Tax burden ultimately shifts to common man: SC

ISLAMABAD: Supreme Court judge Muhammad Ali Mazhar on Wednesday remarked during the hearing of a super tax matter that things will only work smoothly if ease is created for the people.

A five-member constitutional bench, headed by Justice Aminuddin Khan, heard petitions challenging Sections 4B and 4C of the Income Tax Ordinance (ITO) 2001 regarding the Super Tax. Hundreds of petitions had been filed against Sections 4B and 4C, which were inserted into the Income Tax Ordinance, 2001.

During the hearing, Justice Mazhar remarked that whether it’s a bag of cement or LNG, the burden ultimately falls on the common man.

“Things will only work smoothly if ease is created for the people,” Justice Mazhar added.

Makhdom Ali Khan, counsel representing a private company, told the court the question is whether the provisions of Income Tax law are in line with the Constitution. He submitted that the court should examine the law in the constitutional context.

Continuing her arguments, Asma Hamid, counsel for the Federal Board of Revenue (FBR), submitted that the biggest difficulty for the FBR is that different high courts have issued different rulings and there are conflicting judgements on the same matter.

Justice Mazhar noted that the Supreme Court is only hearing appeals against the high courts’ decisions and will issue its ruling keeping those decisions in mind.

The FBR counsel submitted that the Sindh High Court (SHC) based its ruling on two previous judgements. At this, Justice Jamal Khan Mandokhail asked why parliament had created a distinction among taxpayers. Asma Hamid argued that neither the SHC nor Islamabad High Court had demanded supporting data.

Justice Mandokhail remarked that the sole purpose of imposing taxes is to increase government revenue, but such steps discourage taxpayers.

Justice Mazhar remarked that ultimately, the tax burden shifts to consumers and the public.

The FBR counsel contended that the government imposed the Super Tax only on those with income above a certain threshold.

Justice Mazhar responded that whether it’s a bag of cement or LNG, the cost is borne by the common man, and things will function better if ease is created for the people.

The FBR counsel, however, explained that there is a difference between Income Tax and Super Tax, and that Super Tax is imposed on income exceeding Rs300 million.

Justice Mazhar, however, noted that the core question in the case at hand is why taxpayers were treated differently. Justice Mandokhail added that neither the judgements nor the taxation itself provided reasons for this differentiation. Justice Mazhar remarked that apart from the budget speech, no other documents are necessary in this case, and questioned whether this tax was imposed in addition to other taxes. The FBR lawyer maintained that the Super Tax was levied on 15 specific sectors above a certain income level, and that no company had argued it was incapable of paying. Later, the court adjourned the hearing until today (Thursday).