Super Tax on super rich

By Vijay Kumar

IN order to generate Rs. 24 billion extra revenue, the government had introduced Super Tax on rich individuals, association of persons (AOPs) and companies earning income above Rs. 500 million in tax year 2015 at rate of 4 percent of income of banking companies and 3 percent on other categories for rehabilitation of temporarily displaced persons through Finance Bill (2015-16).

The purpose of the tax is to generate funds for rehabilitation of temporarily displaced persons , who were affected due to terrorism and counter-terrorism efforts that resulted in displacement of hundreds of thousands of people.

On September 2, draft rules were issued to implement the levy of super tax that was announced by the finance minister in his budget speech 2015/2016.

However, in November 2015, the Sindh High Court suspended the imposition of the levy and against this decision the federal government filed a petition in the Supreme Court.

Incidentally, the Lahore High Court, on 30.12.2015, has dismissed a similar petition for interim relief against section 4B of Super tax, Income Tax Ordinance 2001 and said that it is still valid and operative and no relief can be granted until its struck down by the superior courts.

Noting that the relief granted by the High Court of Sindh effectively renders the provisions of section 4B of the Ordinance, 2001 as redundant and inoperative, the Lahore High Court chose not to follow the same.

The High Court also observed - "In case an interim relief in any form is granted at this stage, that will tantamount to circumventing the mandate of the principle laid down by the superior courts. This cannot be countenanced. Two principles would come into play. Firstly, the maxim that what cannot be done directly cannot also be done indirectly is fully applicable in this case. Also it has consistently been held by the superior courts that an interim relief which amounts to the grant of the final relief cannot be granted by the courts. However, the primary basis for the refusal of the relief remains the same. It is that by way of interim relief, no concession can be granted which will result in the suspension of the operation of a provision of law."

Let it be known that the above legal battle is being fought in our neighborhood, Pakistan.