Course correction

Use of pre-paid calling cards and easy load to now be subjected to a 25% tax deduction

No good news it is for the people of Pakistan who are already hit with increased direct and indirect taxes, but the tax on mobile phone top-ups is back to add to their financial burden.

The use of pre-paid calling cards and easy load will now be subjected to a 25% tax deduction, as was the case before June 10 last year. To Mian Saqib Nisar, then Chief Justice of Pakistan, this forced deduction of the amount — even from somebody not falling under the tax net — was an act of exploitation.

Hence, the former CJP took a suo-motu notice of the issue on grounds that the matter involved public interest, and a three-member bench headed by him ordered suspension of the tax that continued for about 10 months, costing the government a revenue loss of more than Rs90 billion.

In came Justice Asif Saeed Khosa in January this year, as successor to Mian Saqib Nisar, declaring that the suo-motu powers bestowed to the CJP under Article 184(3) of the Constitution would be used sparingly and that the Supreme Court would set up parameters for exercise of such powers.

The declaration suggested a clear disapproval of what was considered, by many, as generous use of the suo-motu powers by Mian Saqib Nisar.

Reversal of the suspension of the telecom tax by a new three-member bench of the top court thus comes in line with what can be conceived as a course-correction policy of the incumbent CJP. This is not the first time that the top court, under Justice Khosa, has reversed orders issued by ex-CJP Nisar in exercise of the suo-motu powers. Last month, the court had treated similarly a case of alleged corruption in the Pakistan Kidney and Liver Institute.

The ruling from the Supreme Court in the cellphone tax case is very clear: suo-motu jurisdiction “cannot be invoked in matters of public revenue and tax collection”. The ruling serves to contribute towards devising the parameters for exercise of suo-motu powers. The approach, in the meanwhile, is pretty evident that suo-motu powers — a powerful tool for the public good — must only be used under well-defined rules.

Published in The Express Tribune, April 26^th, 2019.

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