Advocate Adnan Haider Randhawa told the Constitutional Bench of the Supreme Court that the Super Tax imposed by the federal government is ultra vires the Constitution because it violates Entries 47 and 52 of the Federal Legislative List. He argued that the federal government can levy taxes only within the specific constitutional framework and that the Super Tax exceeds those limits, rendering the levy constitutionally invalid.
Mr. Randhawa submitted that the retrospective application of the Super Tax has inflicted double prejudice on taxpayers. Companies that had closed their accounts for Tax Year 2022 on 31 December 2021 were later hit by the Super Tax imposed on 1 July 2022, meaning a new tax was retroactively applied to a period for which financial statements had already been finalized and tax obligations discharged. He described this retroactive levy as unjust and contrary to fundamental principles of tax law.
He further highlighted the additional burden placed on companies operating under a Special Tax Year. According to Mr. Randhawa, the Federal Board of Revenue’s interpretation treated the Super Tax as applicable from 1 January 2021, while the tax measure related to Tax Year 2022. That misinterpretation forced some companies to face tax for an 18-month period even though the Income Tax Law defines a tax year as 12 months, producing an inequitable and illogical result born of the FBR’s approach.
Advocate Randhawa also criticized the FBR’s reliance on Indian tax law reasoning, singling out the assumption “the next year’s tax rate will apply to the previous tax year” as legally misplaced under Pakistan’s framework. He noted that the principle cited belongs to Indian law and argued that using it to interpret Pakistan’s tax year system was inappropriate. He added that India has now adopted Pakistan’s tax year model in its new tax law set to take effect next year, which he said underscores the conceptual soundness of Pakistan’s tax year arrangement.
The hearing will continue tomorrow before the Constitutional Bench, where Advocate Randhawa will press his arguments that the Super Tax is ultra vires and seek relief for affected taxpayers. The outcome is expected to carry significant implications for major taxpayers, corporations and the wider business community in Pakistan if the court rules on the constitutional validity of the levy.
