The Sindh High Court (SHC) has withdrawn the federal excise duty of 75 paisas on phone calls of more than five minutes duration and announced the federal excise duty against the Constitution.
Sindh High Court Struck Down Federal Excise Duty on Phone Calls
The verdict of the Sindh High Court has settled the federal and provincial governments’ domains in taxing the telecommunication services. The provincial court struck down the tax because the federal government did not have the jurisdiction to tax telecommunication services that under the Constitution fell under the provincial domain.
“We are of the view that impugned legislation, Entry 6A to Table-II of First Schedule ultra vires to the Constitution and as a consequence whereof is being struck down and the petitions are as such allowed to this effect,” read the Sindh High Court judgment.
Major Telecom Service Providers Opposed the Imposed Tax
Moreover, three telecommunication service providers Pakistan Mobile Communication Limited, Pak Telecom Mobile Ltd, and Telenor Pakistan had disputed the federal excise duty in the Sindh High Court. The response of the Federal Board of Revenue (FBR) spokesperson Asad Tahir was awaited till the filing of the story. In the Finance Bill, Adviser Shaukat Tarin had suggested 10 paisas tax on each SMS, Re1 per call of more than three minutes, and Rs5 per 1 gigabyte of internet usage.
Federal Excise Duty was Imposed to Generate Rs15 billion this Year
However, after the public backlash, the government had withdrawn the SMS and internet tax but decided to charge 75 paisas on all phone calls topping five minutes. The federal excise duty was imposed to generate Rs15 billion in the current fiscal year. The development came during tough negotiations between Pakistan and the International Monetary Fund (IMF) on the fate of the 6th Review under the $6 billion program.
While deciding the federal excise duty on phone calls, the Sindh High Court ruling declared that the constitutional scheme did not authorize two taxes in respect of the same event and that too being imposed by two individual legislatures — the Centre and province. It further stated that the 18th Amendment had changed several articles of the Constitution.
Source: Pro Pakistani