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April 25, 2019

SC ruling on phone cards reversed

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April 25, 2019

ISLAMABAD: The Supreme Court (SC) on Wednesday restored all taxes on mobile phone scratch cards.

The case pertaining to taxes on mobile phone scratch cards was heard by a three-member bench of the apex court headed by Chief Justice of Pakistan Asif Saeed Khan Khosa and comprising Justice Qazi Faiz Isa and Justice Ijazul Ahsen. The court disposed of the suo motu case relating to tax charges deducted by cellular companies from the subscribers.

The top court stated that it could not issue orders on matters related to taxes. With the restoration of taxes on scratch cards, from now Rs25 will be deducted on every Rs100 card. The court said that it doesn’t want to intervene in matters of public revenue and taxes.

"Reasons to be recorded later on, we disposed of the instant suo motu case because the matter relates to revenue hence we don’t want to interfere in it and the interim order passed by the court last year is disposed of," the CJP announced in a short order.

Last year in June, a three-member bench of the apex court headed by former chief justice Mian Saqib Nisar had suspended the ‘exorbitant tax deductions' from mobile phones pre-paid calling cards and easyload by companies.

The Federal Board of Revenue (FBR) chief had told the court that at least 130 million people use the mobile phones while tax deduction is the personal act of the companies. He had submitted that only 5 percent people in the country pay taxes and had also admitted that there was no mechanism to distinguish between the people liable and not liable to pay tax. The court then had observed that if the FBR had no such mechanism, then its policy to collect tax is sheer discriminatory in nature and the court has power to set aside the same. The court had observed that the public is being looted and had questioned as to how can tax be received from a street vendor.

On Wednesday, the court after hearing to all parties and law officers of the provinces as well as the attorney general had reserved the judgment and later on after half-an-hour, reassembled and restored the tax deductions from mobile phones pre-paid calling cards and easyload by companies.

Earlier, during the course of hearing, the court deliberated extensively as to whether matters pertaining to taxes could be heard under Article 184(3) of the Constitution.

Attorney General Anwar Mansoor Khan briefly argued on the definition of tax as well as going through various provisions of Income Tax Ordinance 2001. He submitted that a tax means any penalty or charge payable under the ordinance. He elaborated that a person who is required to furnish his tax return under this ordinance is required to pay tax, but at the same time, he submitted that a person even who is not required to furnish his return is also required to pay tax as well.

The attorney general contended that the matter could be taken up under the original

jurisdiction of the apex court of Article 184(3) of the Constitution as he submitted that no fundamental right of anyone has been infringed upon.

Justice Ijazul Ahsen pointed out that money was taken allegedly from citizens who are not liable to pay tax, adding that there are 1.3 million taxpayers, however, tax was deducted from over 20 million people of the country, which is a sheer violation of fundamental rights.

Chief Justice Asif Saeed Khosa recalled that these proceeding were taken up by the court that some people who were not liable to pay taxes were charged taxes. “But according to your argument now people who are not required to furnish tax returns, are also liable to pay taxes,” the CJP told the AG.

“What is the Supreme Court?, asked Justice Qazi Faiz Isa, adding if someone comes to his chamber and bring something into his notice, then whether he is Supreme Court.

“When you are in the court you attain the status of Supreme Court,” the attorney general replied. Justice Isa, however, again asked as to whether it is mandatory to have a bench in a court or a judge?

The chief justice recalled that the matter was referred to the bench by human rights cell of the apex court, adding that once a petition is filed in the apex court under Article 184(3) of the Constitution, it is fixed before a bench and when the judges, sitting on the bench examine the case and apply their mind that the matter is of public importance and enforcement of fundamental rights then the bench issues notices to the respondents.

Sindh Advocate General Salman Talibuddin deliberated upon as to how the Supreme Court functions while referring to Article 176 of the Constitution that the SC shall consist of a Chief Justice to be known as the chief justice of Pakistan and so many judges as may be determined by Act of Majlis-e-Shoora (Parliament) or until so determined, as may be fixed by the president.

The chief justice observed that if something is put before a bench and when the bench after considering it of public importance issues notice to the parties concerned made in the petitions as respondents.

“Here something was brought before the chief justice and he put up the case before the bench and the bench after examining the matter is of public importance issued notices,” the CJP remarked.

Barrister Ali Zafar representing Punjab Revenue Authority ([PRA) said that under Article 184(3) it was a requirement that before exercising this jurisdiction, the bench of the Supreme 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. In this case, after reading various judgements, he argued that when it comes to a matter of tax, the imposition of any kind of tax or fee is a sovereign power of Parliament and provincial assemblies and one of their core duties.

He said that 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.

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