SHC stays recovery of surcharge on Super Tax

ISLAMABAD: Sindh High Court (SHC) Tuesday granted stay to a taxpayer against recovery of alleged default surcharge on the Super Tax liability of the taxpayer, it is learnt. According to the details of the case, the taxpayer had received show cause notices for several tax years under Sections 205(1) read with Section 205(7) and Section 137(1) of the Income Tax Ordinance 2001 [“Ordinance 2001] stating that the taxpayer was liable to pay default surcharge on account of alleged failure to pay super tax under Section 4C of the 2001 Ordinance with their return of income for the tax years in question. Several Petitions were filed before the Sindh High Court. One set of Petitioners were represented by Barrister Asad Ashfaq Tola, M. Amayed Ashfaq Tola, and Shaheer Memon. The second set of petitioners was represented by Jawad Qureshi and Yousuf Khalid Anwer. The Petitioner taxpayer contended that no amount of default surcharge is payable – since the period for which default surcharge has been calculated as being payable upon the Petitioner enjoyed the protection of the Islamabad High Court or for that matter even the Supreme Court and the Federal Constitutional Court (since neither had suspended either the Fauji Fertilizer Judgement or the Pakistan Oilfields Judgment during the pendency of the proceedings). It was further contended that as is apparent from Section 205 of the Ordinance 2001, it is critical for there to first be an assessment of whether any default surcharge is payable by a taxpayer or not. Moreover, it was contended that the assessment is to be by way of the assessing officer passing an Order-in-Original against the taxpayer Petitioner for the given tax years. As per Section 137(2) of the Ordinance 2001, where a tax has been determined to be ‘payable’ pursuant to an Order passed by a Commissioner, then a notice must be served on the taxpayer specifying the amount payable. Critically, the taxpayer will be afforded a period of 30 days to pay the tax from the date of the notice under Section 137(2) of the 2001 Ordinance. Since the Respondent No. 4 has not yet passed an Order assessing the amount of default surcharge payable (if any is payable at all) by the Petitioner, the process under Section 137(2) cannot be initiated. It was further submitted that the mandatory nature of providing the taxpayer with a period of thirty (30) days following passage of the Order-in-Original has been affirmed by the Hon’ble Supreme Court numerously, and most recently in C. P. Nos. 3578 and 4598 of 2024 (Commissioner Inland Revenue (Legal), Islamabad v. Pakistan LNG Limited and others) (reported as 2026 PTD 192). The Sindh High Court has issued notices to the respondents and the deputy attorney general (DAG) and stated that in the meanwhile no coercive action be taken by the Respondents in pursuance of the impugned notices for the tax years without adhering to Section 137(2) of the Ordinance 2001. Copyright Business Recorder, 2026

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