SHC dismisses petitions against windfall tax

By MG News | February 23, 2025 at 09:47 PM GMT+05:00
February 23, 2025 (MLN): The Sindh High Court (SHC) has dismissed petitions challenging the enforcement of Section 99D of the Income Tax Ordinance 2001 and SRO 1588(I) of 2023, which relates to the imposition of the windfall tax.
In its order, the SHC dismissed the petitions opposing the tax's implementation.
The petitioners had contested the legality of Section 99D and the associated SRO 1588(I) of 2023, dated November 21, 2023.
In light of the ruling, the Federal Board of Revenue (FBR) has decided to engage legal counsel to handle the matter moving forward.
The court categorically dismissed all petitions and pending applications. During the proceedings, senior lawyer Dr. Farogh Naseem, representing the petitioners, made an oral motion seeking suspension of the order for a month.
He argued that interim orders had been in place since 2023, as referenced in the interim order dated December 7, 2023, in CPD 5741 of 2023 and related petitions.
These interim orders had previously suspended the operation of SRO 1588(I)/2023.
However, the SHC stated that granting such an oral motion would effectively reinstate the interim orders and prolong the suspension of the windfall tax, despite the fact that the challenge to its validity had already been dismissed.
The court further referenced the Supreme Court’s stance against issuing interim orders that suspend a law, particularly in revenue-related matters.
As per our information, the total windfall profit on foreign exchange income is approximately Rs35 billion, with most banks having already taken provisions for this amount in their accounts.
The court, in its considered view, emphasized that granting the oral motion would contradict the directives of the Supreme Court, which has consistently discouraged interim orders that effectively suspend legislation.
Consequently, the SHC denied the oral motion for suspension of its ruling.
The dismissal of these petitions solidifies the government’s stance on imposing windfall tax and sets a significant precedent in taxation law.
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