The Islamabad High Court has dismissed a constitutional challenge by Meezan Bank against the super tax, upholding the levy in a case involving roughly Rs. 11 billion and dealing a blow to the country’s largest Islamic bank.

A division bench vacated its earlier interim stay orders and threw out all pending applications, ruling that Parliament has the constitutional authority to impose the super tax under Section 4C of the Income Tax Ordinance, 2001. The court reaffirmed that the statutory tax regime applies to banking companies without distinction.

Meezan Bank, represented by senior counsel Dr. Farogh Naseem, had mounted a multi-pronged attack on the levy. The bank argued the super tax amounted to double taxation, income already taxed under Section 4 of the ordinance was being hit again under Section 4C. It also challenged the retrospective enhancement of the tax and contended that income from Islamic financing agreements signed before the super tax was introduced or raised should be shielded from the levy.

The government pushed back on procedural grounds. Hafiz Ehsaan Ahmad Khokhar, representing the Federation and the Federal Board of Revenue, argued the petition was not maintainable because the bank had already pursued its statutory remedy by filing an appeal before the Appellate Tribunal Inland Revenue in Karachi. He further contended the IHC lacked territorial jurisdiction, as the tax assessment proceedings had been conducted in Karachi.

The court sided with the government on both counts. On the substance, it ruled that liability under Section 4C is determined by income earned during the relevant tax year — not by the date financing agreements were executed. It also held that the Seventh Schedule of the Income Tax Ordinance draws no distinction between conventional and Islamic banks, and found no constitutional violation in applying the super tax to Meezan Bank.