ISLAMABAD – Relief for corporate taxpayers as Federal Constitutional Court overturned Islamabad High Court’s ruling and declared the adjustment of tax credits against super tax fully lawful, potentially opening avenue for companies facing super-tax liabilities.
Justice Aamer Farooq penned verdict on appeals filed by private mobile phone company after the Federal Board of Revenue (FBR) issued it a notice demanding payment of super tax.
It mentioned the dispute was whether taxpayer could use an available tax credit to adjust its super-tax liability. The constitutional court has now settled the issue in favour of the taxpayer, ruling that tax credits available for filing and tax deductions can legally be adjusted against super tax.
The court specifically held that the tax credit available under Section 168 of the law represents a separate and recognised legal right of the taxpayer. Denying that right and forcing a taxpayer to seek a refund instead of allowing adjustment would, the court observed, run contrary to the intent of the law.
In a significant observation, the court said fiscal laws should be interpreted with a view to facilitating and benefiting taxpayers, rather than creating unnecessary hurdles in the utilisation of their legally available tax rights.
The ruling also directed the FBR to re-examine the taxpayer’s adjustment claim in response to the notice issued in the case.
The dispute began after the FBR served the private mobile operator with a notice for payment of super tax. The company challenged the matter before the Islamabad High Court, seeking adjustment of its tax credit against the liability. The high court, however, rejected the company’s plea, prompting it to approach the Federal Constitutional Court.
The latest verdict has now set aside the Islamabad High Court’s decision, accepting the company’s appeals and recognising the legality of adjusting eligible tax credits against super tax.
The ruling could prove significant for corporate taxpayers with similar tax-credit claims, as it reinforces the principle that a legally available credit cannot simply be denied when the law permits its adjustment.
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