

Senior counsel Raashid Anwer, leading the arguments on behalf of the trans-provincial establishments, submitted that the Supreme Court had suspended the Shafiquddin Moinee judgment in 2018. He stated that the High Court had; therefore, not relied upon that judgment while deciding the WWF petitions.

Anwer contended that the SHC had correctly decided the matter on the basis of the CCI’s decision. He pointed out that the decision could have been challenged before Parliament, but no such challenge had been made.

He also relied on the Supreme Court’s 2018 judgment in the Sui Southern Gas Company case, submitting that a province could not legislate beyond its territorial limits.

In similar circumstances, he argued, the apex court had held that federal legislation would govern trans-provincial establishments.

Regarding the tax consequences, Anwer submitted that, following the amendment to Section 60A of the Income Tax Ordinance, 2001, trans-provincial establishments paying WWF under provincial legislation would not be entitled to claim those payments as a deductible allowance.

He contended that the amendment left such establishments with no choice but to contribute under the federal WWF law, as payment under the provincial law would expose them to a substantial additional income tax liability.

Anwer further argued that applying the provincial law in these circumstances would effectively turn the WWF contribution into a tax. He relied on the Supreme Court’s judgment in the East Pakistan Chrome Tannery case in support of his submission that the contribution was not a tax.

Copyright Business Recorder, 2026