ISLAMABAD: The Federal Constitutional Court has delivered a significant ruling in favour of corporate taxpayers, declaring the adjustment of tax credits against super tax liabilities legally permissible.
The court set aside the Islamabad High Court’s decision and allowed the appeals filed by private mobile operator Zong.
The Federal Board of Revenue (FBR) had issued the company a notice for payment of super tax. Zong approached the Islamabad High Court, seeking to adjust its available tax credits against the super tax liability. However, the high court dismissed the petition.
The company challenged the high court’s decision before the Federal Constitutional Court. After hearing the case, the court allowed Zong’s appeals and overturned the Islamabad High Court ruling.
In a six-page detailed judgment authored by Justice Aamer Farooq, the court held that tax credits obtained through filing and deductions can be adjusted against a super tax liability.
The court observed that tax credits available under Section 168 of the law constitute a separate and recognised legal right.
It said preventing taxpayers from adjusting such credits and forcing them to seek refunds instead would run contrary to the intent of the law.
The judgment further stated that financial laws should be interpreted while keeping the interests and convenience of taxpayers in view.
According to the court, a right granted under the law cannot be restricted merely on procedural grounds.
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The Federal Constitutional Court also directed the FBR to examine and decide the taxpayer’s adjustment claim in accordance with the law.
