A Constitutional Bench has struck down the 4 percent additional tax imposed on poultry feed supplied to unregistered poultry farms, dealing a setback to federal revenue measures ahead of the upcoming budget.

A two-member bench headed by Justice Aamer Farooq set aside a Lahore High Court ruling and held that the levy could not be imposed on poultry feed manufacturers supplying feed to unregistered farms.

The case revolved around Section 31A of the tax law introduced through the Finance Act 2024. The court found ambiguity in the provision and ruled it could not be interpreted to justify the additional tax on such supplies.

The bench observed that poultry farms are legally exempt from taxation and are not required to register under the relevant framework. It added that where exemption exists, neither the farms nor feed suppliers can be penalised for non-registration.

The court further ruled that the legal structure does not impose a compulsory registration requirement on poultry farms, making the application of the 4 percent levy inconsistent with the law.

The decision overturns the earlier Lahore High Court judgment that had upheld the tax. Poultry feed mill owners had challenged the levy, arguing it was wrongly applied despite the exemption granted to poultry farms.

The ruling is expected to provide relief to feed manufacturers and poultry producers, while also reducing expected revenue collections as budget preparations continue.