Divergent views on sou motu powers in tax matters

Justice Isa, CJP say protection from taxation not fundamental right; Justice Ahsan disagrees

ISLAMABAD: The top court judges have divergent views about the Supreme Court’s suo motu jurisdiction in matters of taxation.

In the SC’s 13-page detailed judgment on a suo motu case regarding deduction of taxes imposed on the top-up of prepaid mobile phone cards, SC judge Qazi Faez Isa has objected to exercise of suo motu power by former chief justice of Pakistan (CJP) Mian Saqib Nisar.

Justice Isa has noted that protection from taxation is not listed as one of the fundamental rights. Therefore, the apex court is generally slow in entertaining challenges to taxes which are imposed by the appropriate legislature in apparent conformity with the provisions of the Constitution, he adds.

“In exercise of power under Article 184 (3) of the Constitution, this court may pass appropriate orders for the enforcement of fundamental rights. These fundamental rights are those conferred by Chapter 1 of Part II of the Constitution; protection from taxation is not listed as one of these Fundamental Rights.

“We also agree with the learned law officers that the taxes cannot be presumed to be against the public interest since taxes are spent for the benefit of the public.

“This court is generally slow in entertaining challenges to taxes which are imposed by the appropriate legislature in apparent conformity with the provisions of the Constitution. This however is not to say that a law imposing a tax cannot be challenged,” says the judgment authored by Justice Isa.

The power of suo motu

Interestingly, CJP Asif Saeed Khosa has also endorsed his view in this matter. However, another members of bench, Justice Ijazul Ahsan, has disagreed with majority view that “protection from taxation is not listed as one of these fundamental rights”.

The judge says there is no bar or impediment in the way of the apex court against exercising jurisdiction in such and similar matters of tax in the future.

Justice Isa, however, says the Supreme Court may invoke jurisdiction under Article 184 (3) in respect of matters of public importance which require the enforcement of any of the fundamental rights.

Whilst exercising this jurisdiction the Supreme Court regulates itself, therefore, it must ensure that the two stipulated preconditions are first met.

“Moreover, as there is no appeal against an order/judgment passed by this court in exercise of jurisdiction under Article 184 (3) of the Constitution every precaution should be taken to strictly act within the precise parameters set by the Constitution,” he says.

The judgment notes that the case of Iqbal Zafar Jhagra does not constitute a precedent in respect of a challenge to a tax imposed by the legislature.

“In the present case advance income tax and the federal excise duty imposed by the parliament and sales tax imposed under the respective provincial laws are under consideration.

“Only once the taxes imposed by the six statutes are declared contrary to the Constitution and struck down could their imposition and collection from subscribers/customers of cellular telecom companies be stopped”.

The judgment says they are also not persuaded to hold that the taxes were imposed without requisite legislation or that the six statutes contravened the Constitution.

“Recovery of taxes may therefore be resumed. However, the cellular telecom companies are not allowed to impose any service/maintenance charge thereon as they have elected not to impose these charges,” it adds.

However, Justice Ijazul Ahsan while dissenting majority view has strongly endorsed the exercise of suo motu jurisdiction in the matters initiated by the Supreme Court’s Director General Human Rights Cell.

Justice Ahsan says he is in no manner of doubt the power under Article 184(3) is correctly, validly and properly exercised in this matter as all conditions for invoking such powers were adequately met.

He observed that framers of the Constitution have intentionally, deliberately and by conscious design placed no restriction on the types of fundamental rights for enforcement of which powers under Article 184(3) can and cannot be exercised.