A two-member bench of the Federal Constitutional Court (FCC), comprising Chief Justice Aminuddin Khan and Justice Aamer Farooq, has ruled that commercial entities can adjust super tax liability against available tax credits under the Income Tax Ordinance (ITO), 2001.
The court issued the verdict on an appeal filed by CM Pak Limited, a Chinese multinational telecom operator, challenging the Islamabad High Court’s (IHC) March 25, 2026 decision dismissing its similar plea.
Justice Aamer Farooq, who authored the six-page judgement, held that there was no legal justification for preventing taxpayers from adjusting super tax paid under Section 4C of the ITO against tax credits available under Section 168.
The court observed that a tax credit under Section 168 was legally and conceptually different from a refund under Section 170. It noted that Section 170 provides a separate mechanism for claiming refunds, while Section 168 allows credit for tax already collected or deducted.
The FCC said Section 4C(3) clearly provides that super tax would be paid, collected and deposited in the manner prescribed under Section 137(1), while all provisions of Chapter X of the ITO would also apply.
According to the judgement, the reference to “all provisions of Chapter X” could not be restricted only to procedural matters. Since Section 168 falls within the same chapter, its provisions relating to tax credits would also apply to super tax.
The court said that accepting a contrary interpretation would amount to adding a restriction to the law that Parliament had not imposed.
The super tax was introduced on the income of specified high-earning sectors as an additional charge on income. Its constitutional validity was subsequently challenged before the superior courts but was ultimately upheld by the FCC.
Following the court’s decision, the Federal Board of Revenue (FBR) issued a notice to CM Pak Limited on February 9, 2026, seeking payment of its super tax liability.
The company subsequently informed the FBR that it had excess tax deducted at source amounting to Rs2.2 billion for tax year 2022, which it sought to adjust against its super tax liability. The FBR rejected the request, prompting the company to approach the IHC.
The FCC has now set aside the IHC’s March 25 order and allowed the company to seek adjustment of its available tax credit before the competent tax authority.
The court directed the relevant authority to determine the company’s claim in accordance with the provisions of the Income Tax Ordinance.
