ISLAMABAD: Counsel for the Secretary Revenue Division on Monday argued before the Federal Constitutional Court (FCC) that the controversial Super Tax imposed under Section 4-C of the Income Tax Ordinance (ITO), 2001 squarely falls within Parliament’s exclusive taxing authority as provided under Article 77 read with Entry 47 of the Federal Legislative List.
A three-judge constitutional bench, headed by Chief Justice Amin-ud-Din Khan, was hearing appeals filed by the Federal Board of Revenue (FBR) against judgments of the Sindh, Lahore and Islamabad High Courts that struck down or questioned the levy of Super Tax introduced through the Finance Act 2022-23.
FBR counsels Asma Hamid and Hafiz Ahsaan Ahmed Khokhar, along with Additional Attorney General Aamir Rehman, have concluded their arguments. The bench is expected to reserve its judgment after hearing submissions from taxpayers’ counsel from Karachi. The court also allowed senior advocate Makhdoom Ali Khan limited time on Tuesday to make brief oral submissions, in addition to written arguments.
Appearing for the Federation, Hafiz Ahsaan Ahmed Khokhar presented detailed constitutional arguments in T.C. No. 1031/2025 and 225 connected matters, including 71 intra-court appeals transferred to the FCC under Article 186-A following the Twenty-Seventh Constitutional Amendment.
Khokhar contended that Super Tax is a tax on income, not a fee or cess, and therefore well within Parliament’s legislative competence. He maintained that the Constitution permits multiple fiscal levies on the same subject, provided each is imposed under valid statutory authority. He described Super Tax as an additional charge on high-income earners—similar in nature to a surcharge—rather than a separate or parallel impost.
Responding to objections on the maintainability of appeals, Khokhar argued that under Article 99 of the Constitution and the Rules of Business, 1973, taxation and fiscal litigation fall exclusively within the domain of the Revenue Division and the FBR. He added that revenue litigation is expressly exempt from mandatory consultation with the Ministry of Law and Justice or the Attorney General’s Office.
During the hearing, Justice Syed Hasan Azhar Rizvi questioned whether Commissioners Inland Revenue had the authority to initiate litigation before superior courts. In reply, Khokhar submitted that under Article 186-A and the 27th Amendment, all cases stood automatically transferred to the FCC, requiring no fresh authorization. He further argued that litigation powers are inherent in the statutory mandate of the Revenue Division and FBR to administer and protect federal revenues.
Criticising the High Courts’ rulings, Khokhar said they failed to apply settled principles governing judicial review of fiscal legislation. He stressed that courts may only examine whether Parliament had legislative competence and whether any express constitutional prohibition was violated—not reassess the wisdom, necessity or fairness of tax measures.
He also rejected the argument of double taxation, stating that Section 4-C operates independently and “in addition” to normal income tax under Section 4, thereby imposing an extra fiscal burden rather than re-taxing the same income. On retrospectivity, he argued that the Super Tax was lawfully applied prospectively to Tax Year 2022, as no vested right accrues before the return filing date.
Concluding his arguments, Khokhar urged the court to set aside the High Courts’ judgments and uphold Section 4-C as constitutional, lawful and consistent with principles of taxation, distributive justice and separation of powers.
