October 16, 2019

SC asks federal, provincial govts to comment on taxes levied on mobile services

News Source: Dawn News

The Supreme Court, while hearing a case pertaining to taxes charged by cellular service providers, on Wednesday asked the federal and provincial governments to provide details of all mobile phone taxes they collected over the past one year.

A two-member bench of the apex court, headed by Justice Qazi Faez Isa, heard the case.

In June 2018, the Supreme Court had suspended the deduction of taxes on prepaid cards provided by mobile phone service providers.

Attorney General of Pakistan Anwar Mansoor today opposed the court’s decision to suspend mobile phone taxes, saying that the matter did not fall under the categories of fundamental rights or public interest and therefore the Supreme Court should not have intervened.

According to a lawyer present on behalf of the Punjab government, due to the suspension of mobile phone taxes, the provincial government was unable to collect Rs80bn of revenue.

During the proceedings, the court noted that it was being argued by the federal and provincial governments that oversight over mobile phone taxes does not fall under the Supreme Court’s powers as defined in Article 184(3) of the Constitution.

Article 184(3) of the Constitution states: “[…] the Supreme Court […] if it considers that a question of public importance with reference to the enforcement of any of the Fundamental Rights conferred by Cha­pter I of Part II is involved, has the power to make an order of the nature mentioned.”

The court asked the federal government to explain the laws under which mobile service taxes are collected from people who do not fall under the tax net.

“Without the suspension of the laws for tax collection, how can [the] tax collection be suspended?” Justice Isa enquired. He added that he believes the case does come under the Supreme Court’s jurisdiction under Article 184(3).

Separately, Justice Ejazul Ahsan asked how the government determines who was paying the taxes.

“Why should a pushcart driver (‘rehri wala’), bread seller (‘naan wala’), plumber or barber pay taxes on mobile services?” he asked.

He said that cellular services taxes should be paid by those who are eligible to pay them. He also asked why a person who is exempted from taxes should be required to pay the withholding tax deducted by cellular service providers.

A lawyer for a service provider said the companies had removed a 10 per cent service charge on mobile phones, as per the orders of the court.

In February, it had been reported that the government would present an alternative formula to the apex court for revival of taxes on mobile phone cards to bridge the revenue shortfall and meet budgetary target instead of imposing any new taxes in the next five months.

“No new taxes will be imposed in the current fiscal year to achieve revenue target as prior conditions for availing the International Monetary Fund (IMF) bailout package,” State Minister for Revenue Hammad Azhar had said.

Justice Isa today said that the decision to suspend mobile phone taxes had been given by a three-member bench and therefore it would be appropriate that a three-member bench hear the case.

He then sent the case to the Chief Justice of Pakistan for his consideration.

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