Islamabad July 20 2023: Islamabad High Court declare super tax to be ultra vires the fundamental right and orders to read down or declared ultra vires.
“Super tax, as it stands now, falls to be ultra vires the fundamental rights under Articles 18, 23 and 24, read with Article 4 of the Constitution. Using Imrana Tiwana phraseology, 4C is “held to be against the scheme of the Constitution and should either be read down or declared ultra vires for the reasons given” in this judgment” states the Court decision.
The court decision adds, “With the preference to save rather than destroy, §4C is to be read down in calculating the income taxable to super tax so as to: (a) exclude all classes of income enumerated therein the tax on which is final under the other provisions of the Ordinance; and (b) sever the exclusions of brought forward depreciation, brought forward business losses, and brought forward amortization allowances available to the taxpayers under the other extant provisions of the Ordinance”
Super tax, as read down, will have prospective application only, and will not apply to any transactions or events past and closed on or before 30th June 2022” the decision added.
Super tax under 4C, as read down, will not apply to the benevolent funds holding exemptions from tax under the other provisions of the Ordinance.
4C, as read down, will not apply to petroleum and exploration companies to the extent its application results in the taxation of such companies exceeding the thresholds stipulated in Rule 4 of the Fifth Schedule to the Ordinance; and all notices of demand or recovery impugned in the petitions are set aside, without prejudice to the revenue‟s right to issue fresh notices not inconsistent with this judgment.
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