Home South Asia Pakistan State suffers Rs90 bn before SC restores taxes on mobile phone cards

State suffers Rs90 bn before SC restores taxes on mobile phone cards

Surprising as it may seem, the court was informed that the state has suffered a loss of about Rs90 billion since the interim order passed on June 11 till April 24. Earlier, the apex court was informed that Punjab government earned about Rs120 billion, Sindh government earned about Rs90bn, Balochistan government earned about Rs36bn and Khyber Pakhtunkhwa government earned about Rs55bn annually through tax deductions on the cards and easy load.

mobile phone cards

News Desk |

The Supreme Court restored on Wednesday taxes imposed on prepaid mobile phone cards and easy load by disposing of an earlier order of the top court that had suspended the taxes.

With the April 24 order, a three-judge special bench comprising Chief Justice of Pakistan (CJP) Justice Asif Saeed Khosa, Justice Qazi Faez Isa and Justice Ijazul Ahsan has restored deduction of withholding tax, sales tax and service charges on the top-up of the prepaid mobile phone cards.

Surprising as it may seem, the local media reported, the court was informed that the state has suffered a loss of about Rs90 billion since the interim order passed on June 11, 2018, till April 24.

Read more: Supreme Court of Pakistan suspends mobile card taxes

The media reports added that the apex court was earlier informed that Punjab government earned about Rs120 billion, Sindh government earned about Rs90bn, Balochistan government earned about Rs36bn and Khyber Pakhtunkhwa government earned about Rs55bn annually through tax deductions on the cards and easy load.

Former CJP Mian Saqib Nisar had taken a suo motu notice in May 2018 on public complaints and had enquired if deduction of Rs40 on every card or load of Rs100 was not exploitation. He had observed that the matter involved public interest and, subsequently, suspended tax collection on mobile cards.

Later, the federal and all provincial governments had challenged the interim order but the case was taken up after ex CJP Nisar’s retirement in January.

Read more: CJP questions the illegal high taxes on mobile users

“For the reasons to be recorded later this human right cell case and all interim orders are disposed of,” CJP Khosa said while dictating the order, adding the court would not interfere in tax matters.

Was Notice Taken on a Fake Social Media Post?

Interestingly during the Wednesday’s hearing, the media reported, CJP Khosa recalled that the basis of the instant suo motu proceedings was a post on social media, but nobody knew who the initiator of the message was. “There is every possibility that fake message may have been posted since nowadays social media is full of fake items,” the chief justice regretted.

Also, the reports said, the bench debated exercise of suo motu jurisdiction in tax matters during Wednesday hearing after Justice Isa enquired if suo motu jurisdiction could be invoked in tax matters. The CJP agreed that public interest proceedings should be initiated by the court itself. “If a judge or someone else initiates suo motu proceeding and later the matter is referred to the bench then it is objectionable,” he said.

Read more: Taxes should be reduced on mobile phone scratch cards: Senate Committee

Justice Ahsan, who was also part of the June 11 bench that had suspended the taxes, noted it was a violation of fundamental rights if money is taken out from a person who is not liable to pay tax. Meanwhile, Punjab Revenue Authority (PRA) Counsel Barrister Ali Zafar told the bench that Punjab alone could not recover a sum of more than Rs.27 billion as a result of the interim order.

Barrister Zafar said that jurisdiction of the Article 184 (3) of Constitution could only be exercised if the matter was of public importance as well as enforcement of fundamental rights. In the instant case, he said, the Supreme Court assumed jurisdiction on a note put up by the Human Rights Cell of the court.

Taxes and Service Charges

Before the suspension of the taxes, the Federal Board of Revenue (FBR) was deducting withholding tax (income tax) of 12.5 per cent under section 236 of the Income Tax Ordinance, 2001. The users in the Islamabad Capital Territory were charged 17 per cent excise duty whereas the users in provinces were being charged 19.5 per cent sales tax on services. Moreover, the cellular companies used to deduct 10 per cent for their services on each card.

Read more: Will CJP re-impose tax on cellphones cards?

Resultantly, on purchase of a card or easy load of Rs100, Rs25 was immediately deducted and the users received Rs75 balance in the account. Call charges and Federal Excise Duty or the provincial sales tax were separately deducted on every phone call.

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