The reinstatement of the mobile card top-up tax, a few days back,on directive of Chief Justice Asif Saeed Khosa marks a new beginning in the judicial history of Pakistan. Justice Khosa, in his verdict on the case, concluded; “For reasons to be recorded later, this human rights cell case and all interim orders are disposed of.” The Honorable Chief Justice contended that the case had only been taken up after an anonymous message on social media was circulated citing blatant exploitation of consumers due to excessive taxes on mobile cards. Considering the ‘fake news’ that makes rounds on social media platforms every now and then, the head of the apex court was regretful that suomotu proceedings were initiated on basis of a social media post.
Before analyzing the decision of the Supreme Court to forthwith overrule the stay order issued during reign of Justice Nisar and reinstate tax on mobile top-ups, it is important to get a quick overview of the mobile tax. As elaborated by the Federal Board of Revenue (FBR), when consumers purchased or loaded Rs.100 card, Rs.40 would be instantly deducted. The breakdown of taxes is as follows:
- Income tax of 12.5 per cent deducted under Section 236 of the Income Tax Ordinance 2001 by the Federal Board of Revenue (FBR)
- 10pc deducted by cellular companies for the services rendered by them
- 17pc excise duty charged from the users in Islamabad Capital Territory (ICT)
- 5pc sales tax on services charged from the users by the provinces
The above deductions left Rs.61.93 in the consumers’ account as per FBR calculations.
Justice Nisar had asserted that the taxes levied on mobile top-ups were progressive with crushing impacts on the poor segments of society that already lived below the poverty line. Therein lied his decision, announced in a verdict on 11th June 2018, to suspend all such taxes. Consumers breathed a sigh of relief upon being exempted from heavy taxation and exploitation for using basic cellular services.
However, the impact of this tax to cash dried national and provincial coffers could not be overlooked. The Supreme Court was informed by the FBR that the state suffered revenue losses amounting Rs.90bn since suspension of mobile card top-up tax. It was further revealed that the provinces earned significant revenue by levying this tax. Share of Punjab stood at Rs.120bn, closely followed by Sindh at Rs.90bn, KP at Rs.55bn and Baluchistan at Rs.36bn. Owing to suomotu proceedings of the Supreme Court, the provinces were deprived of collecting revenue that they are legally entitled to under Provincial Tax Acts. Due to presence of legislation on tax collection, the consumers are not aggrieved party and therefore, the issue of excessive taxes on mobile cards would not qualify as violation of public interest. The pertinence of the mobile tax was even highlighted even by Justice Nisar who hinted at using the generated revenue to fund dam construction.
As noted earlier, the restoration of mobile top-up taxes marks the apparent beginning of a new era. The Supreme Court has experienced radical paradigm shifts since assumption of office by Justice Khosa. In his inaugural speech, the Honorable Chief Justice announced that he too would like to build a dam and retire the national debt; a dam against unnecessary delays in litigation and retiring the debt of pending cases. This hints at a change in the approach of the apex court- from judicial activism to active judiciary and thus the start of a new era. The decision to revive the tax signifies that the Supreme Court, with Justice Khosa at the helm, is looking to distance itself from legislative and executive affairs- exercise separation of powers- and instead divert its focus upon ‘getting its own house in order’. The mobile top-up tax was suspended under Article 184(3) in public interest. However, the presence of legislation under the Provincial Tax Acts raises the question whether the people were really aggrieved due to the tax and therefore makes intervention under Article 184(3) doubtful.
Moreover, as cited by Justice Khosa, the suomotu directive was taken on basis of a social media post which may have been false pretenses. The Supreme Court’s new course of action to direct its energy upon fixing the judicial system will be of greater benefit to all segments of the population. Lastly, the restoration of mobile top-up tax may be a decision unpopular among some segments of society, but, it is enshrined in legislation formulated by democratically elected representatives in national and provincial assemblies. If the public is truly aggrieved, channels of law may be pursued by forming advocacy coalitions and pressure groups to demand change in legislation. Exercise of suomotu powers leaves public interest to be solely interpreted by the Honorable justices. In this case, the said ‘public interest’ stemmed from social media which Chief Justice Khosa himself was regretful to recall.
 Reinstatement of mobile top-up tax was announced by the Supreme Court in a verdict on April 25, 2019.