Pleas against ITO Sections: CB of SC dissolved after recusal of Justice Farooq

ISLAMABAD: The Constitutional Bench of the Supreme Court, constituted for hearing of petitions against Sections 4B and 4C of the Income Tax Ordinance, 2001, on Monday dissolved as Justice Aamer Farooq recused from the bench.

Justice Farooq as a member of division bench of the Islamabad High Court (IHC) had heard the matter in the IHC and passed the interim order on April 4, 2024.

A five-judge of constitutional bench, headed by Justice Aminuddin Khan, and comprising Justice Jamal Khan Mandokhail, Justice Muhammad Ali Mazhar, Justice Syed Hasan Azhar Rizvi, and Justice Aamer Farooq assembled to hear about 354 petitions filed against Section 4B, and 182 against the Section 4C of the Income Tax Ordinance, 2001.

Sections 4B & 4C of Income Tax law: SC will hear petitions from tomorrow

However, because of Justice Farooq’s recusal, it could not proceed with the matter. Justice Amin; therefore, referred the matter to the committee for the reconstitution of the bench, which will hear the arguments today (Tuesday).

During the proceeding, the court was informed that the Sindh High Court (SHC), Lahore High Court (LHC) and the Peshawar High Court (PHC) have decided the petitions, while case regarding Section 4C is pending before a division bench of the IHC. The petitioner counsels prayed to the bench to defer the case until Eid.

However, Justice Amin rejected the request and said they would hear the matter on day to day basis. Section 4B was inserted in the Income Tax Ordinance, 2001 through the Finance Act, 2015 during the Pakistan Muslim League-Nawaz (PML-N) government had introduced Super Tax on rich individuals, association of persons and companies earning income above Rs500 million in tax year 2015 at rate of four percent of income of banking companies and three percent on other categories for rehabilitation of temporarily displaced persons through Finance Bill (2015-16).

The government inserted Section 4C in the Income Tax Ordinance through Finance Act 2022 to charge the super tax from 13 specific sectors that according to it made windfall gains, taking their total income tax rate to 39 per cent.

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

The super tax under Section 4C was imposed on profits of wealthy corporation whose earnings exceeded Rs150 million, to ease the impact of the rising inflation on the poor. The FBR had projected Rs250bn from the imposition of the super tax in FY23.

Several companies then approached all the provincial High Courts and the IHC, challenging the super tax.

A division bench of the IHC comprising Chief Justice Aamer Farooq and Justice Tariq Mehmood Jehangri on April 4, 2024, hearing the intra-court appeals (ICAs) of the Commissioner Inland Revenue had issued the notice to the respondents (Pakistan Oilfields Limited and others). It ordered that the respondents shall continue to pay the tax liability under Section 4C as amended by the Finance Act, 2023.

A three-judge bench, headed by Justice Syed Mansoor Ali Shah, and comprising Justice Athar Minallah and Justice Irfan Saadat, on April 23, 24 had expressed concern over no final decision by high courts on super tax on high earning persons imposed vide Section 4C of Income Tax Ordinance, 2001.

Copyright Business Recorder, 2025