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The Supreme Court on Wednesday restored all the taxes charged by cellular service providers on mobile phone top-up cards. A three-judge bench, headed by Chief Justice Asif Saeed Khan Khosa, after hearing the arguments reserved the judgement which was announced after half-an-hour. The short order said: "The reason will be recorded later. All the interim orders for suspension of taxes are withdrawn and all taxes will be intact." The Chief Justice said that the court will not interfere in the revenue and tax collection issue and disposed of the human rights case.

On the charge of Rs 100 easy load or scratch card, 40% of the amount is deducted, which includes withholding income tax, sales tax and company services charges. The person who loads the card had to pay 40%. Since the suspension of the taxes the consumers on Rs 100 charge used to get Rs 100 balance, but now the cellular consumers will not receive full balance for their recharges. Former Chief Justice Mian Saqib Nisar taking suo motu had declared charging of high amount of tax/other charges on easy load and calling cards unreasonable. It termed that the withholding tax, sales tax and service charges were not validly and legally been imposed on amounts loaded by users of mobile phones.

Attorney General for Pakistan and the advocate generals of all the four provinces and the Islamabad Capital Territory (ICT) opposed the Supreme Court jurisdiction under Article 184 (3) to suspend withholding tax, and provincial sales tax on amount loaded by the mobile phone users on cell phones. During the hearing, the court was also told that an approximate amount of Rs 120 billion was earned by the Punjab government through such deductions per annum, around Rs 90 billion by the Sindh government, Rs 36 billion by the Balochistan government and Rs 55 billion by the Khyber Pakhtunkhwa (KP) excluding FATA areas.

The federation supported levy of Advance Tax on mobile users and had said that taxing by the government is not the fundamental right and the suo motu notice taken by the Supreme Court does not fall under the Article 184(3) of Constitution. Their contention was that income tax under Section 236 of Income Tax Ordinance, 2001 can be levied on the telephone users, it is legal and the apex court had given judgement in this in 2004 in telecard case, it added. The provinces' stance was that levy of sale/income tax was done away with by the apex court in an interim order dated 11-06-2018 without examining the provisions of Income Tax Ordinance 2001 and Sale Tax on Services Act.

Justice Qazi Faez questioned whether suo motu jurisdiction could be invoked in tax matters. "How could the federal government be barred from charging sales tax under Income Tax Ordinance? Is there any restriction?" he further asked. Justice Ijaz-ul-Ahsan said the government is collecting tax from people who are not in tax bracket. "How could Advance Tax under Section 236 of Income Tax Ordinance (ITO), 2001 be collected from many people who use cell phones but are not tax filers?"

Barrister Syed Ali Zafar representing the Punjab Revenue Authority (PRA) argued that the Supreme Court had passed interim orders under which the sales tax charged on telecommunication services under the calling cards was suspended. He submitted that as a result Punjab alone could not recover amount more than Rs 27 billion so far. He argued that before exercising the jurisdiction under Article 184(3), the apex 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.

The counsel citing various judgements contended when it comes to matter of tax, the imposition of any kind of tax or fee is a sovereign power of the Parliament and provincial assemblies and one of their core duties. He said if a tax is challenged then the appropriate procedure under the Constitution is that the case should first be filed by an aggrieved party under Article 199 of the Constitution before the appropriate high court and the Supreme Court should only examine the validity of tax laws in exercise of appellate jurisdiction. In this way the court will have the benefit of the decisions of the high court as well.

As regards the imposition of sales tax on the services under the Punjab Sales Tax Act, 2012, he submitted that the tax was being levied in accordance with and under the provisions of valid law and neither was anyone aggrieved by it nor had it been challenged being contrary to any of the fundamental rights enshrined in the Constitution and, hence, the suo moto proceedings undertaken by the court should be disposed of.

Copyright Business Recorder, 2019

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