Advocate Adnan Haider Randhawa, appearing before the Constitutional Bench of the Supreme Court, argued that the Super Tax imposed by the federal government is ultra vires and exceeds constitutionally assigned powers. He told the bench that the levy conflicts with Entries 47 and 52 of the Federal Legislative List and that the federal government may only tax within the strict bounds of the constitutional framework, making the Super Tax constitutionally invalid.
Randhawa told the court that the retrospective application of the Super Tax has inflicted double prejudice on taxpayers. He explained that many companies had closed their accounts for Tax Year 2022 on 31 December 2021 and had completed their tax obligations, yet a Super Tax announced on 1 July 2022 was applied to those earlier accounting periods. According to him, reopening finalized tax periods with a retroactive charge violates settled tax principles and is unjust to taxpayers who had already settled liabilities.
He also highlighted the additional hardship created for companies operating under a Special Tax Year. The Federal Board of Revenue’s interpretation, he submitted, treated the Super Tax as applicable from 1 January 2021 while it was meant for Tax Year 2022. That approach forced some companies to be taxed for an 18-month span despite the Income Tax Law defining a tax year as 12 months, producing an illogical and unfair result rooted in the FBR’s misinterpretation.
Randhawa further criticized the FBR’s reliance on an interpretation drawn from Indian tax practice, saying the assumption that “the next year’s tax rate will apply to the previous tax year” belongs to Indian law and not Pakistan’s legal framework. He noted that Pakistan’s tax year model differs and that recent changes in India show a move toward Pakistan’s system, underscoring that Pakistan’s approach is conceptually sound and that the FBR’s comparison was misplaced.
The constitutional challenge led by Advocate Randhawa resumed before the bench with detailed legal submissions and is set to continue tomorrow. The outcome of this hearing is expected to carry significant implications for major taxpayers, corporations and the broader business community across Pakistan as the court considers the limits of federal taxing power and the fairness of retrospective taxation under the Super Tax.
