ISLAMABAD: The Federal Constitutional Court (FCC) has ruled that after the 27th Amendment, the exclusive authority to strike down any law or interpret the Constitution rests solely with it and the Supreme Court could no longer intervene in such matters.
A two-member bench, comprising Justice Aamer Farooq and Justice Rozi Khan Bareech, had reserved judgment in a case related to tax law on February 2.
The court upheld the constitutional validity of Serial No14 of Schedule 2 of the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022, and dismissed all petitions filed by the construction companies challenging it.
M/s Matracon Pakistan (Private) Limited, Islamabad, Zhongmel-Al Mehran Joint Venture, Swabi, M/s Merryland Housing Society, Mardan, and M/s Subhan Smart City Society, Mardan, had challenged the judgment of Peshawar High Court dated May 13, 2025. The court upheld the verdict of Peshawar High Court (PHC) dated May 13, 2025.
“The imposition of tax on ‘construction services’ by the provincial government is fully in accordance with the Constitution and does not violate Entry 49 of the Federal Legislative List”, says a 9-page verdict issued on Friday, authored by Justice Aamir Farooq.
The court clarified that the Khyber Pakhtunkhwa Revenue Authority (KPRA) was authorised to levy tax only on “services,” and not on “goods.” The court directed KPRA to devise a mechanism to segregate the total contract amount into the value of services and goods, so as to prevent double taxation on taxpayers.
The judgment also referred to the Memorandum of Understanding (MoU) signed in 2016 between the Federal Board of Revenue (FBR) and KPRA, under which tax adjustment was permitted to avoid double taxation.
The ruling further clarified that tax references did not ordinarily fall within its direct jurisdiction, but since this case involved an important question about the constitutional validity and interpretation of Serial No14 of Schedule 2 of the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022, the court had full authority to hear the matter under Article 175E(5) of the Constitution.
The judgment held that following the 27th Amendment, the exclusive power to strike down laws or interpret the Constitution now lay with the Federal Constitutional Court and the Supreme Court could no longer intervene in such matters.
“After the amendment, the Supreme Court cannot invalidate laws on constitutional grounds, and the power of constitutional interpretation has been confined to a specified forum,” says the judgment.
The court further noted that after the amendment, the Federal Constitutional Court may call for records from any court or tribunal for the purpose of constitutional interpretation.
