• Justice Mandokhail flags use of national funds without provincial consent
• Exact amount collected under the cess remains undisclosed, bench told
• Judges weigh fundamental rights in military court trials

ISLAMABAD: The Constitutional Bench of the Supreme Court, hearing a set of challenges to the imposition of super tax, was informed on Tuesday that the cess was initially introduced as a one-time measure for a specific purpose in 2015 but continued to be enforced until 2022.

Senior counsel Makhdoom Ali Khan, representing a number of companies, argued that this prolonged implementation raised questions about its legitimacy.

A five-judge CB, headed by Justice Aminuddin Khan, had taken up a number of petitions filed by different taxpayers assailing the constitutional vires of the amended Section 4C of the Income Tax Ordinance 2001 implemented for the tax year 2023.

The tax was initially imposed in 2015 under a money bill on wealthy individuals and companies, with the stated purpose of rehabilitating the areas affected during the Operation Zarb-i-Azb against terrorism.

The counsel argued that while the government estimated collecting approximately Rs80 billion through the super tax, the exact amount collected remains undisclosed.

Justice Jamal Khan Mandokhail questioned whether the government had prepared a PC-1 (Project Concept-1) or a detailed plan for rehabilitating the affected areas. He also inquired about the estimated cost of rehabilitation and whether the collected funds were used as intended.

The judge emphasised that the rehabilitation of affected areas was a local or provincial matter, raising concerns about using national funds without provincial consent. He also questioned whether taxes on services could be implemented through a money bill.

Justice Muhammad Ali Mazhar questioned the indefinite continuation of the super tax, asking whether a tax, once imposed, could last forever.

The counsel argued that the recovery and expenditure of the super tax were never mentioned in any speeches by the finance minister and that the government should be asked to disclose how much tax had been collected and spent.

He contended that the term ‘super tax’ was used to avoid the issue of double taxation, as income tax had already been collected. He emphasised that this was not a super tax but a regular tax imposed for a specific purpose.

Senior advocate Raza Rabbani, representing the Federal Board of Revenue (FBR), apprised the bench that the war against terrorism was a continuous process and the rehabilitation of victims remains a critical issue.

Justice Mandokhail noted that terrorism continues to affect the country on a daily basis and the victims of terrorism were displaced as a result of the operation.

Makhdoom Ali questioned whether the terrorism had truly ended by 2020, as the FBR lawyer acknowledged that it remains an ongoing challenge.

Justice Aminuddin Khan objected to using national general funds for provincial rehabilitation projects without provincial consent.

The counsel argued that the tax was imposed without proper transparency or accountability, and its prolonged enforcement raised questions about its legality.

Military trials case

Senior counsel Khawaja Haris Ahmed, representing the defence ministry, informed a seven-judge Constitutional Bench in a rebuttal that the F.B. Ali case, decided under the 1962 Constitution, had upheld the legality of military trials while also recognising the right to a fair trial within the military justice system.

He contended that the arguments presented by the opposing counsel, including Salman Akram Raja and Uzair Karamat Bhandari, were based on a misinterpretation of the case.

At this, Justice Naeem Akhtar Afghan observed that since the case was decided under the 1962 Constitution, it could not be directly applied to the current legal framework under the 1973 Constitution.

Justice Jamal Khan Mandokhail, however, asked that if the F.B. Ali case had established that civilians were entitled to fundamental rights under Section 2(1)(d), how they could still be tried in military courts. He added that this contradiction is central to the case at hand.

Justice Mandokhail, while citing Article 8(3)(a) of the Constitution — which stipulates that fundamental rights do not apply to certain laws, including those governing the armed forces — wondered whether this provision could be extended to civilians, effectively denying them fundamental rights if tried in military courts.

In response, Khawaja Haris argued that if Article 8(3)(a) were applied to civilians, they would not be entitled to fundamental rights, rendering the petition inadmissible under Article 184(3) of the Constitution.

Justice Mandokhail further questioned the distinction between trials for attacks on parliament, which were tried in anti-terrorism courts, and attacks on military installations, which were tried in military courts. He wondered under what principle this distinction was made and emphasised the importance of parliamentary sovereignty, stating that for the court, the most respected institution is parliament.

Published in Dawn, March 12th, 2025