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ISLAMABAD: The Supreme Court Monday directed high-income earners to pay 50 percent of the due liability with regard to the super tax within seven days.

A two-judge bench comprising Chief Justice Umar Ata Bandial and Justice Athar Minallah heard the Federal Board of Revenue’s petitions against the Lahore High Court’s order regarding imposition of super tax.

The bench in its order turned down the FBR counsels’ plea to direct the companies to deposit the entire amount. However, the bench after hearing the arguments modified the LHC’s order and directed the companies to deposit 50 percent of the due amount which will be adjusted. It further said 50 percent of the amount is subject to the LHC’s final order.

The LHC on September 30, 2022, conditionally suspended up to 10 percent super tax for companies, whose accounting year closed in December last (2021) but were still required to pay it.

Super tax to be applicable in TY23 and onwards: SHC

“The FBR is directed to allow the petitioners in this and concerned petitions to file their returns excluding the tax under Section 4C of the Ordinance of 2001 subject to the deposit of post-dated cheque of the differential amount liable to be deposited under Section 4C,” read the interim LHC’s order.

The super tax was imposed on the profits of wealthy corporations whose earnings exceeded Rs150 million through the Finance Act, 2022. The government had inserted Section 4C in the Income Tax Ordinance to charge the super tax from 13 specific sectors.

The government imposed the super tax on banks, cement, iron and steel, sugar, oil and gas, fertilisers, LNG terminals, textile, automobile, cigarettes, beverages, chemicals, and airlines.

Hafiz Ahsaan Ahmed Khokhar, a tax expert, said that the Sindh High Court (SHC) has also issued a short order over the taxpayers’ grievances agitated to challenge the vires of Section 4C of the Income Tax Ordinance, 2001 and struck down up to 10 per cent super tax to the first proviso to Division IIB of Part I of the First Schedule to the Income Tax Ordinance, 2001 and declared to be discriminatory, thus, ultra vires to the Constitution.

He said there is no cavil with the legal principle that a charging provision in a fiscal statute is to be given a strict interpretation and if a case does not fall within the purview thereof, tax cannot be charged from a person from whom it is being claimed.

He further stated that there is no doubt that the legislature has the power to make a law retrospective and this includes a power to give retrospective effect to a taxing statute, and in this particular case, the legislature has given their retrospective effect words through the Finance Act, 2022-2023 and stated that the amended Section 4C of Income Tax Ordinance, 2001 read with Division IIB of Part I of the First Schedule of Ordinance would apply from the assessment year 2022 and onwards which means to apply as retrospectively, and there are many judgments of Supreme Court ratifying such taxing legislation with retrospective effect and upholding the legislation on different occasions.

Copyright Business Recorder, 2023

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