Petition Against Tax Hike on Telecom Services Filed in SC

supreme-court-of-pakistan-nroA petition has been filed in the Supreme Court of Pakistan seeking the exception on tax hike announced in recently announced annual budget.

Petitioner made Federation of Pakistan the respondent through secretary Ministry of Law and prayed that  tax increase on telecom services be declared ultra vires of the Constitution.

As an interim relief, petitioner requested the court to instruct the Federation not to deduct any tax imposed through the Finance Bill 2013 on the subscribers using mobile phone service until the disposal of this petition.

Petitioner prayed that the increase in tax on the telecom sector violated the fundamental commitments of the Constitution made in Article 4 and leaves the persons for the time being in Pakistan with an irremovable handicap in commercial competition and fair play.

Shahid Orakzai, the petitioner, contended his case on three points:

  1. Whether the Federation can impose any tax in the Finance Bill which is to be collected through a foreign commercial enterprise?
  2. Whether the Federation can impose any tax on the business or clientele of a foreign commercial enterprise which is against the letter and spirit of their mutual contract?
  3. Whether a foreign commercial enterprise, being a person for the time being in Pakistan, can be discriminated in Federal taxation?

Petition said that ridiculous taxation has rocked the telecom sector and knocked out the feasibility of doing any profitable business in Pakistan. He said that none of the telecom companies could perceive such taxation in a country where mobile phone communication has changed the face and pace of life.

Petition said that his business, and business of a common man will get affected because the irrational taxation will have a catastrophic fall out on the inflow of money and communication technology, which will eventually make investors take a u-turn.

It merits mentioning here that government of Pakistan deducts 19.5 percent FED on telecom services, while another 15 percent WHT – which was 10 percent before 2013 budget.

It maybe recalled that taxes on telecom services in Pakistan are second highest in the world after Turkey.