Salman Akram Raja, lawyer for Zong, appeared before the high court as IHC Chief Justice Aamer Farooq took up the plea on Tuesday.

Raja informed the court that the amendment made to the law was contrary to Article 18 of the Constitution (freedom of trade, business or profession).

The decision comes as a big blow to the federal government which took the step to broaden the tax base amid concerns from the Global System for Mobile Communications Association over the decision.

Earlier this month, the Federal Board of Revenue decided all telecom operators to block SIMs of non-filers by May 15, 2024.

Last month, the FBR ordered the Pakistan Telecommunication Authority and telecom operators to block 506,671 mobile phone SIMs of non-filers.

Telecommunication operators have agreed to block the SIM cards manually in small batches, according sources. Instead of imposing penalties on more than 570,000 tax evaders, the FBR has decided to levy an additional withholding tax of 90% on them.

An additional withholding tax of 90% will be imposed on tax evaders until they submit income tax returns, they added. If a tax evader reloads a balance of Rs100, Rs90 rupees will be deducted by the FBR, they explained.

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If mobile phone companies fail to collect income tax returns from these tax evaders despite blocking their SIM cards, in that case, if they activate another SIM card, they will be liable to pay an additional 90% tax on it as well.

Additional taxes will be imposed on tax evaders for every reload of their SIM cards, as well as on mobile phones and data usage.