Meezan Bank Fails to Block Rs. 11 Billion Super Tax at IHC

The Islamabad High Court (IHC) has dismissed a petition filed by Meezan Bank Limited challenging the constitutional validity of the super tax, upholding the levy in a case involving around Rs. 11 billion.

A division bench also vacated its interim stay orders and dismissed all pending applications, ruling that Parliament has the constitutional authority to impose the super tax under Section 4C of the Income Tax Ordinance, 2001. The court reaffirmed the statutory tax regime applicable to banking companies.

Meezan Bank, represented by senior counsel Dr. Farogh Naseem, argued that the super tax amounted to double taxation, as income already taxed under Section 4 of the ordinance was subjected to an additional levy under Section 4C.

The bank also challenged the retrospective enhancement of the tax and argued that income generated from Islamic financing agreements executed before the introduction or increase of the super tax should not be taxed.

Representing the Federation and the Federal Board of Revenue (FBR), advocate Hafiz Ehsaan Ahmad Khokhar argued that the petition was not maintainable because the bank had already pursued the statutory remedy by filing an appeal before the Appellate Tribunal Inland Revenue (ATIR) in Karachi. He also contended that the IHC lacked territorial jurisdiction since the tax assessment proceedings were conducted in Karachi.

The court agreed with the government’s arguments, ruling that liability under Section 4C is determined by income earned during the relevant tax year rather than the date financing agreements were executed.

It also held that the Seventh Schedule of the Income Tax Ordinance makes no distinction between conventional and Islamic banks and found no constitutional violation in the application of the super tax.