Supreme Court restores all taxes on mobile phone top-ups, wraps up suo motu case

Updated April 24, 2019

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The SC had suspended the deduction of taxes on prepaid cards provided by mobile phone service providers in June 2018. — File
The SC had suspended the deduction of taxes on prepaid cards provided by mobile phone service providers in June 2018. — File

The Supreme Court on Wednesday announced the restoration of all taxes charged by cellular service providers on mobile phone top-up cards.

Chief Justice Asif Saeed Khosa read out the short order, saying the top court "would not interfere in the matters of public revenue and tax collection".

The court also withdrew the stay order placed on the collection of mobile phone taxes while wrapping up the suo motu case.

In June 2018, the apex court had suspended the deduction of taxes on prepaid cards provided by mobile phone service providers.

A three-member special bench headed by the chief justice had today reserved its judgement in the case after a detailed hearing during which law officers for the federal and provincial governments presented their arguments.

Justice Qazi Faez Isa during the hearing questioned whether there was a precedent of using Article 184(3) of the Constitution, which empowers the apex court to pass any order to enforce fundamental rights, in cases related to tax enforcement.

The chief justice recalled that the matter was brought into the notice of the bench through the Human Rights Cell of the Supreme Court. He said the suo motu notice was taken on the basis of a social media post urging the chief justice to take suo motu notice of the excessive taxes being charged on the top-up of mobile phones.

But Advocate General of Sindh Salman Talibuddin argued that social media is "full of fake information". He said no person paying the mobile taxes had moved the Supreme Court with the claim that their fundamental rights were being affected.

Meanwhile, Justice Ijaz-ul-Ahsan remarked that the collection of taxes from non-filers was a violation of fundamental human rights. He noted that while there were only 1.3 million taxpayers in the country, mobile tax was being levied on more than 20m citizens.

Examine: Taxing non-filers

The attorney general and legal counsels for all the provinces supported the restoration of the taxes, saying a major source of revenue for their governments had been blocked by the suspension.

After hearing all the lawyers, the bench reserved its verdict in the case and later reinstated the taxes on the usage of mobile phone services.

The bench had taken up a case relating to an unreasonably high amount of tax/other charges being deducted from the topping up of mobile balance through 'easy load' and calling cards and taxes charged on phones calls — with Rs40 being deducted in the form of different taxes for every Rs100 charge — on public complaints.

The suo motu notice was taken by former chief justice Mian Saqib Nisar on May 3, 2018, on the grounds that the matter involved public interest. The ex-CJP later on June 11 suspended the deduction of sales tax and at another hearing pertaining to the development of Diamer-Bhasha and Mohmand Dams had asked the federation to explore avenues to redirect the amounts so recovered to the dam funds.

In March, the Supreme Court had expressed its bewilderment over the exercise of suo motu powers to suspend tax deductions on top-up cards and wondered whether such jurisdiction falls under Article 184(3).

“Whether such matter can be proceeded in the exercise of jurisdiction under Article 184(3) and if the answer is in affirmative then can the advance tax or the withholding tax under Section 236 of the Income Tax Ordinance (ITO) be levied or recovered from non-tax payers,” an order dictated by an SC bench comprising Justice Isa and Justice Ahsan had said.