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