HC starts hearing on long-pending writs

A High Court (HC) larger bench started hearing on about 100 long-pending writ petitions that challenged minimum 0.5 per cent income tax on the companies' annual 'gross receipts' irrespective of whether they made loss or profit, sources said.
"Taking the significance of the legal matter into consideration, the Chief Justice formed the larger bench at the HC for hearing the long pending writ petitions," a lawyer said.
Earlier on different occasions, the HC issued rules on about 200-300 such writ petitions seeking explanation from the government over legality of the relevant income tax provision, the lawyer said.
"Of the total writ petitions, nearly 100 were included in the cause list for hearing by the larger bench of the HC," the SC lawyer, who is dealing with some of the petitions, told the FE Saturday.
The larger bench comprising Justice A. F. M. Abdur Rahman, Justice Md. Ashfaqul Islam and Justice Md. Ashraful Kamal started hearing on the legal matter last week.
The private companies filed the writ petitions on different occasions in the last few years challenging legality of the Section 16CCC of the Income Tax Ordinance-1984 that imposed the 0.5 per cent income tax on their annual 'gross receipts'.
In 2006-07 fiscal year (FY), the government introduced 'turnover tax' for companies and business firms at the rate of 0.5 per cent on their annual turnover. In the next FY (2007-08), the tax rate was lowered to 0.25 per cent, sources said.
In the FY 2008-2009, the government rescinded the provision of such tax saying that it was against fundamental principles of income tax.
The budget speech for the FY 2008-2009, Clause 157 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 imposing the latest income tax at the rate of minimum 0.5 per cent on annual 'gross receipts' irrespective of loss or profit.
The Section 16CCC reads: "Notwithstanding anything contained in any other provisions of this Ordinance, every company shall, irrespective of its profits or loss in an assessment year for any reason whatsoever, including sustaining a loss, off-setting 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 five zero (0.50) per cent of the amount representing such a company's gross receipts from all sources for that year."