IN THE HIGH COURT OF SINDH AT KARACHI

                         Spl. Cr. Bail Application No.101 of 2012

Date	Order with signature of Judge

For Hearing.

Date of hearing    : 03.09.2012

Date of order       : 03.09.2012

          Mr. M. Kaukab Sabahuddin, advocate for the applicant

Mr. Ashiq Ali Anwar Rana, advocate for the respondent a/w  I.O. Nisar Ahmed, Directorate of Intelligence, F.B.R.

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O R D E R

Aqeel Ahmed Abbasi, J:  Being aggrieved by the impugned order dated 28.6.2012 passed by the learned Special Judge Link (Customs & Taxation) Sindh at Karachi, in Crime No.01/2012 under Section 2(9), 2(14), 2(14) (a), 2(14) (b), 2(37), 3, 6, 7, 8 (1) (a), (8) (1) (ca) and 8A, 22, 23 and 26 of the Sales Tax Act, 1990, punishable under section 33 ibid, the applicant has sought for his release on bail on the following grounds.

2.       Brief facts  of the case are that complainant Ahmed Nadeem Khan, Assistant Commissioner, Inland Revenue, Zone-III, RTO-III, Karachi lodged the FIR against the applicant/accused stating therein that accused received illegal and inadmissible input/refund sales tax and deceitfully and fraudulently adjusted and obtained refund of tax on the basis of fake invoice, bogus import documents during the period July 2010 to April 2011 and amount of tax involved is of Rs.31.553 milliohm which was not deposited into government treasury  by the said registered person and other associates but fraudulently  received back input adjustment/refund from the state.

3.       Learned counsel for the applicant has contended that the Federal Board of Revenue through advertisement in the daily newspapers  as well on his official Website encourages the registered person to always purchase from active taxpayer duly registered with the FBR because in near future:

(i) Only active tax payer will be allowed to import

        and export.

(ii) Sales tax input credit/adjustment allowed only

if purchases are made from active tax payers.

4.       It is further contended that prior to the purchasing any goods from the supplier the applicant/accused, as per the directions of FBR always checks their status online in order to know whether they are active taxpayer or not. Per learned counsel, M/s Huzaifa Traders and M/s Noman Enterprises were active taxpayer on the FBR’s e-portal and no buyer can be held responsible for infringement of any law when the supplier is an Active Taxpayer on the date when the purchases are made. It is further contended that the applicant/accused were still Active Taxpayer as on 29.5.2012, therefore, applicant has been falsely implicated in this case and a fictitious liability has been created on the applicant/accused. Per learned counsel, Sales Tax authorities have no power to lodge FIR under the Sales Tax Act, 1990. It is further contended that under the provision of sub-section (2) of section 11 of the Sales Tax Act, 1990, if a person has not paid the tax due on supplies made by him or has made short payment or has claimed input tax credit, which is not admissible under the Act, the officer of Inland Revenue shall make an assessment of sale tax actually payable by that person and determine the amount of tax, which has been unlawfully claimed, after issuance of show cause notice under the provisions of subsection 4 of section 11 ibid after full opportunity of being heard, but in the instant case no notice as required under section 11(4) of the Sales Tax Act, 1990 has been issued to the applicant/accused nor any assessment has been made through which any liability could be created. It is further contended that the goods have been supplied to the buyer and such fact is corroborated from withholding of income tax to the tune of Rs.3,377,080/-, which has been deducted by the buyer and has been duly deposited in the government treasury. It is further contended that the learned trail court has failed to appreciate that the accused/applicant is not registered as an importer nor he has imported any goods but has purchased the goods locally and supplied the same to his buyer and the allegation against the applicant that he has obtained refund of tax on the basis of fake and fabricated import documents is not sustainable, whereas he has never claimed nor any refund has been sanctioned to him. It is further contended that no material or evidence has been brought on record to connect the applicant/accused with the commission of offence of tax fraud as defined in section 2 (37) of Sales Tax Act, 1990 nor any specific liability has todate be adjudged by the adjudicating authority, whereas a fictitious accumulative amount of Rs.31.553 million has been mentioned in the FIR. Lastly learned counsel has contended that the entire case against the applicant is based on presumption, probability, conjectures and surmises and there is no possibility of conviction, therefore, the applicant may be released on bail subject to furnishing surety. In support of his contention, learned counsel for the applicant has placed the following case law:

1.       Khawaja Shahbaz Ahmed v. Deputy Director, Directorate General of Intelligence and Investigation, Range Office, Gujranwala and another 2012 PTD 1361.

