Supreme Court suspends SHC order declaring Sugar Inquiry Commission report 'illegal'

The Supreme Court on Wednesday suspended a Sindh High Court (SHC) order declaring the Sugar Inquiry Commission (SIC) report 'illegal' and accepted for hearing the federal government's appeal against the high court's verdict. 

A three-member bench, headed by Chief Justice of Pakistan (CJP) Gulzar Ahmed, also issued notices to 20 sugar mill owners and related parties in the case. The court, after issuing the notices, adjourned hearing the case for a month.

The federal government had filed an appeal in the apex court against the SHC's August 17 order that had declared the SIC report illegal.

The SHC, apart from declaring the report null and void, had also directed the Federal Board of Revenue (FBR), Federal Investigation Agency (FIA) and the National Accountability Bureau (NAB) to launch a fresh investigation into the matter.

The verdict was issued by the SHC on a petition filed by sugar mill owners against a government-led commission on the sugar price hike that took place earlier this year. The verdict was issued by a two-member bench comprising the SHC's Justice Muhammad Karim Khan Agha and Justice Omar Sial.

The court had directed the FBR, FIA, and NAB to include people 'who knew the sugar industry' in their investigation and directed the institutions to carry out a fresh investigation as per the law. 

“If any government official has misused his powers, it should be investigated,” the SHC had said in its order. It also asked the FBR to investigate the matter according to the country's tax laws.

“The FIA should also ignore the Sugar Inquiry Commission's report and re-investigate [the increase in prices],” the court had directed in its verdict. 

It also issued the same orders to the Securities & Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP).

The court had also sent the verdict to the governor SBP, Chairman NAB, and DG FIA.

'Damning revelations in Sugar Inquiry Commission's report'

The Sugar Inquiry Commission report had laid bare some startling revelations about how the price of sugar is fixed, how exports of the commodity are faked to avail rebates on sales taxes, and how billions of rupees are overcharged by sugar mill owners.

According to sources, the report mentioned in depth how the amount of sugar exported to Afghanistan is routinely inflated to show as if 75 tonnes of the commodity were being exported per truck. However, this is barely possible, given that the maximum capacity of a truck, even when overloaded, does not exceed 30 tonnes.

The scam also seemingly has another purpose: laundering money. If sugar is being exported to Afghanistan, the payment should also be coming in from the same country. However, it was found by the commission that many sugar mill owners were receiving telegraphic transfers for payments for sugar sold to Afghanistan from the US and Dubai, therefore seemingly whitening money and earning dollars at the same time.

Another important finding highlighted in the report is that sugar mills paid an estimated Rs22bn in taxes to the Government of Pakistan, but out of that total amount, Rs12bn was reclaimed in rebates. Hence, the net contribution was close to only around Rs10bn.