ISLAMABAD: The Islamabad High Court has upheld the validity and enforceability of the ‘super tax’ under Section 4C of the Income Tax Ordinance 2001, ruling that it is a standalone levy and cannot be offset through the adjustment of withholding taxes.

A division bench comprising Justice Muhammad Azam Khan and Justice Raja Inaam Ameen Minhas dismissed a set of writ petitions filed by CM Pak Ltd, which had challenged notices issued by tax authorities for the recovery of super tax for the tax year 2023.

The petitioner company had assailed the notices on the grounds that substantial amounts of tax had already been deducted at source and should be adjusted against its super tax liability. It was argued that the denial of such adjustment amounted to unlawful and excessive taxation and was contrary to the scheme of the law.

Counsel for the petitioner contended that once taxes were collected through withholding mechanisms, the same must be given due credit while determining final liability, including any additional levy such as super tax. The petition also questioned the tax authorities’ jurisdiction to issue demands without allowing for such adjustments.

IHC says independent levy not adjustable against withholding taxes

On the other hand, the Federal Board of Revenue (FBR) Counsel, Rehan Seerat, opposed the petition, arguing that the levy under Section 4C is distinct from the normal income tax regime. He maintained that the super tax is an independent charge on income and cannot be diluted by importing adjustment mechanisms applicable to other forms of taxation.

In its detailed judgment, the court examined the statutory framework of the Income Tax Ordinance and held that Section 4C constitutes a separate charging provision. The bench observed that the legislature has deliberately created multiple taxation mechanisms within the law, each operating independently, though related to the same subject of income.

The court noted that the language used in Section 4C — particularly the expression “a super tax shall be imposed” — clearly reflects legislative intent to introduce a fresh and independent levy rather than an extension of existing income tax.

Referring to the judgment of the FCC, the bench observed that the apex constitutional forum has already upheld the vires of Section 4C and categorically declared the super tax to be a standalone tax on income. The high court held that this determination is binding and leaves little room for re-examination of the issue.

Published in Dawn, April 8th, 2026