ISLAMABAD: The Supreme Court of Pakistan on Thursday reserved its judgment on whether the term ‘services’ under Section 153(1)(b) of the Income Tax Ordinance, 2001, is limited to those described in sub-section (7) of Section 153 or encompasses all types of services.
A three-judge bench, headed by Chief Justice Yahya Afridi and comprising Justice Muhammad Shafi Siddiqui and Justice Miangul Hassan Aurangzeb heard the appeals of Pak-Arab Pipeline Limited and others.
The bench after hearing the arguments of the department and the respondent lawyers reserved the judgment and asked them to file their written submission within a week.
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Dr Shah Nawaz Ali, representing the Federal Board of Revenue (FBR), argued that previous Supreme Court rulings have affirmed that all kinds of services fall under Section 153(1)(b).
“Section 153 is clear that services include those services requiring professional qualification or otherwise, and it is not controlled/supplemented by Clause-42, Part-IV of 2nd Schedule to the ITO, 2001,” he added.
He further stated that the law [in section 153] is very clear and there is no need to rely on Clause-42 to interpret the definition of “services” available in section 153.
If the word ‘service’ as used in Clause (42) is given a broader meaning that would in effect displace the statutory definition. He stated that the word ‘professional’ was omitted from section 153(9) by the Finance Ordinance, 2003 and the word ‘professional’ in section 153(1)(b) of the Ordinance was omitted by Finance Ordinance, 2002. The word ‘Services’ mentioned in section 153(9) of the Ordinance are not exhaustive and may include other services, including labour and carriage services. Therefore, to exclude labour and carriage services it would be discriminated, which is not permissible. Dr Nawaz contended that the reasoning of superior courts, whether the apex court or high courts, is more or less similar. Their wisdom is that the definition of services in section 153 is not exhaustive as it starts with the word “includes” rather than “means”.
He stated that the words “professional” was omitted, which means legislature has given wide scope to “services” and caters for “services” of all types rather than professional services requiring a professional degree.
Makhdoom Ali Khan, representing M/s Pak-Arab Pipeline Company, argued that the verdicts of Commissioner, Appellate Tribunal and the High Court are based on clause-42, and therefore the department now can’t change its position before the apex court.
Justice Shafi questioned which would prevail in case of conflict between Section 153 and Clause 42, to which Makhdoom replied Section 153.
Copyright Business Recorder, 2025