ISLAMABAD: The Supreme Court on Wednesday restored deduction of withholding tax, sales tax and service charges on pre-paid cellular scratch cards by vacating its earlier
“For the reasons to be recorded later this human right cell case and all interim orders are disposed of,” Chief Justice Asif Saeed Khosa said while dictating an order after a daylong hearing. He also said the court would not interfere in revenue matters.
The Supreme Court stated that it could not issue instructions on tax issues. With the restoration of the scratch card tax, Rs25 is now deducted on every Rs100 card. The court stated that it did not intend to intervene in public revenue and tax issues.
“Reasons to be recorded later on, we disposed of the instant suo motu case because the matter relates to revenue hence we don’t want to interfere in it and the interim order passed by the court last year is disposed of,” the CJP announced in a short order.
During the hearing, the court was told that the state had suffered a loss of about Rs90 billion since the issuance of the suspension order.
Taking suo motu notice on May 3 last year, then chief justice Mian Saqib Nisar asked whether deduction of Rs40 on every scratch card of Rs100 was not exploitation and observed that the matter involved public interest.
The head of the Federal Revenue Board (FBR) told the court that at least 130 million people use mobile phones, while tax deduction is a personal act of the company. He argued that only five percent of people in the country pay taxes, and he also acknowledged that there is no mechanism for distinguishing between controllers and non-taxpayers. The Court then found that if the FBR does not have such a mechanism, the tax collection policy is purely discriminatory and the court has the power to abolish it. The court found that the public was robbed and asked how a street vendor could be taxed.
After hearing all the parties and legal personnel in the province and the prosecutor, the court ruled on Wednesday. Later, after half an hour, reassembled and restored the tax deductions from mobile phones pre-paid calling cards and easyload by companies.
Earlier, at the hearing, the court had discussed at length whether tax issues could be discussed under Article 184 (3) of the Constitution.
Senior counsel Khalid Jawed Khan, representing the Sindh Revenue Board, argued that as far as the deduction of advance tax under the Income Tax Ordinance (ITO) was concerned, the law permitted such deduction even in cases of users of telecommunication service, including mobile card, who otherwise were not paying income tax by filing returns or whose income fell below the taxable income.
Referring to various provisions of the ITO, the counsel contended that the definition of income was wide enough to include all advance taxes, including those levied on imports, sale of goods, contracts and services. It also included other advance taxes collected from all persons under the ITO irrespective of whether they were taxpayers or not, the counsel said, adding that if it was not so, then not only advance taxes on mobile use would be struck down but levy of a large number of other advance taxes would also restricted to the extent of existing taxpayers.
The attorney general contended that the matter could be taken up under the original
Jurisdiction of the Supreme Court in Article 184 (3) of the Constitution, claiming that no fundamental right had been violated.
The judge Ijazul Ahsen has pointed out that the money was allegedly taken by non-taxpayers and has 1.3 million taxpayers. However, the tax is claimed by more than 20 million people in the country, which is a mere violation of fundamental rights. ,
Chief Justice Asif Saeed Khosa recalled that these proceeding were taken up by the court that some people who were not liable to pay taxes were charged taxes. “But according to your argument now people who are not required to furnish tax returns, are also liable to pay taxes,” the CJP told the AG.
“When you are in the court you attain the status of Supreme Court,” the attorney general replied. Justice Isa, however, again asked as to whether it is mandatory to have a bench in a court or a judge?
The chief justice recalled that the matter was referred to the bench by human rights cell of the apex court, adding that once a petition is filed in the apex court under Article 184(3) of the Constitution, it is fixed before a bench and when the judges, sitting on the bench examine the case and apply their mind that the matter is of public importance and enforcement of fundamental rights then the bench issues notices to the respondents.
Sindh Advocate General Salman Talibuddin deliberated upon as to how the Supreme Court functions while referring to Article 176 of the Constitution that the SC shall consist of a Chief Justice to be known as the chief justice of Pakistan and so many judges as may be determined by Act of Majlis-e-Shoora (Parliament) or until so determined, as may be fixed by the president.
The presiding judge pointed out that the interested parties will be informed of the applications as respondents if something is brought before the panel and the panel after consideration of public importance.
“Here something was brought before the chief justice and he put up the case before the bench and the bench after examining the matter is of public importance issued notices,” the CJP remarked.
Attorney Ali Zafar, a representative of the Punjab Revenue Authority (PRA), said that under Article 184 (3), before the exercise of that jurisdiction, the bench of the Supreme Court must apply its mind and come to the conclusion that prima facie there was a matter of public importance involving enforcement of fundamental rights. In this case, after reading various judgements, he argued that when it comes to a matter of tax, the imposition of any kind of tax or fee is a sovereign power of Parliament and provincial assemblies and one of their core duties.
He said that if the tax is challenged, the appropriate procedure under the Constitution is that the case be brought first by an aggrieved party in accordance with Article 199 of the Constitution before the competent higher court, and the Supreme Court should only examine the validity of the tax law in the exercise of appeal jurisdiction. Thus, the court will benefit from the decisions of the High Court.