2.       M/s G.M.H Traders v. Deputy Director/Investigating Officer, Directorate of Intelligence/Investigation, Lahore PTCL 2010 CL 118.

3.       The State through Collector of Sales Tax v. Muhammad Ashfaq Ahmed and others 2006 PTD 286.

4.       Babar Younus v. The State PTCL 2007 CL 71.

5.       Conversely, Mr. Ashiq Ali Anwar Rana, learned counsel for the respondent/department, has opposed the bail application on the ground that the applicant is involved in huge tax fraud. It is contended that during investigation, prosecution has collected sufficient material evidence against the applicant, which prima-facie connects the applicant with the commission of alleged offence, therefore, he may not be released on bail.

6.       I have heard both the learned counsel and perused the record. From tentative assessment of the record, it appears that the allegations as contained in the FIR against the present applicant are that the applicant with the connivance of other co-accused persons committed tax fraud by issuing fake and bogus sales tax invoices and claims false input tax adjustment. However, the prosecution has not shown any such alleged fake invoices or the sales tax return, whereby it could be seen that the applicant has committed tax fraud. It has also not been shown as to whether the purchases made by the applicant were from registered persons, who were declared as black listed by the department. During his arrest, the applicant was investigated by the prosecution, whereas the applicant is no more required for further examination. The alleged offence admittedly does not fall within the prohibitory clause of section 497 Cr.P.C, whereas punishment of the alleged offence is five years or fine or both, which may be determined after taking evidence and on the conclusion of the proceedings.

7.       In the case of Akhtar Zaman Khan v. The State 2010 YLR 804 a Division Bench of Lahore High Court, under some what similar circumstances in a case of sales tax evasion, while granting bail to the applicant/accused has held that the accused cannot be denied bail only on the ground that he has caused huge loss to public exchequer. Reliance in this regard was placed on the judgment of the Hon’ble Supreme Court reported as Tariq Bashir and 5 others v. The State (PLD 1995 SC 34)

8.       In the case of Zafar Iqbal v. Muhammad Anwar and others reported as 2009 SCMR 1488, Full Bench of the Hon’ble Supreme Court, headed by the Hon’ble Chief Justice, while placing reliance in the case of Tariq Bashir and 5 others v. The State PLD 1995 SC 34 and Subhan Khan v. The State 2002 SCMR 1797 has held that “Courts, in cases where offence falls within the non-prohibitory clause of Section 497, Cr.P.C., consider favourably by granting bail as a rule but decline to do so in the exceptional cases. As far as exceptional circumstances are concerned those are to be taken into consideration depending upon each case.”

9.       Similarly, in the case of Saeed Ahmed v. The State 1996 SCMR 1132, the Hon’ble Supreme Court has held that “case against accused entirely depended upon documentary evidence which was in possession of the prosecution and there is no possibility of tampering with the evidence, petitioner and the accused was admitted on bail.”   

10.     In view of the above facts and circumstances of the case and the dicta laid down by the Hon’ble Supreme Court in the above referred case law, I am of the view that the applicant/accused has made out a case for grant of bail. The applicant was granted bail vide short order dated 03.09.2012 on furnishing of solvent surety in the sum Rs.02 million (Rupees two million only) with P.R. Bond in the like amount to the satisfaction of the trial court, these are the reasons of the short order mentioned hereinabove.

11.     However, it is clarified that the observation made herein are tentative in nature and shall not prejudice the merits of the case which may be examined strictly in accordance with law and on the basis of evidence on record.

 JUDGE

Dated:  22.09.2012