TERENCE J SIGAMONY

ISLAMABAD: Supreme Court Judge Justice Muhammad Ali Mazhar has said that if the apex court concludes that the levy under Section 4B of the Income Tax Ordinance was a “tax” then the question of spending collected amount for specific purpose would not emerge as tax is always a necessary exaction for common burden and not for any specific service.

Justice Mazhar further said but if the Court declares that it was “fee” then the question of specific purpose would arise, and that it should not have been part of money bill and must have been passed by the Senate, as well.

A five-judge Constitutional Bench of the Supreme Court headed by Justice Aminuddin Khan on Tuesday heard appeals of 354 taxpayers against Section 4B, which was inserted in the Income Tax Ordinance, 2001.

Makhdoom Ali Khan, representing a number of taxpayers argued that the finance minister in budget speech 2015 said the Super Tax under Section 4B of the Income Tax Ordinance was one-time, and it was estimated that Rs80 billion would be collected from it. He said the purpose of levy was the social welfare of TDPs of FATA, adding the subject of “Social Welfare” was devolved to the provinces through 18th Amendment; therefore, the impugned levy under the garb of “Social Welfare” is not the subject matter of the federal government.

Justice Mandokhail questioned: “Was there any plan how much amount will be collected (under Section 4B of ITO), and how much will be spent, and how much was required for rehabilitation of the Temporarily Displaced Persons (TDPs).”

Makhdoom informed that in 2016 changes were made in Section 5(1) of the Financial Act, while in 2017 the word “onward” was added in it. He argued that in 2018 the Super Tax was extended up to 2020, and in 2022, the government did not notify the rate of levy for banking companies. He said from 2023 onward rate is not specified.

Makhdoom submitted the tax was imposed on the taxed income. Justice Mazhar remarked; therefore, it is called Super Tax.

Justice Mandokhail questioned how the amount collected be distributed among the provinces? Makhdoom replied that it is done through National Finance Commission award, adding the main purpose of the 18th Amendment was to distribute the amount amongst provinces. Hafiz Ahsan Khokhar, representing the FBR, raising objection, said when the issue of distribution of funds among provinces is not before the Court, then why it is being discussed.

Makhdoom then argued that in Gas Infrastructure Development Cess case the Supreme Court had asked the government how much amount was collected, and how much spent and how much amount further required for gas import projects.