Supreme Court Declares Income Support Levy Illegal

The Supreme Court has declared Income Support Levy (ISL) ultra vires to the Constitution. In this regard, the Apex Court has issued a judgement on Income Support Levy issue against the Department.

The Sindh and Lahore High Courts had issued different judgments on the ISL issue. The SHC announced its decision in the case of Yaqoob Ahmed and 575 other petitioners in CPD-3757/2013, etc. that the ISL Act was ultra vires the Constitution. Earlier, LHC had declared it as ultra vires to the Constitution vide order of April-May 2019 in WP 14509-2019, etc. in the case of Syed Tayyab Hussain Rizvi, etc.

The SC released its detailed judgment, upheld the SHC order, and dismissed the appeals against it.

When contacted, Asif S Kasbati, a senior tax, fee and levies expert, explained that after discussing the matter threadbare in 16 pages, the SC upheld the SHC Order in favor of taxpayers and against the Department on the 3 grounds. The member of ICAP Fiscal Laws Committee pointed out that,

1. ISL law was passed along with Money Bill, it does not possess the character of a tax; and
2. it is a levy in the nature of fund to be charged and utilized for a specific purpose i.e. to provide for financial resources for raising an income support fund for the economically distressed persons and their families; hence, ultra vires considering Article 73 of the Constitution;
3. Since, the ISL Act 2013 (Act) has been repealed through the Finance Act 2014, without a saving clause, therefore, whether any levy can be claimed, charged, or collected on the basis of the Act, which allegedly stood obliterated/abrogated completely, from the date of its promulgation.

Hence, all the notices and the proceedings, including assessment order(s) passed under Section 5 of the ISL Act after the repeal of the ISL Act, 2013, are declared without jurisdiction and lawful authority, the tax expert opined.