Arrest of taxpayers without sales tax assessment illegal, rules SC

ISLAMABAD: The Supreme Court (SC) has declared that initiating criminal cases and making arrests of taxpayers without determining sales tax liabilities is illegal.

A three-member SC bench comprising Justice Shahid Waheed, Justice Irfan Saadat Khan, and Justice Aqeel Abbasi issued a detailed judgment in the case. The court ruled that before initiating any criminal proceedings against a taxpayer, tax liability must be determined, and the right to appeal must be granted.

“Arrests made without a hearing and civil proceedings are a violation of the Constitution,” said the judgment, adding that starting criminal proceedings at the preliminary stage was against the principles of justice.

The court noted that registering direct cases on tax evasion constituted abuse of authority, adding that it was essential to establish tax liability under the law before prosecution begins. “The Directorate of Intelligence can only gather information but does not have the authority to prosecute,” the detailed judgement held. The court ruled that investigations could only commence after the tax department declared an amount due.

“Before any criminal action is taken against a defaulter, the service of order, right to appeal, and final decision must be ensured,” said the judgment, adding that arrests based on mere notice or preliminary inquiry violate the Constitution.

The detailed judgment declared the criminal jurisdiction of FBR’s Directorate of Intelligence ineffective, upheld all rele