SC hears plea challenging tax on foreign assets

Top court issues restraining order in the case; to hear matter in detail

ISLAMABAD:

The apex court on Monday issued some restraining orders while hearing a petition challenging the Sindh High Court’s (SHC) verdict upholding Section 8 of the Finance Act, 2022 under which the federal government imposed a levy on moveable and immoveable foreign assets of Pakistanis.

Section 8 of the Finance Act, 2022 read: “A tax [Capital Value Tax 2022] shall be levied on foreign assets of a resident individual where the value of such assets on the last day of the tax year in aggregate exceeds rupees one hundred million.”

Some petitioners challenged Section 8 of the Finance Act, 2022 in the SHC whose division bench on December 30, 2022 dismissed the petitions.

Filing an appeal against the SHC order, the petitioners raised a number of legal questions, asking if any words in an entry in the Fourth Schedule to the Constitution can be made redundant by judicial interpretation. It also asked if the levy is unconstitutional, without lawful authority and of no legal effect.

“Whether the Impugned Levy is void ab initio being beyond the legislative competence of Parliament? Whether the Impugned Levy can be said to have extra-territorial operations?  Whether the levy is inconsistent with and repugnant to the Fundamental Rights of Petitioners and liable to be struck down?

“Whether the Impugned Levy is ex-facie discriminatory? Whether burdening the Petitioners with double taxation in such a manner is constitutional? Whether the Impugned Levy interferes with past and closed transactions and vested rights of Petitioners?

“Whether the impugned judgment [of the SHC] suffers from errors apparent and floating on the surface and is liable to be set aside?” it questions.

A Supreme Court bench after hearing the counsel for petitioners and respondents on Monday passed an order observing that it would like to hear the case in detail and pass appropriate orders.

In the meanwhile, and as an interim arrangement, the bench issued a restraining order.

As the court was short of time, the entire order was not dictated in the court but it appears that the bench has granted interim orders against a deposit of 50% of the amount and/or bank guarantee for the tax demanded.

The order regarding whether the order would apply to both movable and immovable foreign assets or only to one of the two was discussed in the court. The order was later dictated in chambers.