The FCC Super Tax dispute entered a pause on Monday when a three-judge panel kept its review order pending. Major companies had asked the court to reopen its 27 January finding that Super Tax is lawful. Chief Justice Aminuddin Khan sat with Justices Syed Hasan Azhar Rizvi and Syed Arshad Hussain Shah and took arguments through a full sitting day.
What the 27 January order held
In that earlier ruling the court said lawmakers had full power to create, scrap, ease, change or control the charge by way of a Finance Act framed as a Money Bill, relying on Article 73(2)(a) of the Constitution. It added that Sections 4B and 4C of the Income Tax Ordinance, 2001, run from each provision’s own start date.
Petitioners and how Super Tax works
Those seeking a fresh look include Fauji Fertiliser Company Ltd, Fauji Fertiliser Bin Qasim, Thar Power Company, Colgate-Palmolive Pakistan, The Searle Company, JS Bank, Total Parco Pakistan, Gas & Oil Pakistan, Arif Habib Corporation, Pakistan Refinery Limited and Engro Corporation. Defence Housing Authority, Lahore, is also on the list. Counsel who spoke included Dr Farogh Nasim, Khalid Javed Khan, Sardar Ahmed Jamal Sukhera, Rashid Anwar and Imtiaz Ali Siddiqui.
Authorities first brought Super Tax into force in 2015. It covers individuals, associations of persons and companies once income crosses Rs500 million. Banks face a 4% rate; other sectors face 3%. The stated aim was money for people displaced on a temporary basis.
What lawyers argued, and what comes next
Sukhera, for Fauji Fertiliser, told reporters the panel would speak later. He pressed the court to invalidate Section 4C on constitutional grounds, saying the 27 January text gave no reasons for keeping that section. Failing that, he sought a finding that Section 4C should not reach tax year 2022 or income already under final tax, and that brought-forward losses, depreciation and amortisation should stay outside the charge.
He said the Finance Act, 2022, began on 2 July 2022 yet fell on earnings from a tax year already finished. Taxpayers had by then closed books, held annual meetings and paid dividends under the older rules. A duty no one could plan for, he argued, was arbitrary. He set a collection aim of about Rs215 billion beside yearly state-owned enterprise losses near Rs650 billion, power-theft losses near Rs600 billion, federal spending on devolved subjects near Rs328 billion, and borrowing past Fiscal Responsibility and Debt Limitation Act, 2005, limits of about Rs404 billion.
The review papers also say judges missed constitutional limits on back-dated new tax burdens under Articles 10A, 18, 23 and 24. Refusing loss, depreciation and amortisation carry-forwards, they argue, taxes costs or losses, which Entry 47 does not allow because the federation may tax income only. Until the reserved order is announced, the FCC Super Tax case leaves the 27 January position as the last word on legality.
Timeline: what has happened so far
- 2015: Super Tax is introduced in Pakistan.
- 2 July 2022: The Finance Act, 2022, comes into force.
- 27 January: The court upholds Super Tax and sets when Sections 4B and 4C apply.
- Monday: After a full day of review arguments, the bench reserves its decision.
Aasan alfaaz mein
Badi companies Super Tax ke khilaf review le kar gayi thin. Court ne 27 January ko pehle yeh levy qanooni qarar di thi. Monday ki lambi sunwai ke baad naya faisla abhi baad mein aayega. Seedha asar un par hai jinki income Rs500 million se upar hai; aam salary wale is nisab mein aam taur par nahi aate.
