ISLAMABAD: The Supreme Court on Monday grilled the government over its decision to impose a windfall profit tax, asking whether ordinary price fluctuations could be treated as extraordinary profits.
A five-member constitutional bench headed by Justice Aminuddin Khan heard arguments from petitioners’ counsel Ahmed Jamal Sukhera.
Justice Hassan Azhar Rizvi questioned the government’s definition of windfall gains, asking: “If petrol rises from Rs150 to Rs200, would that be windfall profit? If sugar goes from Rs160 to Rs170, would that still count?”
Sukhera argued the tax unfairly targeted select sectors, claiming that while a handful of businesses profited, many others suffered losses. “If three or four people benefit while the majority incur losses, how can tax be imposed?” he said, calling the measure a product of “windfall profit policy” rather than sound economic logic.
Justice Muhammad Ali Mazhar noted that constitutional safeguards had limits. “Article 10-A is about fair trial — what does that have to do with taxation?” he asked. Sukhera countered that taxation required public participation, and that the levy violated Entry 47 of the Constitution, which outlines Parliament’s powers to tax. Justice Mazhar responded that while municipal taxes allow for public input, “income tax law has no clause about public hearing.”
The courtroom also witnessed lighter moments. When Sukhera remarked, “Simplicity too can be a captivating charm,” Justice Mazhar quipped, “Perhaps this is your kind of simplicity?” Later, Sukhera referenced his age and mentioned his children, who are barristers. Upon learning that the person was 57 years old, Justice Jamal Khan Mandokhail asked, “Do you consider 57 to be old?” — sparking laughter.
Sukhera closed his arguments by noting, “One day, none of us will be here, but this judicial decision will remain.”
The bench pointed out that several loss-making government institutions — including PIA and Pakistan Steel Mills — had been placed on the super tax list, even though their performance was the state’s responsibility. The hearing was adjourned until Tuesday.
Background on Super Tax
The super tax is an additional levy on high-income individuals, companies, and industries, introduced in the 2022–23 federal budget. The government imposed up to 10% on major sectors including cement, steel, sugar, oil and gas, fertiliser, banks, and textiles to raise revenue for economic stabilisation.
Several petitions challenging the levy have reached the Supreme Court. Earlier, the Federal Board of Revenue (FBR) informed the court that no appeals had been filed against the Lahore High Court’s decision upholding the legality of the super tax under Section 4C of the Income Tax Ordinance, 2001. The LHC had, however, reduced its rate from 10% to 4% for 16 sectors, including banking, granting partial relief.
The Supreme Court has also questioned whether the Centre can distribute super tax revenue to provinces, noting that despite its extension since 2016, funds were not being used for their stated purpose.
At earlier hearings, the bench expressed concern about the tax’s trickle-down effect on the public. Justice Mazhar observed: “Whether it is a cement bag or an LNG shipment, the entire burden comes down on the common man.” Justice Mandokhail cautioned that discouraging taxpayers could drive businesses out of the country.
The FBR previously clarified that only 15 sectors with incomes above Rs300 million were liable for the super tax, adding that no company had claimed inability to pay. However, the bench pressed the revenue body to justify why distinctions among taxpayers were created, stressing that budgetary measures must not shift the burden onto the public.
