1. Overview of the Case
This matter concerns constitutional petitions challenging the vires of Serial No. 14 of Schedule 2 to the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022, on the grounds that it encroaches upon the federal legislative domain regarding the taxation of goods under Entry 49 of the Constitution. The key principle laid down is that the Federal Constitutional Court is the exclusive apex forum for determining the vires of legislation and interpreting the Constitution, superseding previous jurisdictional arrangements.
2. Brief Facts
This judgment shall decide the captioned petitions as common question of law arises, from these petitions, for us to decide i.e., whether Serial No. 14 of Schedule 2 to the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022 ( the impugned law ) is ultra vires the Constitution of the Islamic Republic of Pakistan ( Constitution ). The effect of the impugned law is to impose a tax on services within the categories listed at Serial 14.
3. Questions of Law
- Is Serial No. 14 of Schedule 2 to the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022, ultra vires the Constitution of the Islamic Republic of Pakistan 1973?
- Does the Federal Constitutional Court have the jurisdiction to adjudicate tax references that involve a substantial question of constitutional interpretation?
4. The Court’s Answers
Question 1
Is Serial No. 14 of Schedule 2 to the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022, ultra vires the Constitution of the Islamic Republic of Pakistan 1973?
“In view of the foregoing discussion, leave to appeal is refused and the instant petitions are hereby dismissed. The impugned judgment of the Peshawar High Court dated May 13th, 2025 is affirmed.”
Paragraph 13
Question 2
Does the Federal Constitutional Court have the jurisdiction to adjudicate tax references that involve a substantial question of constitutional interpretation?
“The use of the unqualified expression any case thus necessarily includes cases in which this Court may not otherwise have jurisdiction, provided that the jurisdictional trigger, namely, the involvement of a substantial question of constitutional interpretation, is satisfied.”
Paragraph 9
5. Practical Relevance
Businesses and withholding agents should test each asserted liability against the enabling statute, territorial scope and taxable transaction. Recovery demands and delegated rules require particular scrutiny before compliance or challenge.