TAX on income of certain persons from dividends and bank profits, etc

Citation Name : 2019 PTD 291 SUPREME-COURT
Side Appellant : DEWAN KHALID TEXTILE MILLS LTD.
Side Opponent : COMMISSIONER OF INCOME TAX (LEGAL DIVISION), LARGE TAXPAYERS UNIT, KARACHI
Ss. 2(32) & 80B(1)---TAX on income of certain persons from dividends and bank profits, etc.---Concession under S. 80B of the Income TAX Ordinance, 1979 was available to a company as well---High Court observed that all material statutory provisions were not brought to the notice of the Supreme Court in the case of Genertech Pakistan Ltd. and others v. Income TAX Appellate Tribunal of Pakistan and others 2004 SCMR 1319, therefore the observations made in (paragraph 13) of the said judgment with respect to S. 80B of the Ordinance may be open to doubt.

Citation Name : 2019 PLD 645 SUPREME-COURT
Side Appellant : HUMAN RIGHTS CASE NO.18877 OF 2018
Side Opponent :
Ss. 2(63), 2(66), 147, 168 & 236---Federal Excise Act (VII of 2005), S. 3 & First Sched. Table II, Sr. No. 6 --- Punjab Sales TAX on Services Act (XLII of 2012), Ss. 1(4), 2(38) & 3 & First Sched. Classification No. 9812.1210---Sindh Sales TAX on Services Act (XII of 2011), Ss. 2(97), 3 & 8 & Second Sched. Tariff heading No.9812.1210---Khyber Pakhtunkhwa Finance Act (XXI of 2013), Ss.2(48) & 19 & Sched. II, Serial Nos. 4(5) & 4(9)---Balochistan Sales TAX on Services Act (VI of 2015), Ss. 2(39) & 3 & First Sched. Classification No.98.12.1000---Constitution of Pakistan, Arts. 4(2)(a), 23, 24 & 184(3) & Pt. II, Chapt.1---Human rights case regarding deduction of TAX es and other charges by mobile companies in Pakistan---Levy/imposition of advance income TAX , Federal excise duty, sales TAX on services and service/maintenance charges---Constitutionality and legality---Question as to whether the Supreme Court under Art.184(3) of the Constitution had the jurisdiction to determine the validity of the imposition and collection of TAX es---[Per Qazi Faez Isa, J (Majority view): Only once the TAX es imposed on customers of cellular companies by the Income TAX Ordinance, 2001, the Federal Excise Act, 2005, the Punjab Sales TAX on Services Act, 2012, the Sindh Sales TAX on Services Act, 2011, the Khyber Pakhtunkhwa Finance Act, 2013, and the Balochistan Sales TAX on Services Act, 2015, were declared contrary to the Constitution and struck down could their imposition and collection from subscribers/customers of cellular telecom companies be stopped---None of the said statutes, which had imposed the TAX es, had been declared by a competent Court to be beyond the legislative competence of the legislature which had imposed them nor had it been declared that they contravened any constitutional provision---In exercise of power under Art.184(3) of the Constitution the Supreme Court may pass appropriate orders for the enforcement of Fundamental Rights---Said Fundamental Rights were those conferred by Chap. 1 of Part II of the Constitution; protection from TAX ation was not listed as one of these Fundamental Rights---TAX es could not be presumed to be against the public interest since TAX es were spent for the benefit of the public---Supreme Court was generally slow in entertaining challenges to TAX es which were imposed by the appropriate legislature in apparent conformity with the provisions of the Constitution---Interim order of the Supreme Court whereby the recovery of TAX es by cellular companies was suspended did not record reasons nor did it determine that the imposition of the TAX es was without jurisdiction---Supreme Court directed that the recovery of the TAX es in question may be resumed by the cellular telecom companies, however, they were not allowed to impose any service/maintenance charge thereon as they had elected not to impose these charges, and that it would be unfair and unjust to demand that the cellular telecom companies make good the loss of the TAX es that could not be recovered for the period during which their recovery was suspended by an interim order of the Supreme Court---Human rights case was disposed of accordingly---[Per Ijaz ul Ahsan, J dissenting (Minority view)]: Framers of the Constitution, had intentionally, deliberately and by conscious design placed no restriction on the types of fundamental rights for enforcement of which powers under Art.184(3) of the Constitution could and could not be exercised---As long as a matter met the two conditions, in that, it involved a question of public importance with reference to the enforcement of any of the Fundamental Rights conferred by Chap. I of Part II of the Constitution, it was immaterial whether the violation related to a fiscal matter, TAX ation, a matter involving property rights, personal freedoms or human liberties, the Supreme Court could and should exercise its powers to come to the rescue of the citizen whose rights may be at risk of being bulldozed, destroyed or encroached upon by the State with all the might and resources available to it---With a population of over 200 million out of which the number of cellular subscribers was approximately 150 million (in mid of the year 2018), there could be no two opinions that the present matter regarding imposition of TAX es on, inter alia, topping up of mobile phone balance, affected and had repercussions on the public at large and was not an individual or private grievance---Issue in the present matter was that of alleged unlawful extraction of money in the form of advance TAX under S.236 of the Income TAX Ordinance, 2001 from millions of cellular subscribers who did not fall within the relevant TAX bracket for the purposes of the said Ordinance---Money being taken from cellular subscribers constituted 'property' as envisaged by Arts. 23 & 24 of the Constitution, therefore, the contention that the present matter did not involve the enforcement of any Fundamental Rights was incorrect---Apart from the Fundamental Rights contained in Chapter I of Part II of the Constitution, the deduction and collection of such advance TAX was also seemingly a clear contravention of Art. 4(2)(a) of the Constitution---Contention that the Supreme Court did not have jurisdiction under Art. 184(3) of the Constitution to determine the validity of the imposition and collection of TAX es which had been imposed pursuant to statutes passed by competent legislatures under the Constitution, was misconceived---While dealing with a matter under Art.184(3) of the Constitution, the Supreme Court was neither bound by the procedural trappings nor limitations of Art.199 of the Constitution, hence, the interim order of the Supreme Court whereby recovery of the TAX es in question by the cellular telecom companies was suspended, was neither without jurisdiction, nor did it suffer from any legal, procedural or jurisdictional error, defect, flaw or infirmity whatsoever.