A constitutional petition, challenging Federal Board of Revenue''s (FBR''s) decision and directive that "the surcharge is to be computed at the rate of 15 percent on income tax payable for three and a half months on pro rata basis instead of actual basis," has been filed in the High Court of Sindh.
The petition has been filed by an assessee under article 199 of the constitution of Islamic Republic of Pakistan, 1973. The petitioner said he felt aggrieved to the extent that pursuant to the promulgation of Amendment Ordinance and clarifications dated April 2 and June 16, 2011 issued by the FBR regarding the applicability of surcharge from March 15, 2011 to June 30, 2011, various government departments and other withholding agents started charging/deducting surcharge at source under section 4A of the Ordinance 2001 in addition to income tax from the petitioner during the period from March 15, 2011 onwards till June 30, 2011.
The following points have been raised in the petition for consideration of the High Court of Sindh:
That through the Income Tax (Amendment) Ordinance, 2011, (hereinafter referred to as the ''Amendment Ordinance'') promulgated on March 15, 2011 (meaning thereby that this Amendment Ordinance shall be applicable from March 15, 2011 to June 6, 2011), the President of Islamic Republic of Pakistan was pleased to insert a charging provision in the Income Tax Ordinance, 2001 (hereinafter referred to as the ''Ordinance, 2001'') to levy surcharge at the rate of fifteen percent on the income tax payable. This action was taken by inserting Section 4A in the Ordinance, 2001.
That the FBR on April 2, 2011 and thereafter on June 16, 2011 respectively through the Press Releases issued on its website (www.fbr.qov.pk) have categorically, legally and rightly clarified that surcharge at the rate of fifteen percent is to be paid on the income tax liability arising for the period from March 15, 2011 to June 30, 2011.
That pursuant to the promulgation of the Amendment Ordinance and clarifications dated April 2, 2011 and June 16, 2011 issued by the FBR regarding the applicability of surcharge from March 15, 2011 to June 30, 2011, the various Government Departments and other withholding agents started charging/deducting surcharge at source U/s 4A of the Ordinance 2001 in addition to income tax from the Petitioner during the period from March 15, 2011 onwards till June 30, 2011.
That the FBR through the issuance of Circular No 11 of 2011 dated September 12, 2011 has completely contradicted its earlier legal position and now in its own wisdom have decided and directed that the surcharge is to be computed at the rate of fifteen percent on the income tax payable for three and a half months on a pro rata basis instead of actual basis.
That by the issuance of clarification vide Circular No 11 of 2011 dated September 12, 2011, the FBR is trying to hoodwink the Petitioner by making it to pay surcharge on pro rata basis on the income tax payable of the whole year instead of actual basis which is the admitted position ie from March 15, 2011 through which the concept of surcharge was introduced by Amendment Ordinance.
That the actions of the FBR are illegal and mala fide in as much as that the FBR is trying to tax the income/transactions of before the promulgation and the effective date of March 15, 2011 of the Amendment Ordinance and is also trying to apply the amendment introduced by the Amendment Ordinance retrospectively when this Amendment Ordinance was not in field nor enforced.
That the mal-administration and arbitrariness of the FBR is also corroborated from the fact that the calculation of surcharge in the return of income finalised vide SRO 850(1)/2011 dated September 17, 2011 is also being made on pro rata basis.
The petitioner has, therefore, prayed that the Honourable High Court of Sindh be graciously pleased to:
i) Declare that the clarification issued vide Circular No 11 of 2011 dated September 12, 2011 by the Respondents is illegal, without lawful force, void ab initio, of no legal effect and in excess of his power and quash/annul the same.
ii) Declare that the Surcharge is to be levied on the income tax payable for the period from March 15, 2011 to June 30, 2011 only and it cannot be charged on pro rata basis on the full year''s tax liability as enunciated in circular No 11 of 2011.
iii) Direct the Respondents to suitably amend the return of income I statement of final taxation already notified vide SRO 850(1)/2011 dated September 17, 2011.
iv) Grant stay against the Respondents for filing of return of income I statement of final taxation by the due date which at present is October 25, 2011 without any coercive action in any manner whatsoever till the matter is decided by the High Court of Sindh.
v) Restrain and forbid the Respondents jointly and severally or through their agents, etc from collecting surcharge at the rate of fifteen percent on pro rata basis and direct the respondents not to levy/charge any penalty/additional tax from the Petitioner and from harassing him in any manner whatsoever till the matter is decided by the High Court of Sindh.