LHC terms imposition of super tax 'constitutional' and 'valid'

16 Apr, 2020

The Lahore High Court (LHC) has decided the matter of imposition of super tax under Section 4B of the Income Tax Ordinance 2001 as "constitutional and valid".

The LHC in its order published on its website, while deciding an intra-court appeal (ICA) (ICA No 134758 of 2018) connected with 72 similar cases, upheld the vires of super tax.

This confirmed, earlier order of a single judge that the Parliament is fully empowered to levy any tax even for a class of persons and specific purpose, in this case for the rehabilitation of internally displaced persons [IDPs] in the Federally Administrated Tribal Areas, which was collected from eligible persons/entities from tax year 2015 to 2019.

Brief facts of the case are that imposition of super tax through Section 4B of the Ordinance of 2001 for rehabilitation of TDPs was challenged by appellants through various writ petitions before single bench of the LHC, which were dismissed vide consolidated judgment December 22, 2017, passed in WP No 38612 of 2015, declaring the levy of super tax as constitutional and valid.

The petitioners challenged super tax on the basis that it is not a tax because it is imposed for a special purpose, whereas tax is compulsory early collection of money for public purposes without any special objective benefiting any particular class of person.

The second objection was after 18th Amendment, it was the responsibility of the provinces to look after any class of persons financially disturbed.

The court did not agree to their arguments and concluded: "Needless to observe here that, while examining a law, enacted through legislative process provided under the Constitution, power of the Court was limited to examine, whether the provision of law was repugnant, inconsistent or in conflict with the provisions of the Constitution, whether legislature had legislative competence as

envisaged in the Constitution, and whether the legislation violated or abridged fundamental rights guaranteed by the Constitution.

A statute must be interpreted to advance the cause of statute and not

to defeat it.

Courts cannot sit in judgment over the wisdom of the legislature, except on two grounds on which the law laid down by the legislature can be struck down by the courts, namely, lack of

legislative competence and violation of any of the fundamental rights guaranteed in the Constitution or of any other Constitutional provision.

It is clarified that court findings are confined to vires of Section 4B of the Income Tax Ordinance of 2001; however, the parties are at liberty to raise any legal or factual objections against any proceedings initiated against them before the forum concerned, which are expected to be dealt with and decided in accordance with the law, the LHC order added.

Copyright Business Recorder, 2020

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