ISLAMABAD: The Supreme Court will resume hearing the case regarding super tax on high earning persons imposed vide Section 4C of Income Tax Ordinance, 2001, from Tuesday.

A three-judge bench, headed by Justice Syed Mansoor Ali Shah, will hear 167 petitions of Commissioner Inland Revenue and various taxpayers from April 23.

The FBR had challenged two orders of Islamabad High Court (IHC) passed on the petitions of the respondents (taxpayers) challenging the vires of Section 4C of the Income Tax Ordinance, 2001, for the tax year 2023.

It was the contention of the FBR’s counsel that respondent taxpayers operate and reside in Sindh and Punjab; the said respondents had earlier challenged the vires of Section 4C for tax year 2022 in their respective provinces before the Sindh High Court (SHC) and the Lahore High Court (LHC).

It was submitted before the apex court that the SHC vide its judgment dated 13.01.2023 upheld the vires of the said section and same view was taken by the LHC.

A division bench of the IHC comprising Chief Justice Aamer Farooq and Justice Tariq Mehmood Jahangiri on April 4, 2024, hearing the intra-court appeals said that respondents (Pakistan Oilfields Limited and others) shall continue to pay the tax liability under Section 4C as amended by the Finance Act, 2023.

The judgment of a single judge bench of Justice Sardar Ejaz Ishaq Khan declared that Section 4C, 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;

Section 4C, as read down, will not apply to the benevolent funds holding exemptions from tax under the other provisions of the Ordinance; Section 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.

Copyright Business Recorder, 2024