𝐈𝐬𝐥𝐚𝐦𝐚𝐛𝐚𝐝 𝐇𝐢𝐠𝐡 𝐂𝐨𝐮𝐫𝐭 𝐆𝐫𝐚𝐧𝐭𝐬 𝐁𝐚𝐢𝐥 𝐭𝐨 𝐚𝐧 𝐈𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐀𝐫𝐫𝐞𝐬𝐭𝐞𝐝 𝐛𝐲 𝐅𝐁𝐑 𝐢𝐧 𝐚𝐧 𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭 𝐓𝐚𝐱 𝐌𝐚𝐭𝐭𝐞𝐫 𝐚𝐠𝐚𝐢𝐧𝐬𝐭 𝟏𝟎𝟎 𝐑𝐮𝐩𝐞𝐞𝐬 𝐨𝐧𝐥𝐲:

𝐈𝐬𝐥𝐚𝐦𝐚𝐛𝐚𝐝 𝐇𝐢𝐠𝐡 𝐂𝐨𝐮𝐫𝐭 𝐆𝐫𝐚𝐧𝐭𝐬 𝐁𝐚𝐢𝐥 𝐭𝐨 𝐚𝐧 𝐈𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐀𝐫𝐫𝐞𝐬𝐭𝐞𝐝 𝐛𝐲 𝐅𝐁𝐑 𝐢𝐧 𝐚𝐧 𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭 𝐓𝐚𝐱 𝐌𝐚𝐭𝐭𝐞𝐫 𝐚𝐠𝐚𝐢𝐧𝐬𝐭 𝟏𝟎𝟎 𝐑𝐮𝐩𝐞𝐞𝐬 𝐨𝐧𝐥𝐲:

This judgment of the Islamabad High Court discusses a pertinent and a live issue related to tax liability as to whether a taxpayer can be prosecuted before determining his actual tax liability on the civil side. Mr. Umer Ijaz Gilani, Advocate Supreme Court, commented on this judgment in the following words:

“According to Justice Babar Sattar’s reading of the law, the FBR could not have initiated investigation proceedings against the Bank employee who aided and abetted the Tax Fraud, until the tax liability of the principal accused person is first established on the civil side. Justice Babar Sattar’s view relies heavily on the earlier ruling by Justice Mansoor Ali Shah in the Taj International case (Taj International (Pvt.) LTD vs. Federal Board of Revenue (2014 PTD 1807),  which has recently been upheld by the Supreme Court.

The FBR’s view, however, is that establishing tax liability on the civil side would normally take months, if not years. During this period, all the accused and co-accused persons are already on high-alert. If an absolute bar is placed on investigating them and, where necessary, carrying out arrests and seizures, there is a high likelihood that the accused persons will take advantage of the time lapse, delete the evidence against them and/or flee the jurisdiction. These are all classic grounds where courts all over the world allow for arrests and pre-trial detention.

The FBR also believes that the recent 2024 amendments in the definition of “tax fraud” provided in the Sales Tax Act, 1990, have broadened the scope of the provision. This has rendered the ruling in Taj International practically redundant.

All eyes will now be on the Supreme Court, assuming that the FBR chooses to appeal this verdict before it.”

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