LAHORE: The Supreme Court on Monday restrained the Federal Board of Revenue (FBR) and cellular companies from deducting withholding tax and other charges on mobile phone top-up cards till further orders.

Giving two days to the FBR and the cellular companies to implement the order, a three-judge SC bench headed by Chief Justice Mian Saqib Nisar observed that the deduction of such taxes was a compulsory appropriation.

Justice Umar Ata Bandial and Justice Ijazul Ahsan were other members of the bench.

During the hearing, FBR chairman Tariq Pasha and lawyers representing the cellular companies were unable to answer a question repeatedly asked by the court that under what law a person not liable to pay tax could be forced to pay tax.

The FBR chairman admitted that there was no mechanism to distinguish between the people liable and not liable to pay tax.

“If you have no such mechanism then your policy to collect tax is sheer discriminatory in nature and the court has the powers to set aside the same,” Chief Justice Nisar told the FBR chief.

Justice Ahsan observed that such tax collection was the worst form of exploitation and said the FBR should make a system under which deduction would not be made from those who did not come under the tax net.

Chief Justice Nisar lamented that the cellular companies had been fleecing innocent consumers with impunity. He also criticised the subsidised night call packages offered by the companies to attract the youth and said: “These call packages have badly damaged the culture of our country.”

Justice Bandial noted that the FBR had outsourced half of its functioning as it had been collecting taxes through private companies.

The FBR chairman and the counsel for the cellular companies sought time to devise a policy on the matter and to remove shortcomings in the system. But the chief justice flatly turned down the request and observed that the court would not allow violation of the law anymore.

“Take time as much as you need to make a system, but we are abolishing these surcharges now,” CJP Nisar told them.

Initially, the court ordered the companies to stop deducting taxes from mobile phone cards immediately, but gave them two days for implementation of the order when their lawyers cited technicalities of system.

The court directed the FBR and the cellular companies to present within two weeks a plan to separate those mobile phone users who were not liable to pay tax from their tax collection system.

Chief Justice Nisar had taken a suo motu notice on public complaints that an unreasonable and high amount of tax/other charges were being deducted from the topping up balance through easy load and calling cards, besides taxing the calls.

Published in Dawn, June 12th, 2018

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