A major legal challenge has emerged against Pakistan’s super tax regime, as Section 4C of the Income Tax Ordinance, 2001, was declared unconstitutional before the Federal Constitutional Court (FCC). The provision was criticized for failing to meet the constitutional requirements necessary for imposing a federal tax.
The matter came up during the hearing of appeals filed by the Federal Board of Revenue (FBR), which sought to overturn earlier judgments issued by the Sindh High Court, Lahore High Court, and Islamabad High Court. These judgments had questioned the legality of the super tax imposed under Section 4B of the Income Tax Ordinance.
The three-member bench hearing the case was headed by Chief Justice Aminuddin Khan and included Justice Syed Hassan Azhar Rizvi and Justice Arshad Hussain. During the proceedings, senior counsel for the taxpayer companies, Makhdoom Ali Khan, strongly argued that Section 4C was fundamentally flawed and unlawful. He maintained that the provision did not satisfy constitutional standards required for federal taxation and therefore could not legally support the collection of super tax.
Raising a critical question, the counsel asked under what lawful authority the government had collected super tax so far if the underlying legal provision itself was unconstitutional. He further contended that the tax placed an excessive financial burden on businesses and was imposed unevenly across different sectors, resulting in discriminatory treatment and a violation of the principle of equality.
Justice Syed Hassan Azhar Rizvi, during the hearing, sought clarification on whether the Federal Board of Revenue and relevant tax commissioners had been made parties to the proceedings before the Islamabad High Court. The counsel confirmed that both authorities were properly impleaded as respondents in that case.
The arguments highlighted concerns not only about the legality of the provision but also about the broader impact of super tax on the business environment. According to the petitioners, non-uniform tax rates and selective application across industries undermine fairness and create uncertainty for taxpayers.
After hearing detailed submissions from both sides, the Federal Constitutional Court adjourned the proceedings until Thursday. The outcome of this case is being closely watched, as a ruling against Section 4C could have far-reaching implications for tax policy, revenue collection, and ongoing litigation related to super tax across the country.