SC bars mobile phone firms from levying additional charges

Published October 17, 2018
Months after temporarily doing away with additional taxes and service charges imposed on customers on the purchase of top-up cards for pre-paid cellular connections, the Supreme Court on Tuesday barred mobile phone companies from levying additional charges on post-paid connections. — File Photo
Months after temporarily doing away with additional taxes and service charges imposed on customers on the purchase of top-up cards for pre-paid cellular connections, the Supreme Court on Tuesday barred mobile phone companies from levying additional charges on post-paid connections. — File Photo

ISLAMABAD: Months after temporarily doing away with additional taxes and service charges imposed on customers on the purchase of top-up cards for pre-paid cellular connections, the Supreme Court on Tuesday barred mobile phone companies from levying additional charges on post-paid connections.

A three-member bench of the apex court headed by Chief Justice of Pakistan Mian Saqib Nisar also ordered continuation of relief the court had provided to the pre-paid connection holders and ordered the government and the service providers not to charge any tax from them till a proper legislation was enacted to address the issue.

As the hearing went underway, the additional attorney general requested the court to grant more time to submit a response to it.

Companies used to collect 10 per cent service tax, in addition to other taxes, from consumers

In June, the Supreme Court had barred network providers and the Federal Board of Revenue from collecting service tax on pre-paid cards, saying it was exploitative and illegal.

Prior to the court orders, the consumers were charged 10 per cent service tax, in addition to other taxes, such as withholding tax (5.5pc) and sales tax (19pc). On a pre-paid card of Rs100, only Rs64 is availed by the consumers.

Advocate General Punjab Ahmad Awais and Advocate General Sindh Salman Talibuddin apprised the court that the respective provincial governments were incurring a loss of Rs2 billion and Rs1 billion per month, respectively, because of suspension of additional charges.

In response, CJP Nisar said the court was aware of the losses incurred by the provinces.

“If you stop receiving commissions and kickbacks, these losses can be reduced,” he remarked.

He also chided the Sindh advocate general for transfer of wealth abroad through launches and said this practice needed to be curbed to avoid losses.

Blasting the excessive service charges billed to the consumers he said: “If you buy Rs100 worth of credit, Rs25 are deducted. What are these service charges?”

“If people buy bread would they not want to eat it,” he remarked and asked should they pay separately for eating it.

The CJP also asked as to why some amount out of the money paid to buy a mobile top-up card should go to the provinces. “What is the service the provinces provide”, he asked.

A lawyer representing the FBR apprised the bench that Rs25, deducted as service charges, are not given to the board. “The tax deducted on each call is received by national exchequer,” he said.

The federal and provincial governments requested the court to grant some time to submit their responses.

The court adjourned further proceedings without announcing next date of hearing.

Published in Dawn, October 17th, 2018

Opinion

Editorial

IMF’s projections
Updated 18 Apr, 2024

IMF’s projections

The problems are well-known and the country is aware of what is needed to stabilise the economy; the challenge is follow-through and implementation.
Hepatitis crisis
18 Apr, 2024

Hepatitis crisis

THE sheer scale of the crisis is staggering. A new WHO report flags Pakistan as the country with the highest number...
Never-ending suffering
18 Apr, 2024

Never-ending suffering

OVER the weekend, the world witnessed an intense spectacle when Iran launched its drone-and-missile barrage against...
Saudi FM’s visit
Updated 17 Apr, 2024

Saudi FM’s visit

The government of Shehbaz Sharif will have to manage a delicate balancing act with Pakistan’s traditional Saudi allies and its Iranian neighbours.
Dharna inquiry
17 Apr, 2024

Dharna inquiry

THE Supreme Court-sanctioned inquiry into the infamous Faizabad dharna of 2017 has turned out to be a damp squib. A...
Future energy
17 Apr, 2024

Future energy

PRIME MINISTER Shehbaz Sharif’s recent directive to the energy sector to curtail Pakistan’s staggering $27bn oil...