ISLAMABAD, Oct 19: The Supreme Court on Tuesday dismissed 32 identical appeals against imposition of advance income tax.

One of the petitioners, M/s Bismillah and Company, had challenged the move and declined to pay five per cent advance income tax amounting to Rs2.1 million.

The contractor had won the bidding held to collect export and toll tax for the year 1996-97 by offering Rs420 million. An agreement was signed between the administrator of Lahore district and the contractor in July 1996.

After the agreement, the district administrator asked the contractor to pay five per cent advance income tax amounting to Rs2.1 million against income generated between Aug 1 and Aug 31, 1996. The contractor had already taken the charge of collecting the toll tax after paying Rs50.4 million of the total bid.

In the Supreme Court, the contractor challenged the imposition of the advance tax, pleading that the tax should be declared illegal and without lawful authority on the grounds that the collection of toll tax could not be considered income of the petitioner and as such the administrator had no authority to impose advance income tax.

To substantiate, the petitioner argued that the tax was always levied on income and not on investments or expenditures.

The agreement clause concerning the payment of the advance income tax was also assailed by the petition saying it was contrary to the scheme of the recovery of the advance income tax as prescribed under Section 50 of the Income Tax Ordinance 1979 and was also against different constitutional provisions.

Moreover, he cited an amendment made in the Finance Ordinance of 1984 under Article 89 of the Constitution in pursuance of the presidential proclamation of July 5, 1977.

On behalf of the federation, Deputy Attorney-General Raja Mohammad Irshad said: "The amendment made in Section 50 of the Income Tax Ordinance 1979 added by Finance Ordinance 1984 was without jurisdiction as the Constitution including Article 89 was in abeyance through the Provisional Constitution Order 1981 ... As such the President could not have exercised the powers under the said article."

Earlier, the contractor had moved an appeal before the LHC against the demand of the advance income tax, which, however, was dismissed by the high court on December 1996.