SC withdraws service charges on mobile top-ups


–Customers to now get Rs88.89 on recharge of Rs100

ISLAMABAD: The Supreme Court (SC) on Monday ordered the immediate withdrawal of service charges after which the mobile users could avail Rs88 upon a recharge of R100.

According to details, Rs88.89 will be credited to the customers’ balance upon a recharge of Rs100 whereas previously consumers would get only Rs76.94 after the deduction of additional charges.

Earlier this year, the apex court had told the telecom service providers that they could charge a 12 per cent withholding tax on mobile top-ups but they would have to abolish the 10 per cent administrative charges.

On April 24, SC had ordered the restoration of all taxes on mobile phones top-up cards. While disposing of the suo motu case, Chief Justice of Pakistan (CJP) Asif Saeed Khosa had announced a short order while heading a three-member bench of Justice Qazi Faez Isa and Justice Ijazul Ahsan, saying that the apex court will not intervene in public revenue and tax collection propositions.

Meanwhile, appearing before the bench on behalf of the Punjab Revenue Authority (PRA) in the matter, Barrister Syed Ali Zafar had argued that the apex court had passed interim orders under which the sales tax charged on telecommunication services under the calling cards were suspended.

Barrister Zafar had contended that his client alone could not recover a sum of more than Rs27 billion so far, adding that jurisdiction of Article 184(3) could only be exercised if the matter is of public importance as well as enforcement of fundamental rights but in the matter in hand, jurisdiction has been assumed by the top court on a note put up by the human rights cell of the court.

Barrister Zafar had further argued that under Article 184(3), it was a requirement that before exercising this jurisdiction, the apex court must apply its mind and come to the conclusion that prima facie there was a matter of public importance involving enforcement of fundamental rights.

Citing a number of the verdict in order to substantiate his arguments, Barrister Zafar had said that imposition of any kind of tax or fee is exclusively prerogative of the sovereign power of the parliament and provincial assemblies under the law of the land.

The counsel had further argued that if a tax is challenged, then the appropriate procedure under the constitution is that the case should first be filed by an aggrieved party under Article 199 of the constitution before the high court saying after which the top court can examine the validity of tax laws while exercising its appellate jurisdiction in a matter.

Regarding the imposition of sales tax on the services under the Punjab Sales Tax Act, 2012, he had submitted that the tax was being levied in accordance with law and under the provisions of valid law and no one was aggrieved by it nor had it been challenged is contrary to any of the fundamental rights enshrined in the constitution and, hence, the suo moto proceedings undertaken by the court should be disposed of.

After hearing the federation, provincial law officers and Barrister Ali Zafar, the bench had reserved the verdict. After half an hour, the bench had announced short order while disposing off the case, holding that the top court will not interfere in revenue and taxation matter.

In June last year, the apex court had suspended all the taxes deducted by the cellular companies on mobile phone recharge and gave a two-day deadline to the companies for implementing the order.

Days later, following the court’s order, cellular companies had decided to suspend all taxes on mobile phone recharge through pre-paid scratch cards.

The Federal Board of Revenue (FBR) had said that it will establish a new mechanism regarding tax deduction on mobile phone recharge within 15 days, in collaboration with local cellular firms.

During a separate hearing of the case, then CJP Mian Saqib Nisar had remarked that it was said that the decision to suspend deduction on mobile balance was for a limited time period and that the practice would resume following the expiry of two weeks.

He had said this in the presence of the attorney general and several other members of the federation.

“The taxes on mobile balance cannot be deducted until the court’s next orders,” he had said. “The decision to suspend tax collection on mobile cards will hold until then.”

Earlier, the consumers were paying 42 per cent tax, including 19.5 per cent FED, 12.5 per cent WHT and 10 per cent service/ maintenance charges on every Rs100 card.

The then CJP took the notice in May last year and had issued notices to the federal government and cellular companies, asking “under which head an amount of Rs40 is being charged on every Rs100 recharge”.

Earlier, Senator Muhammad Ateeq Shiekh had said, consumers, have to pay Rs28 on Rs100 card which is unfair. The government should remove advance and withholding tax being charged on Rs100 mobile card, he had demanded.