ISLAMABAD: The Supreme Court has been asked to dismiss appeals of the companies and big industrial entities and uphold the verdicts of the provincial high courts regarding Section 4B of the Income Tax Ordinance.
A five-member SC Constitutional Bench, headed by Justice Muhammad Ali Mazhar, on Monday, heard the petitions of Islamabad High Court (IHC)’s five judges, Pakistan Tehreek-e-Insaf (PTI) founder Imran Khan, and Karachi and Lahore Bar Associations.
Upon the completion of arguments of departments counsels, Justice Amin inquired from petitioners’ lead counsel Makhdoom Ali Khan, whether he would like to rebut the arguments of respondents.
The bench; therefore, adjourned the case until May 22.
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Earlier, Dr Shahnawaz argued that the levy of super tax is a separate charge under Section 4B, whereas, the tax paid under FTR is a separate charge under Section 4 read with Section 8 and Section 169.
He contended that the history of income taxation and literature thereto is fraught with examples where separate taxes are incorporated in income taxation to achieve progressivity in tax burden for ensuring vertical equity. The income taxation, besides revenue collection, has other objectives also which include redistribution of income to help impoverished people of the country.
The progressivity in taxation, in addition to progressive tax rates, is secured either through levy of surcharge or super tax. These levies are also imposed when there is need for additional revenue for specific purpose such as war.
Dr Shahnawaz stated that the contention that super tax is violative of Article 25 of the Constitution also reflects lack of basic understanding of income tax system. He submitted that the progressivity in tax rates for achieving equity in tax system is the cardinal principle of good tax system and it could be achieved when the individuals with different levels of income are taxed differently. Thus, discrimination is mandatory for achieving equity and consequently securing a good tax system.
He emphasised that super tax is not a new feature in Pakistan’s income tax law. It was also part and parcel of Pakistan income tax system under repealed Income Tax Ordinance, 1979. He mentioned that many countries have been using super tax for many reasons. Currently, super tax is part of income tax system in Australia, Canada, and New Zealand, he added.
Dr Shahnawaz stated it is justified to say that legislature should classify the persons on reasonable basis to achieve the purpose of good tax system. In the case of super tax, the classification is quite logical as only the super rich are required to bear this burden of helping those impoverished and displaced victims of war of terror who are our fellow citizens.
He argued that the allegation that agriculture income of Rs500 million is not subjected to super tax is also irrelevant because the agriculture income, being a provincial subject, is not charged to tax under Income Tax Ordinance 2001 and we are not even aware and even doubt that any agriculturist in Pakistan has the assessed agricultural income of Rs500 million.
Additional Attorney General for Pakistan (AAGP) Aamir Rehman told the court that he would file three judgments of the apex court regarding the matter, adding in light of those decisions the government can levy additional tax. Justice Amin told him to file the written submission.
The case has been adjourned until May 22.
Copyright Business Recorder, 2025
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