The Lahore High Court on Wednesday struck down amendments to the Workers Welfare Fund (WWF) Ordinance through Finance Act 2006 and 2008 as being unconstitutional.
Many private limited companies had challenged the amendments and notices issued to them by the Federal Board of Revenue (FBR) under Section 221 of Income Tax Ordinance, 2001 read with Section 4 of the WWF Ordinance.
The petitioner companies were liable to pay Workers Welfare Fund under the WWF Ordinance 1971 and the notice by the FBR on April 10, 2011 demanded payment of enhanced funds under the ordinance, which was an outcome of amendments made in the WWF Ordinance.
Sections 2 and 4 of the WWF ordinance were amended vide Section 12 and 4 of Finance Act 2006 and 2008 respectively. These amendments enhanced the amount of contribution to be paid towards the Workers Welfare Fund.
Counsel for the petitioners argued that the impugned amendments were unconstitutional as they fell outside the purview of Article 72(3) (a) to (g) of the Constitution. They said these amendments should not have been introduced through the Finance Acts (money bills) and could only be introduced through the regular legislative procedure provided under Article 70 of the Constitution.
Counsel for the FBR opposed the petitions and argued that the WWF was a tax and relied on Article 73 (2) (g) of the Constitution which, he said, enlarged the scope of a money bill and included the impugned amendments. He added the fund was a tax because it was a compulsory exaction of money.
Justice Syed Mansoor Ali Shah set aside the impugned amendments and cancelled the notices issued to petitioners by the FBR. However, petitioners were liable to pay workers the welfare fund under the WWF Ordinance as it stood prior to the amendments, the judge wrote in the order.
Published in The Express Tribune, August 25th, 2011.