Super tax case: Double taxation can’t be imposed on taxpayer, SC told

ISLAMABAD: The Supreme Court (SC) was told on Wednesday that it is a general principle that a taxpayer can choose to pay tax under one of two similar laws, and that double taxation cannot be imposed on a taxpayer.

A five-member constitutional bench headed by Justice Amin-ud-Din Khan heard the case filed against the implementation of super tax under Section 4B of the Income Tax Ordinance 2001

Other members of the bench comprising Justice Jamal Khan Mandokhail, Justice Muhammad Ali Mazhar, Justice Syed Hassan Azhar Rizvi, and Justice Shahid Bilal Hassan heard the case.

The counsel for various taxpayer companies, Barrister Farogh Naseem argued before the court that the language of tax laws in 1922 and 1976 was different.

Justice Jamal Khan Mandokhail asked how super tax could be imposed on a system already subject to tax. The learned counsel responded when income is assessed, super tax or surcharge can be applied.

For example, he submitted that if an account is opened in January 2021 and closed on December 31, 2021, a tax is still imposed on it six months later, which the taxpayer has already paid.

He contended that super tax is applicable on income, but nowhere is it stated that this is an additional tax. Section 4C does not mention additional tax.

The learned counsel submitted that the taxpayer can choose to pay tax under either Section 4 or Section 4C of the Income Tax Ordinance 2001.

Justice Jamal Khan Mandokhail asked where this law or option originated from. The learned counsel replied that it is a general principle that a taxpayer can choose to pay tax under one of two similar laws.

Justice Jamal Mandokhail remarked that, for instance, if two sections apply to a crime, the punishment is given under one section and it is usually the one with the lesser sentence.

Farogh Naseem agreed and submitted that the same principle applies here, and double tax cannot be imposed. Justice Jamal Mandokhail asked the learned counsel that he has also been a Member of Parliament and tell the court as to who drafted such legislation.

The learned counsel however, replied that he did not draft Section 4C.

Meanwhile, the court adjourned for today (Thursday) wherein Farogh Naseem will continue presenting his arguments.