The Federal Constitutional Court of Pakistan has held that no administrative circular can override or limit a law passed by Parliament or any of its schedules.
The ruling came in a significant decision concerning the Employees’ Old-Age Benefits Institution (EOBI), marking a major development in pension rights for thousands of workers.
A three-member bench headed by Chief Justice Aminuddin Khan, and comprising Justice Syed Hasan Azhar Rizvi and Justice Arshad Hussain Shah, delivered the verdict while dismissing multiple appeals filed by EOBI.
The Court upheld earlier judgments of the Lahore High Court.
In its decision, the Court ruled that employees who have completed 14 years and 6 months or more of insurable employment are entitled to monthly old-age pension. It held that under the schedule attached to the Employees’ Old-Age Benefits Act, 1976, any period of insurable employment of six months or more must be counted as a full year, and this principle applies to pension eligibility as well as pension calculation.
The Court emphasized that EOBI is a welfare institution and welfare laws must be interpreted in favor of employees. Denying a lifelong pension due to a shortfall of a few months, it said, violates justice and constitutional principles.
The bench declared the EOBI circular issued in 2022 ineffective, noting that administrative instructions cannot curtail statutory rights. It observed that the 2019 circular – which treated a six-month period as a full year – was lawful and the rights accrued under it could not later be withdrawn.
Concluding the judgment, the Federal Constitutional Court ordered EOBI to grant monthly old-age pensions to all affected employees, calling it a vital legal development for workers nationwide.
Super Tax case adjourned
The Federal Constitutional Court of Pakistan (FCCP) on Thursday adjourned until Friday the hearing of various petitions related to the super tax.
The proceedings were conducted by a three-member bench headed by Chief Justice Aminuddin Khan, during which senior advocate Makhdoom Ali Khan continued his arguments on behalf of several taxpayer companies. He will conclude his submissions at the next hearing.
During the proceedings, Makhdoom Ali Khan cautioned the court that if the current approach to imposing taxes continued, the consequences would have to be faced.
He argued that Section 4C of the Income Tax Ordinance, 2001, does not permit tax classification, nor does it contain clear and legally precise language. The counsel contended that the government had issued a mere notification to continue tax collection, while the definitions of income under Sections 4C and 4B had been altered. He added that both sections fail to allow deductions for expenses and losses, which is against fundamental principles of taxation law.
Referring to the economic impact of COVID-19, Makhdoom Ali Khan said all sectors – particularly petroleum and aviation – had suffered heavy losses, yet the government did not introduce any relaxation in its tax policy.
He further stated that local investors face numerous questions before choosing to invest in Pakistan, while instead of reducing tax burdens, exemptions are frequently increased.
At this point, Justice Hasan Azhar Rizvi remarked that the provisions of the tax ordinance clearly stipulate that local companies must be based in Pakistan.
The Federal Constitutional Court later adjourned further proceedings of the super tax cases until today.