A constitutional bench of the Supreme Court questioned on Wednesday the legality of
The Supreme Court’s constitutional bench heard arguments from senior lawyer Farogh Naseem, representing various companies, in the ongoing super tax case, with Justice Jamal Khan Mandokhail posing sharp questions on the legality of the levy.
The five-member bench, headed by Justice Aminuddin Khan, on Wednesday, pressed counsel on whether the tax could be imposed on income already subject to taxation.
“How can a super tax be imposed on a system that is already subject to taxation?” Justice Mandokhail asked.
Read: SC questions super tax 'burden on common man'
Naseem responded that once income was assessed, a super tax or surcharge could apply.
“For instance, if an account is opened in January 2021 and closed on December 31, 2021, a tax is still imposed six months later even though the taxpayer had already paid it,” he said.
He added that the law applied the super tax to income but nowhere described it as an additional levy. “Section 4C of the Income Tax Ordinance — the provision that introduced the super tax in 2022 — does not mention an additional tax, and a taxpayer may choose to pay under Section 4 (general income tax) or Section 4C (super tax) of the Act,” he argued.
When Justice Mandokhail asked where this option came from, Naseem replied: “It is a general principle that a taxpayer may, at their discretion, choose one of two identical provisions under which to pay tax.”
Justice Mandokhail likened the issue to criminal law: “It is like when two sections apply to one crime — the punishment will be awarded under the section carrying the lesser penalty.”
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Naseem agreed, adding: “Exactly — the same principle applies here as well. Double taxation cannot be imposed.”
The judge then pointed to Naseem’s political background. “You have been a member of parliament. Tell us, who drafts this legislation?” Mandokhail asked. Naseem quipped back: “I did not draft Section 4C.”
The bench adjourned the hearing until Wednesday, with Naseem set to continue his arguments on behalf of taxpayer companies.
The Supreme Court is racing to conclude the matter before October 7, when challenges to the 26th Constitutional Amendment are due to begin. Justice Aminuddin Khan, who heads the bench, has emphasised the urgency of wrapping up arguments quickly.
Super Tax
The super tax is an additional levy on high-earning individuals, companies, and industries, largely aimed at big corporations. In the 2022–23 federal budget, the government imposed up to 10% super tax on major sectors, including cement, steel, sugar, oil and gas, fertiliser, banks, and textiles, citing the need to raise extra revenue for economic stabilisation.
Petitions challenging the levy have been filed before the top court by individuals and organisations. At the previous hearing, the bench was apprised by the FBR that no one had challenged the Lahore High Court’s (LHC) verdict, upholding the legality of the super tax imposed under Section 4C of the Income Tax Ordinance, 2001, while reducing its rate from 10% to 4% for 16 sectors, including banking, and offering partial relief to petitioners.
Earlier this year, the apex court questioned whether the Centre could distribute super tax revenue to provinces, noting that while the levy has been extended since 2016, no funds had been utilised for the stated purpose.
Earlier hearings
The Federal Board of Revenue (FBR) mounted a defence of Parliament’s powers. Counsel Hafiz Ehsan Khokhar maintained that while Section 14 of the Finance Act had seen its purpose altered, its substance remained intact.
He rejected claims of legislative overreach, citing the 63-A case, but Justice Mandokhail pressed whether Parliament could constitutionally pass a tax bill outside the annual budget cycle. Judges also flagged contradictions in the Islamabad High Court ruling that had partly struck down the levy.
The bench in a later hearing then turned to provident funds, with FBR counsel Asma Hameed arguing that partial relief had already been provided. Justice Hasan Azhar Rizvi warned that taxing Rs100 today could mean Rs550 lost for retirees decades later. Judges also asked how advance super tax could be calculated when profits were unknown.
Also Read: SC grills 'windfall profit' logic in super tax case
Earlier, on Sep 25, the Court voiced concern that the tax ultimately burdened ordinary citizens. “Whether it is a cement bag or an LNG shipment, the entire burden comes down on the common man,” observed Justice Muhammad Ali Mazhar.
Judges examined provident fund deductions and queried whether widows were among the ultimate beneficiaries. Counsel Asma Hameed argued that Sections 4C and 9 of the Ordinance should be read together, but the bench pressed why taxpayers were treated differently.
Previously, the bench scrutinised the government’s “windfall profits” logic. Justice Rizvi asked whether routine price increases — petrol rising from Rs150 to Rs200, or sugar by Rs10 — could be treated as extraordinary profits.
Counsel Ahmed Jamal Sukhera said the levy targeted only a few sectors and violated constitutional safeguards. Judges also noted that loss-making state enterprises such as PIA and Pakistan Steel Mills were inexplicably included in the super tax list.
The proceedings began on Sep 19, when broader questions of legislative procedure dominated. Justice Mandokhail asked whether parliamentarians genuinely debated taxes before approving them. Counsel for taxpayers argued that FBR’s role was only to collect taxes, not design policy, which should ideally involve experts. Justice Rizvi questioned whether lawmakers simply rubber-stamped bills without considering their impact.
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