Federal Constitutional Court Upholds Super Tax, Partially Nullifies High Court Rulings

Islamabad: The Federal Constitutional Court has upheld the super tax while partially setting aside High Court judgments related to Section 4C of the Income Tax Ordinance, thereby validating the government’s position in the long-running super tax case.

Chief Justice of the Federal Constitutional Court, Amin-ud-Din Khan, announced the short order in the case. The bench hearing the matter comprised Chief Justice Amin-ud-Din Khan, Justice Hassan Rizvi, and Justice Arshad Hussain Shah.

The court rejected objections regarding the maintainability of the petitions and ruled that Section 4B of the Income Tax Ordinance 2015 would remain intact. It further declared that High Court rulings concerning Section 4C were partially set aside.

The Federal Constitutional Court dismissed petitions filed against the super tax imposed in 2015, holding that Parliament has the constitutional authority to levy taxes on income.

Petitions challenging the super tax imposed in 2022 were also dismissed. However, the court ruled that if any individual or entity in the oil and gas sector qualifies for a concession, they may approach the relevant forum. The court also clarified that the super tax will not apply to Modarabas, mutual funds, and benevolent funds.

According to the verdict, sector-specific legal exemptions will continue to remain in force.

Earlier, the court had reserved its verdict after concluding the hearing. During the proceedings, counsel for various companies, Makhdoom Ali Khan, completed his rebuttal arguments. Chief Justice Amin-ud-Din Khan had remarked that efforts would be made to announce the short order the same day.

It is pertinent to note that the decision is expected to benefit the federal government by more than Rs300 billion. The ruling has removed legal ambiguity surrounding the super tax and provided constitutional backing to the government’s stance.