The Supreme Court, in a full-text verdict, observed that some large companies and firms hired renowned accountants to implement various schemes to avoid paying taxes.
A five-member bench of the Appellate Division headed by Chief Justice Hasan Foez Siddique made the observation in the verdict after hearing a total of 84 leave to appeal petitions filed by some renowned companies and firms.
In the observation, the court also said: "Tax evasion and avoidance erodes tax base and hampers revenue collection thereby bringing serious threat to the fiscal health of the country. Again the evil consequences of tax avoidance affects our people directly because expenditure of the government including the implementation or execution of the development project can be met up by the revenue which is earned through collection of tax."
The apex court delivered its short verdict on December 14 in 2022, while the full text has been released on the SC website recently.
The appeal petitions were filed against a High Court verdict that declared lawful the section 16 CCC of Income Tax Ordinance, 1984 that prescribes charging minimum tax on total transaction of the companies or firms.
According to the verdict, some companies and firms filed returns for the assessment year 2009-2010 based on audited accounts under Section 35(3) of the Ordinance, 1984.
But the legislature suddenly incorporated Section 16 CCC in the Ordinance, 1984 through the Finance Act, 2011, imposing liability of paying minimum tax at 0.50% on gross receipts for every company irrespective of its profit or loss in an assessment year from all sources.
In this circumstance, the companies and the firms filed separate writ petitions with the High Court challenging incorporation of Section 16 CCC of Income Tax Ordinance, 1984 through Finance Act, 2011, saying the Section is a violation of fundamental rights enshrined under Articles 26, 27, 31, 40 and 42 of the Constitution.
Upon hearing the counsels for the petitioners in all the writ petitions, different benches of the High Court Division issued separate rule upon the respondents to show cause.
After final hearing on the writ petitions, a larger bench of the High Court Division constituted for disposal discharged all the rules.
Aggrieved, the writ petitioners preferred to file leave to appeal petitions with the apex court.
After final hearing on the appeal petitions, the Appellate Division delivered its decision by dismissing all the leave to appeal petitions filed by different companies and firms.
The apex court said Section 16 CCC was enacted for betterment of the people of the country and to prevent tax evasion and the enactment is not arbitrary, unreasonable, unfair as well as not violative of any of the provisions of the Ordinance, 1984 or of the Constitution.