KARACHI: The Sindh High Court on Thursday ruled that the levy imposed through the Income Support Levy Act, 2013 was ultra vires to the Constitution.
A two-judge bench headed by Justice Aqeel Ahmed Abbasi said that the Income Support Levy Act, 2013 could not be introduced through the Finance Act, 2013 in terms of Article 73 of the Constitution.
The bench ruled, “The levy imposed though Income Support Levy Act, 2013 along with money bill, does not possess the characteristics of a tax, as it is not a common burden for raising revenue to be utilized for general public purpose, on the contrary, it is a levy in the nature of fund to be charged and utilized for a specific purpose i.e. to provide for financial resources for raising an income support fund for the economically distressed persons and their families”.
It further said that the income support levy was lacking the main characteristics of a tax and also discriminatory in nature since it created unreasonable classification within the same class of persons having net moveable assets exceeding Rs1 million.
The bench issued its verdict on over 500 petitions challenging the imposition of the income support levy at the rate of 0.5 per cent on the value of net moveable assets through Income Support Levy Act, 2013.
The bench declared that incidence and charge of levy falls unequally upon the existing taxpayers only, who file or are required to file wealth statement along with income tax returns under the Income Tax Ordinance, 2001. However, non-existing taxpayers, who are not required or do not file wealth statement and tax returns, in spite of having much higher net moveable wealth exceeding Rs1m, have been excluded from the incidence and charge of such levy, which is in clear violation of Article 25 of the Constitution, it added.
“All the notices and the proceedings, including assessment orders passed under Section 5 of the Income Support Levy Act, 2013 after repeal of Income Support Levy Act, 2013 under clause 10 of the Finance Act, 2014 in the absence of any saving or validation clause to protect or validate the Income Support Levy Act, 2013 are hereby declared to be without jurisdiction and lawful authority”, it concluded.
Published in Dawn, July 4th, 2020
