ISLAMABAD: The Federal Constitutional Court has delivered a significant ruling in favour of corporate taxpayers, holding that tax credits can legally be adjusted against super tax liabilities and setting aside an earlier decision of the Islamabad High Court.
Justice Aamer Farooq authored the six-page detailed judgment, allowing appeals filed by a private mobile company.
The court ruled that tax credits available on filing and withholding can be used to adjust super tax payable by a taxpayer.
According to the judgment, a tax credit available under Section 168 constitutes a separate and recognised legal entitlement. The court observed that preventing a taxpayer from making an adjustment and forcing the taxpayer to seek only a refund would run contrary to the intent of the law.
The court further held that fiscal laws should be interpreted in a manner that gives due consideration to the rights and convenience of taxpayers.
It directed the Federal Board of Revenue (FBR) to examine the taxpayer’s claim for adjustment in response to the relevant notice and decide the matter in accordance with law.
The dispute arose after the FBR issued a notice to a private mobile company for payment of super tax.
The company challenged the demand and sought adjustment of available tax credits against its super tax liability. It approached the Islamabad High Court after the tax authorities did not accept the adjustment claim.
The high court had dismissed the company’s petition.
The Federal Constitutional Court has now overturned that ruling and held that the taxpayer’s adjustment claim must be considered under the applicable legal framework.
The judgment could carry wider significance for corporate taxpayers facing similar super tax disputes, particularly where recognised tax credits are available for adjustment against outstanding liabilities.
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