The High Court (HC) is expected to deliver its judgment any day on about 100 writ petitions that challenged the imposition of minimum income tax on companies' gross receipts irrespective of their profit or loss, court sources said.
A larger bench of the HC has already concluded hearing on the long-standing legal dispute between the government and corporate entities, they said.
Earlier, considering significance of the legal matter, the Chief Justice had constituted a larger bench comprising three judges to dispose of the writ petitions.
Around 250-300 writ petitions were filed with the HC on different occasions after the government, in the fiscal year (FY) 2006-07, introduced 'turnover tax' at the rate of 0.5 per cent on companies' annual revenue receipts.
"Of the writ petitions, about 100 were included in the cause list for hearing at the larger bench," a lawyer of the petitioners told the FE.
The larger bench comprising Justice A. F. M. Abdur Rahman, Justice Md. Ashfaqul Islam and Justice Md. Ashraful Kamal recently concluded hearing on the petitions and kept the matter as CAV, a company counsel and a deputy attorney general (DAG) said.
CAV (Curia Advisari Vult) is a Latin legal term that means judgment would be passed anytime; normally, the judgment of any big issue is kept as CAV for delivery anytime, lawyers said
"The HC's larger bench thoroughly heard the counsels from both sides in the writ petitions and finally kept the matter as CAV," said Advocate Mosharaf Hossain, one of lawyers, who argued for companies in the court.
In their writ petitions, the private companies challenged the legality of Section 16CCC of the Income Tax Ordinance-1984 that imposed minimum income tax on their annual 'gross receipts'.
After introducing the minimum 0.5 per cent income tax on companies' annual turnover in the FY 2006-07, the government on the following FY (2007-08) lowered it to 0.25 per cent, sources said.
In the FY 2008-2009, the provision of such tax was rescinded saying that it was against fundamental principles of income tax.
The clause 157 of the budget speech for the FY 2008-2009, reads, "Currently, according to Section 16CC of the Income Tax Ordinance, all companies, irrespective of profit or loss, have to pay a minimum tax on the basis of their turnover which is clearly in breach of the fundamental principles of Income Tax. I propose to rescind this Section."
Thereafter a new Section -- 16CCC -- was incorporated in The Income Tax Ordinance-1984 by the Finance Act-2011; the section imposed the income tax at the rate of minimum 0.5 per cent on annual 'gross receipts' of companies irrespective of their loss or profit.
The rate of such minimum tax was, however, decreased to 0.3 per cent last year by the Finance Act-2014.
The amended Section 16CCC reads: "Notwithstanding anything contained in any other provisions of this Ordinance, every firm having gross receipts of more than taka fifty lakh (5.0 million) or every company shall, irrespective of its profits or loss in an assessment year for any reason whatsoever, including the sustaining of a loss, the setting off of a loss of earlier year or years or the claiming of allowances or deductions (including depreciation) allowed under this Ordinance, be liable to pay minimum tax at the rate of zero point three zero (0.30%) per cent of the amount representing such firm's or company's gross receipts from all sources for that year."
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